Bridging the Digital Divide to Scale Up the COVID-19 Recovery

IMF Blog, November 5, 2020

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Digitalization enabled many developing countries to leapfrog on financial inclusion; examples cited include Kenya, Ghana, Rwanda and Tanzania.
Pandemic-driven adoption: online shopping, entertainment, digital financial services, virtual meetings and events became central to lives and livelihoods globally.
Central bank and private-sector actions:
- Central Bank of Kenya waived charges and expanded the limit for low-value mobile money transactions, resulting in more than 1.6 million additional customers and a significant increase in both value and number of transactions, mostly of $10 or less.
- In Rwanda, all charges were waived in March; by the end of April 2020, the weekly value of all kinds of mobile money transactions increased by 450 percent from pre-pandemic levels.
- In China, Ant Group partnered with more than 100 banks to launch the Contactless Loans initiative to help small and medium enterprises recover from COVID-19.
- In Brazil, the central bank is launching PIX, an instant-payments system expected to become widely available this month.
- In India, Riskcovry, a Mumbai-based start-up, introduced a coronavirus insurance policy for businesses to offer employees hospitalization and lost-wages coverage.

Place people at the center of the global financial system.
- Digitalization must be driven by the needs of the people and work for them.
- Example: Kenya’s 2017 mobile-based digital bond M‑Akiba mobilized micro-savings of as little as $30 to finance government; 85 percent of investors were participating in the government securities market for the first time.
Connect citizens to mitigate the digital divide.
- Over 700 million people lack broadband connectivity.
- Over a billion lack formal identification.
- Policy implication: invest in digital infrastructure and digital identity so citizens can access online services; invest in numeracy and financial literacy.
- International co-operation will be needed; the International Monetary Fund, World Bank and other international organizations are working with the private and public sectors globally to help countries.
Strengthen governance of global digital financial platforms.
- Big Techs are transforming delivery of services globally, a trend accelerated by COVID-19.
- Concern: developing countries have not been at the table when governance of these platforms is discussed.
- Initiative: the Task Force’s Dialogue on Global Digital Finance Governance seeks to facilitate a balanced and more inclusive dialogue, particularly involving developing nations, on aligning Big Tech governance to the Sustainable Development Goals.

Main risks to address:
- Cybersecurity.
- Data privacy and security—greatest threats to vulnerable citizens using digital services for the first time.
Policy priority: mitigate these risks to protect citizens’ information and hard-earned money.
Cross-sector call to action: Governments, the private sector, international organizations and citizens must cooperate to increase digitalization and seize the pandemic-driven opportunity to enhance lives and livelihoods.

Patrick Njoroge, Ceyla Pazarbasioglu — November 5, 2020

Review of Emergency Measures to Facilitate Mobile Money Transactions
- Review of Emergency Measures to Facilitate Mobile Money Transactions (Markdown version)
- Review of Emergency Measures to Facilitate Mobile Money Transactions (PDF)