Digital Dollars for Online Tea
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Bibliographic details
- Authors: STEVEN DORST
- Published: March 1, 2021
Overview
- Innovators in The Bahamas, Sri Lanka, and Uganda responded to COVID-19 disruption with rapid digital solutions that extended financial access, preserved critical markets, and created new e-commerce channels.
- Common enabling factor: an environment that allowed rapid, homegrown innovation to scale and serve underserved populations.
The Bahamas: first digital currency
- Launched in October 2020: the world’s first central bank digital currency—the sand dollar.
- Design and features:
- Pegged one-to-one to the Bahamian dollar.
- Uses a blockchain-backed digital token.
- Issued and regulated by The Bahamas’ central bank.
- Accessible to people and businesses to buy and sell goods and services and send money.
- Does not require a bank account or a mobile phone for use (though most transactions use mobile phones).
- Motivations and context:
- The Bahamas territory is spread out over 700 islands, making ATMs and branches unprofitable on remote islands.
- Extreme weather events increase infrastructure costs and exacerbate lack of access.
- The need to serve the unbanked and underbanked and to modernize the payment system.
- Accelerants for rollout: 2019’s Hurricane Dorian and the COVID-19 pandemic.
- Early rollout and uptake:
- Following pilots, central bank distributed sand dollars to commercial banks, payment system providers, and money transfer operators.
- Funds are placed in clients’ digital wallets with access limits and transaction thresholds.
- Circulation level (early days): $130,000 worth of sand dollars in circulation compared with $500 million Bahamian dollars.
- Reported user benefits: ease, faster turnaround, lower costs, no fees or transaction costs in some use cases, and safety of cashless transactions.
Sri Lanka: digitalizing a 125-year-old tea auction
- Context and importance:
- Tea industry employs millions; 10 percent of Sri Lankans derive an income from the tea industry.
- Tea exports generated more than $1.2 billion in export revenues in 2020.
- The Ceylon tea auction had operated for more than 125 years, convening twice a week at the Ceylon Chamber of Commerce.
- Crisis and response:
- COVID-19 prevented the weekly live auction from convening, halting sales and jeopardizing millions of livelihoods.
- A task force including the Sri Lanka Tea Board, technical experts, government, brokers, and auctioneers collaborated to build a digital solution.
- Technical and operational rollout:
- Local IT company CICRA Holdings led technical development and worked with brokers to translate live-auction dynamics into an e-platform.
- Training: within days, about 300 people participated in simulated training programs, with sessions running up to the night before launch.
- Deployment timeline: built a solution and launched the first digital auction on April 4, 2020.
- Reported outcomes:
- The digital auction is COVID-safe, faster, more strategic, cost-effective, and yields higher prices.
- Improvements in transparency, efficiency, and reduced duplication of work.
- Continuity of sales allowed estates to continue operations and pay workers; pluckers reported receiving salaries during the pandemic.
Uganda: SafeBoda’s pivot to e-commerce and financial inclusion
- Pre-pandemic context:
- SafeBoda launched in 2015 as a safer motorcycle-taxi (boda boda) service connecting riders and drivers through a mobile app.
- In 2017 SafeBoda introduced a wallet to document drivers’ income, expanding access to financial services for informal-sector drivers.
- Pandemic shock and rapid pivot:
- When COVID-19 hit in March 2020, mobility restrictions grounded vehicles and commerce stalled.
- SafeBoda partnered with local vendors and UN Capital Development Fund and digital experts to launch a new digital service, Shop, within two weeks.
- Scale and reach:
- SafeBoda app has more than 1 million downloads.
- Platform 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.
- Reported impacts:
- Enabled access to food, medicine, and income-generating deliveries during lockdown.
- Helped vendors increase earnings—examples include paying rent and school fees.
- Drivers reported increased earnings from rides plus deliveries.
- The service reduced exposure to COVID-19 through cashless, minimally invasive transactions and stimulated the local digital economy.
Cross-cutting lessons and implications
- Urgent need plus entrepreneurial drive can accelerate technology adoption and institutional innovation.
- Critical success factors observed:
- Strong public–private collaboration (e.g., central bank with payment providers; tea board with IT firms and brokers; SafeBoda with UN and local vendors).
- Rapid prototyping, training, and iterative deployment (days to weeks).
- Design choices that prioritize inclusivity (works without bank accounts or mobile phones in some cases; documents informal incomes).
- Crisis conditions can catalyze long-delayed modernization (e.g., 20 years of discussion around digital tea auctions accelerated into days).
- Outcomes for underserved populations:
- Extended financial access in remote and informal contexts.
- Preservation of livelihoods and continuity of critical commodity markets.
- Creation of new revenue streams and improved transparency and efficiency in market mechanisms.
STEVEN DORST, March 2021 — Digital Dollars for Online Tea, F&D
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