We’ve learned that diversifying and strengthening our relationships while broadening our areas of expertise can help us adapt quickly to new technical, political, and public health realities and support a more resilient policymaking process.

What we’ve learned

1. Mitigate risks to Digital Financial Services (DFS) by diversifying and strengthening relationships 

Collaborate, collaborate, collaborate with partners that have strong pre-existing relationships 

Rather than duplicate efforts, work with partners to fill gaps, especially when they are better positioned to provide technical support or influence policy change.

This has been a cornerstone of our approach since the early days of the Policy Accelerator. For example:

• When we started work in Mauritania, The World Bank was already closely collaborating with the Central Bank of Mauritania (CBM) on issues that complemented the DFS regulatory agenda. We worked with both the CBM and the World Bank to align our respective activities and accelerate the enactment of the country’s new regulatory framework for e-payment services, which was adopted in June 2021.  

• In Ethiopia, we are continuing to support the UN Secretary-General’s Special Advocate for Inclusive Finance for Development and The World Bank in their work with the National Bank of Ethiopia, and we are working closely with the Better Than Cash Alliance to implement policy actions stemming from the country’s National Digital Payments Strategy.  

• In Egypt, we are working closely with GIZ to broaden the scope of support we provide to financial regulators. We are also working with the Arab Monetary Fund to build capacity of financial regulators across the Arab region. 

• And in East and West Africa, we are collaborating with partners such as CGAP and the Bill & Melinda Gates Foundation to assess the impact of DFS taxation on revenue mobilization, financial inclusion, and inclusive economic growth. 

Taking on a complementary role in certain markets has enabled us to provide more focused and higher quality technical support than if we had “flown solo”.  

Go beyond central banks 

DFS does not exist in a bubble. 

The potential positive impact of DFS is affected by more than just the actions of central banks or other financial supervisory authorities (the entities typically responsible for DFS policy and regulation). Public health emergencies, civil conflict, and decisions taken by other government stakeholders can have dramatic effects on our efforts to promote the development of safe and enabling policy and regulatory environments for DFS. 

For example, there has been a wave of taxation of mobile money across Africa. Ghana, Tanzania and Cameroon have all introduced (or are considering introducing) mobile money taxation in 2021. In each of these cases, the tax came as a surprise to the global financial inclusion/DFS sector, and central banks appeared to lack significant influence over the imposition of these taxes as well as their applicability and amounts. In some cases, efforts to increase access to and usage of DFS may be affected by these changes to taxation. 

As a result, we see more clearly the importance of engaging broadly and proactively with stakeholders outside of central banks while also working with our central bank contacts to identify and mitigate risks to their DFS agenda. Developing relationships with a diverse set of policymakers and regulators – as we have within the Senegalese and Malian Ministries of Finance to provide feedback on their draft National Financial Inclusion Strategies – also helps us build credibility and increase the impact of our time, expertise, and resources. This is especially true when we work with departments that are receiving limited support from other development partners.

Cultivate cross-department and cross-sector coalitions 

Bilateral relationships between the Policy Accelerator and specific departments and individual partners can only go so far.

The successful implementation of good policies or regulations relies on broad institutional buy-in. That’s why a major focus for 2022 will be leveraging UNCDF’s “convening power” to bring people together to work toward shared goals. 

For example, we plan to apply the capacity-building model we used in Egypt with the Central Bank of Egypt and the Fletcher Leadership Program in Financial Inclusion at Tufts University to support the implementation of the regional financial inclusion strategy in Central Africa. Similarly, we will adopt our model for civil society engagement that we applied in Central Africa to support a policymaking process that includes and prioritises women in Ethiopia and Indonesia.  

We believe that strong relationships across departments, sectors, and individual actors can lead to a more resilient policymaking process and more sustainable DFS policy reforms.  

2. Broaden our areas of expertise 

Removing policy and regulatory barriers to DFS, especially for women and other underserved groups, has been and will continue to be the core focus of our work. That said, DFS serves as an entry point to other digital services (such as e-commerce, entrepreneurship, education, and even clean water and energy) that matter to people of all income levels and backgrounds.

Financial services regulators are increasingly aware of their responsibility to protect consumers entering the digital economy, and our areas of expertise will need to expand to meet their needs. 

We are starting to formally explore the connections between DFS and the broader policy and regulatory enablers of an inclusive digital economy, including data sharing, data protection, competition, consumer protection, and cybersecurity.

Our series of briefing notes on inclusive digital economies, which we started releasing in late 2021 with notes on consumer protection and data protection, is intended as a resource not only for our team but also for our government counterparts and other financial inclusion stakeholders to understand the broader ecosystem of laws and regulations needed to unlock inclusive digital services. Through this work, we will develop and test hypotheses around the intersection of different policies and regulations, and we will explore how these policies and regulations can foster innovation and inclusivity while protecting consumers.

We expect this process will help us continue to build the expertise needed to meet the evolving demands of our focus markets and help sector stakeholders tackle these issues. 

Final thoughts

We’ve learned that staying focused on DFS often requires going beyond DFS.

In our work, that can mean collaborating with partners; building relationships across the public sector; convening a broad coalition of public, private, and civil society stakeholders; and researching emerging issues. Taken together, this web of relationships and knowledge can help DFS weather a wide range of potential threats while maximizing benefit to end-users.

Ultimately, we aim to support the development of safe, enabling, and inclusive DFS ecosystems that can serve as an entry point into the digital economy for those who have traditionally been excluded or underserved.

Authors

Seharish Gillani

Jeremiah Grossman

Alexis Ditkowsky