## Digital Dollars for Online Tea

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**Canonical URL:** [Digital Dollars for Online Tea](https://www.imf.org/-/media/files/publications/fandd/article/2021/march/en/fighting-pandemic-disruption-with-innovation-dorst-en.pdf)

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### Overview
- Innovators responded to COVID-19 disruption with diverse digital solutions: the overnight transformation of Sri Lanka’s 125-year-old live tea auction; the world’s first central bank digital currency in The Bahamas; and SafeBoda’s pivot from a taxi-hailing app to an e-commerce platform in Kampala, Uganda.
- Common driver: an urgent need plus an enabling environment that allowed rapid germination and scaling of homegrown innovations to serve underserved populations and support livelihoods.

### The Bahamas: first digital currency
- Launch timing and design:
  - Launched in October 2020: the sand dollar, the world’s first central bank digital currency.
  - Pegged one-to-one to the Bahamian dollar and uses a blockchain-backed digital token.
  - Sand dollars are issued and regulated by The Bahamas’ central bank.
- Policy objective and context:
  - Territory spread across 700 islands; commercial banks find it unprofitable to operate ATMs or branches on remote islands.
  - Extreme weather events (notably Hurricane Dorian in 2019) increased infrastructure costs and exacerbated financial access gaps.
  - Central bank aimed to eliminate obstacles to access “the equivalent of a deposit account or a mobile wallet account to conduct transactions.”
- Rollout and usage:
  - Following successful pilots, the central bank distributed sand dollars to Bahamian commercial banks, payment system providers, and money transfer operators; funds placed in clients’ digital wallets with transaction thresholds.
  - Early circulation: $130,000 worth of sand dollars in circulation compared with $500 million Bahamian dollars.
  - Customers cite ease, faster turnaround, lower costs, and safety of cashless transactions during COVID-19.
  - Using the sand dollar does not require a bank account or a mobile phone, though most transactions take place via mobile phones.
- Observations:
  - IMF mission chief Anke Weber attributes fast rollout and interest to the combined effects of Hurricane Dorian and the COVID-19 pandemic.
  - Lessons from The Bahamas’ experience are likely to be closely watched as other countries experiment with central bank digital currency.

### Sri Lanka: tea auction transformed
- Sectoral importance and shock:
  - Tea industry: 10 percent of Sri Lankans derive an income from the tea industry.
  - Tea generated more than $1.2 billion in export revenues in 2020.
  - For more than 125 years the industry relied on a twice-weekly live auction; COVID-19 prevented buyers and brokers from convening, halting sales and threatening millions of livelihoods.
- Response and implementation:
  - A task force led by Asia Siyaka Commodities and including the Sri Lanka Tea Board, technical experts, the government, brokers, and auctioneers collaborated on a digital solution.
  - Local IT company CICRA Holdings led technical development, working with brokers and tea experts to reimagine the human and technical variables of the live auction.
  - Training and deployment: within days, some 300 people took part in simulated training programs; the solution was built in about seven days.
  - First digital auction went live on April 4, 2020.
- Impacts and benefits:
  - The online auction is COVID-safe, faster, more strategic, cost-effective, and has yielded higher prices.
  - Improvements in transparency and efficiency and reduced duplication of work.
  - Continuity of sales enabled estates to continue operations and pay workers; pluckers report continuity of salaries during the pandemic.

### Uganda: digital lifeline on wheels (SafeBoda)
- Pre-pandemic business model and challenges:
  - SafeBoda launched in 2015 to improve safety and efficiency of Kampala’s motorcycle taxis (“boda boda”), using a mobile app to connect riders and drivers.
  - Drivers in the informal sector lacked proof of income and therefore had limited access to bank loans.
- Financial inclusion innovation:
  - In 2017 SafeBoda introduced its wallet, an integrated payment system through mobile service providers that documented drivers’ income without a bank account.
- Pandemic pivot and scale:
  - Mobility restrictions in March 2020 grounded vehicles and disrupted commerce.
  - SafeBoda partnered with local restaurants, food vendors, and markets and—with UN Capital Development Fund and digital experts—launched the Shop service within two weeks.
- Reach and outcomes:
  - SafeBoda app has more than 1 million downloads.
  - Connects customers to nearly 1,000 food vendors, 350 shops, 16 markets, and 21 United Nations Population Fund (UNFPA) pharmacies through 20,000 moto drivers in Kampala.
  - Vendors report faster onboarding and higher earnings; drivers report earning more by combining rides and deliveries.
  - The service helped mitigate pandemic exposure, revitalize local commerce, and catalyze Uganda’s digital economy.

### Key findings and statistics
- The Bahamas:
  - Launch: October 2020.
  - Territory geography: 700 islands.
  - Sand dollars in circulation: $130,000 versus $500 million Bahamian dollars.
- Sri Lanka:
  - Tea industry employment: 10 percent of Sri Lankans.
  - Export revenues: more than $1.2 billion in 2020.
  - Digital auction first live: April 4, 2020; platform developed in about seven days; ~300 people participated in simulated training prior to launch.
- Uganda (SafeBoda):
  - Company launch: 2015.
  - Wallet introduced: 2017.
  - Pandemic pivot: March 2020; Shop launched within two weeks.
  - App scale: more than 1 million downloads; nearly 1,000 food vendors; 350 shops; 16 markets; 21 UNFPA pharmacies; 20,000 moto drivers.

### Policy and practitioner takeaways
- Crises can accelerate adoption of digital solutions when an enabling environment allows rapid collaboration among public authorities, private firms, and technical experts.
- Digital payments and digital identities/wallets can expand access to financial services for the unbanked and underbanked, including informal-sector workers, without requiring traditional bank accounts.
- Central bank digital currencies can target financial inclusion and faster, lower-cost transactions for geographically dispersed populations.
- Rapid, locally led technological adaptation (e.g., e-auctions, platform pivots) can preserve market continuity, protect incomes, and sometimes improve market outcomes (transparency, efficiency, prices).
- Public–private coordination, hands-on training, and iterative pilots can shorten deployment timelines from years to days or weeks in emergency contexts.

*Source: Steven Dorst, “Digital Dollars for Online Tea,” Finance & Development, March 2021.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2021/march/en/fighting-pandemic-disruption-with-innovation-dorst-en.pdf_