Digital finance crucial to achieving sustainable development goals, says UN
Unleashing the potential of digital finance could have a transformational impact on sustainable development, according to a report from a taskforce convened by the United Nations’ secretary-general.
‘People’s Money: Harnessing Digitalisation to Finance a Sustainable Future’ sets out what its authors refer to as an “action agenda” for policymakers aligned with the UN’s Sustainable Development Goals (SDGs). It says that COVID-19 presents a historic opportunity to accelerate digitalisation and “put citizens in control of finance”.
The report, published by the secretary-general’s Taskforce on Digital Financing of the SDGs, cites the positive aspects of technological developments such as mobile payments that have “transformed mobile phones into financial tools for more than a billion people”. But it warns that harnessing digitalisation “for the good” is a choice, not an inevitability driven by technology. Indeed it says that digital risks, if unmitigated, could “deepen exclusion, discrimination and inequalities”.
The report makes five proposals that align with the UN’s SDGs. The 17 SDGs – which include ‘no poverty’, ‘zero hunger’ and gender equality – were agreed in 2015 by the UN General Assembly. The aim is to achieve them by 2030.
The proposals in the 118-page report are for policymakers, organisations that govern finance and the private sector. They aim to “align the vast pools flowing through global capital markets with the SDGs”; increase the “effectiveness and accountability” of public finance; “channel digitally-aggregated domestic savings into long-term development finance”; inform citizens how to link their consumer spending with the SDGs; and “accelerate the lifeblood financing for small- and medium-sized businesses”.
Pandemic highlights digital finance potential
The taskforce, which comprises 17 leaders from policy, regulation, finance, technology and international development, was set up almost two years ago by UN secretary-general António Guterres to “recommend and catalyse ways to harness digitalisation in accelerating financing of the SDGs”. Its work has been funded by the governments of Germany, Italy and Switzerland.
The report was launched by Guterres and the taskforce’s co-chairs, Achim Steiner and Mario Ramos.
“Digital finance’s dramatic potential for transformative impact is being revealed by the COVID-19 pandemic,” said Steiner. “Digital transfers enable governments to get support to people in need, crowdfunding platforms have mobilised funds for medical supplies and emergency relief, and algorithmic lending means small businesses have quicker access to funds.
“The speed of the recent spread of these technologies is astonishing, but progress is not automatic. For digitalisation to be a true force for delivering on the SDGs, technological advances must combine with sound policy that empowers citizens and enables our financial system to meet the urgent investment challenges that must be overcome to build forward better.”
Bangladesh, Africa and the Pacific provide examples
The report outlines a number of schemes that have been initiated in association with the taskforce that, it says, “exemplify ambitious action”.
These include Bangladesh exploring how to capitalise on digitalisation to channel domestic micro-savings into investments in sustainable infrastructure, and using blockchain to improve the effectiveness and accountability in use of funds.
The report also cites M-Pesa, the mobile-phone-based money transfer service that has expanded from Kenya into other African nations and beyond as a digital finance success story that has triggered innovation in its wake.
“Launched into largely unprepared financial markets, governance arrangements and technological infrastructure, [M-Pesa’s] rapid success in itself catalysed the development of many new financial services and enabling rules and governance arrangements,” the taskforce says. “Digital foundations, such as digital ID and even basic infrastructure, are not therefore always well developed in advance of such opportunities but are catalysed by their very presence. Developing countries, often unencumbered by legacy systems, can be agile at developing and encouraging innovation.”
The report also says that regulatory sandboxes and innovation hubs should place more emphasis on the SDGs, citing the example of the Pacific Islands Sandbox.
The report is published alongside a four-page briefing for policymakers and regulators summarising what the taskforce sees as their role. This includes taking actions to accelerate government digitalisation, in particular digitalisation of payments between citizens and government and vice versa, and driving more transparency, efficiency and accountability in public finance.
About Ian Hall
Ian is editor of Global Government Fintech a sister publication to Global Government Forum. Ian also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo. Ian has an MA in Urban and Regional Change in Europe and a BA in Economics, both from Durham University.
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