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Central Bank Digital Currencies in Emerging Economies

Central Bank Digital Currencies
Financial exclusion remains a challenge in many low-income countries. This is especially true in rural areas, which do not have easy access to banks. Even in areas with bank branches, community members may find themselves excluded because many low-income countries have a small financial sector with few financial institutions. The lack of financial accessibility results in high interest rates and expensive charges for ATM use and other transactions. Central Bank Digital Currencies (CBDCs) are a dynamic tool in providing solutions to improve financial inclusion.

What are Central Bank Digital Currencies?

Central Bank Digital Currencies is digital fiat currency (or national currency, such as the peso or naira) that the central bank regulates. Currently, only nine countries have launched CBDCs. The Bahamas was the first country to do so, in October 2020. However, 16 countries are developing them and 40 countries are researching the possibility of instituting them. The potential of central bank digital currencies in emerging economies is particularly strong.

Why Central Bank Digital Currencies in Emerging Economies?

Central banks across the world are considering launching CBDCs for various reasons. For one, the rising influence of digital currency has created the conditions in which central banks could lose control of currency regulation, as well as increasing preference for digital payments over cash. However, there are several unique reasons why central bank digital currencies in emerging economies are especially relevant because of the ways they can expand financial inclusion.

  • Cross-border payments can be faster, more affordable and more secure. Traditional cross-border payments are expensive and inefficient. According to The Economic Times, “The global average cost for sending remittances (0f $200) in Q1 of 2021 stood at 6.38%. There are often time lags for cross-border fund transfers, during which counterparties are exposed to credit and settlement risk.” CBDCs could help expedite cross-border payments and eliminate some of the associated costs. Because many households in emerging economies depend on remittances as a substantial source of income, CBDCs could make making and receiving them much easier on low-income individuals.
  • Central Bank Digital Currencies in emerging economies could serve the unbanked population. The digitization of currency has ensured the safe and easy accessibility of accounts and payment services. The rise of digital currencies has also seen a decrease in the number of unbanked people.

Looking Ahead

Financial inclusion is vital to social inclusion and combats poverty and income inequality by offering financial opportunities for low-income people and those involuntarily excluded from the financial market. The World Bank’s goal of ending extreme poverty by 2030 includes the key component of reducing income inequality. CBDC initiatives provide a dynamic tool in addressing income equality.

More countries are updating their financial framework and promoting digital financial literacy. For example, Aadhaar, India is developing a digital ID system that will encourage undocumented people to join the financial sector. This could ultimately provide secure transactions for those typically excluded from the financial market. Strengthening innovative financial frameworks such as CBDCs encourage a more equitable and inclusive global regulatory system.

– Jennifer Hendricks
Photo: Flickr

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GoodDollar Promotes Universal Basic Income

GoodDollar
GoodDollar is both the name of an Israeli cryptocurrency and a not-for-profit company launched in 2020. Cryptocurrency is an immaterial system of money that has secure coding. Additionally, people can exchange it virtually and governments do not control it. Yoni Assia is the mind behind the GoodDollar project and coin (G$), the virtual currency that intends to democratize the economy by working to promote universal basic income and reduce inequality. Universal basic income (UBI) is “a periodic cash allowance given to all citizens… to provide them with a standard of living above the poverty line.” Here is some information about how GoodDollar promotes universal basic income (UBI).

GoodDollar’s Mission

According to Forbes, 80% of the population owns only 6% of the world’s wealth, while the remaining 20% owns the rest. Against this unfair backdrop, GoodDollar is a potential game-changer through how it promotes universal basic income.

Yoni Assia believes that “too many underprivileged people are locked out of opportunities that could take them out of poverty, including access to capital markets and digital work opportunities. Therefore, the GoodDollar project aims to alleviate that by fostering financial inclusion and empowerment around the world.” The creator of GoodDollar is also the founder of eToro, a social trading company and platform, which is responsible for investing $1 million in the new cryptocurrency.

How GoodDollar Works

GoodDollar can benefit anyone who signs up and creates an account (a wallet). For that, people need to record a short video to ensure that they are real humans, not bots, and they can complete the entire sign-up process in less than 5 minutes. There are two groups of users, claimers and supporters. Claimers are people who benefit from free digital cash (G$) without the need to invest any amount, being allowed to claim it every day and use it to pay for goods, services and exchange it with friends. Up to now, 255,000 claimants have received G$180 million, totaling more than $20,000. Supporters are both companies or regular people that believe in the UBI cause and fund a mechanism that generates interest (the DeFi — decentralized finance, protocol).

Interest generates in a blockchain, a kind of extremely safe digital information record system, and becomes the reserve of G$ coins to that undergoes distribution among claimers and supporters. The supporters benefit not only from the interest generated by their initial staked amount, but also the interest generated on top of the previous interest rate. Currently, only small businesses accept G$ coins, and they are not very valuable. However, as more people join the GoodDollar movement, its value will rise.

Hope for GoodDollar’s Growth

“Inequality plagues the world. Let’s solve for it in our future,” is a statement on GoodDollar’s website. The company is still in its early stages, but getting ready to release version 2.0 of the GoodDollar protocol. In the first year of the second version, it plans to distribute around $47,000 worth of G$. AI Multiple’s review on GoodDollar points out that, to grow and make a real difference in its users’ lives, GoodDollar needs to have more supporters and a G$ reserve that grows “faster than the number of claimers.”

The more people use this cryptocurrency, the more valuable it will become. If “a public figure sheds a light on it via their social media platforms or accepts it as a payment method for a business product or service, that could boost its popularity.”

A Promising Future

The Forbes article discusses how basic income distribution could help to reduce the financial inequality that the pandemic exacerbated, and the GoodDollar team has been working hard to make it a reality someday. While the future of the project depends on a combination of factors, blockchain solutions like GoodDollar are undeniably promising and revolutionary economic models.

Tal Oron, GoodDollar project director, hopes that within a few years, “GoodDollar [will distribute] $2 a day per person, and, together, as a global community, without government support, raise hundreds of millions of people above the poverty line.” The way that GoodDollar promotes universal basic income will only benefit people globally.

– Iasmine Oliveira
Photo: Flickr

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Digital Finance Sources in Developing Countries

digital finance sourcesIt is no secret that cash is becoming more and more obsolete in developed nations. Venmo, Cash App, Square, PayPal, Zelle and Google Pay — none of these popular money transfer services require a physical transfer of cash. The onslaught of a global pandemic has only accelerated the shift to cashless transactions amid efforts to minimize physical contact. China is rapidly moving forward with central bank digital currency (CBDC) trial rollouts while the United States Federal Reserve is conducting ongoing research to potentially develop its own CBDC, a “Digital Dollar.” In lower-income nations, digital finance sources have the potential to transform economies.

Digital Finance in Developing Countries

In developed countries, the notion of an entirely cashless society is not far out of reach. However, the story is very different in developing nations. Many individuals are excluded from participating in even the most basic financial systems and instead rely primarily on physical cash. As of 2017, about 1.7 million adults globally were “unbanked.” This means they lacked any account with a financial institution or mobile money provider. This is nearly one-fourth of the world’s population.

Some of the most commonly cited barriers to account ownership include insufficient funds and inaccessible banking services. Virtually all unbanked adults live in developing economies, with women over-represented among this cohort. Digital finance services delivered via mobile phones, the internet or cards, function as a means of including these unbanked populations. The benefits of digital financial inclusion are prolific.

Digitizing Financial Inclusion

The strong link between financial inclusion and a wide array of global development goals is becoming increasingly clear. Significantly, seven of the 17 U.N. Sustainable Development Goals for 2030 explicitly mention financial inclusion as central to achieving these objectives.

Digital technologies offer financial services at lower costs, fostering opportunities for large-scale inclusion by enabling institutions to serve lower-income customers profitably. Such broadened financial access can sustainably transform emerging economies. A 2016 report by the McKinsey Global Institute estimated that digital finance alone could boost the annual GDP of all emerging economies by $3.7 trillion by 2025 due to productivity gains of businesses and governments.

Digital services include those such as M-PESA, a mobile phone-based transfer, payment and micro-financing service. Mobile money has lifted an estimated 196,000 Kenyan households out of extreme poverty from 2008 to 2016.

The Benefits of Digital Finance Sources

  • Increased Security: Digital footprints provide greater transparency and hold individuals and institutions accountable, reducing vulnerability to fraud and corruption.
  • Time and Cost Savings: Digital services are quicker and more efficient, lowering costs for both providers and consumers.
  • Financial Inclusion: The lower costs and convenience of mobile services make them accessible to more people, including those living in remote or rural areas.
  • Women’s Empowerment: Women with access to financial services like loans, savings accounts and mobile payments can achieve independence. It has been found that women with digital savings accounts also spend more on development endeavors like education.
  • Higher Tax Revenues: Digital finance has been proven to increase tax-paying compliance, and in turn, government revenues.

Given the wide-ranging benefits of digital finance sources, it is clear why many organizations are attempting to accelerate the transition from cash-based to digitized economies in the developing world. A growing number of groups such as the U.N.-based Better Than Cash Alliance are working to extend the reach of financial services by using digital technologies to go where physical banks cannot, bringing access to mobile money, savings accounts, credit and insurance to the under and unbanked. Digital finance is more than a trend of modern societies. It is a vital tool for achieving inclusive and sustainable development in emerging economies that are still far from being cashless.

– Margot Seidel
Photo: Flickr

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How Financial Inclusion Can Fight Poverty

Financial inclusion can fight povertyRoughly 1.7 billion adults around the world are unbanked and most unbanked adults live in developing countries. Unbanked people have limited political, economic and social power and influence. For roughly half of the world’s unbanked who come from the most impoverished 40% of households in their economies, inaccessible financial services compound problems of poverty. Financial inclusion can fight poverty as it opens doors for people to improve their lives. The pace of technological advancement around the world is bringing universal access to financial services closer to fruition.

The Global Unbanked

Unbanked people are not connected to any type of financial institution. The most commonly cited reasons for being unbanked are not having enough money, account expenses, the distance of financial services and insufficient documentation. Nearly half of the unbanked population falls into just seven economies. The highest numbers of unbanked people are in China and India. It can be clearly noted that banking and poverty are closely related.

“Financial tools for savings, insurance, payments and credit are a vital need for poor people, especially women, and can help families and whole communities lift themselves out of poverty,” says Melinda Gates. Without a bank account, people cannot sufficiently save and the cash is not well protected. The digital economy also has the benefit of keeping a clear record of financial activities, which banks can use when underwriting loans. Loans are among the financial tools that are essential to financial growth and stability.

The Gender Gap

Women make up the majority of the unbanked population in most developing countries. Women may face deepened or additional gender-based barriers to account ownership, rooted in financial institutions, governments or society.

Financial institutions often lack products and policies that are gender-inclusive. For instance, women may find it difficult to obtain the identification or the assets needed to open and maintain an account, sometimes due to government-enforced barriers. Additionally, banking-related expenses are also a burden for women looking to enter the formal economy. Finally, the responsibility of unpaid household labor, along with barriers to education, keep many women from earning enough money to access financial services.

The Societal Roles of Women

Women may earn sufficient money but could be part of society that does not allow for them to connect to a financial institution.

For instance, the tradition of men being the head of household and in control of the finances leaves some women with little to no influence in matters of money. Approximately one in 10 women in developing countries are not involved in spending decisions involving their own earnings.

Women’s Empowerment for Poverty Reduction

Women must be part of financial inclusion efforts as they are integral to fighting poverty. Bill Gates explains that women are most likely to be behind the decisions that benefit the family. More women-led businesses and reduced inequalities are ways that an emphasis on financial inclusion for women can further a nation’s development.

Financial Inclusion Using Fintech

An emerging industry is making strides in financial inclusion. Financial technology (fintech) can be described as technological innovations in the processes and products of financial services. Fintech offers solutions to many of the problems at the root of financial exclusion. A fundamental problem is the lack of time or money to travel to distant financial institutions. Fintech has given users the convenience of accessing their accounts and financial services on a mobile device.

Fintech development has been gaining momentum since the COVID-19 pandemic began. Touchless transactions and banking reduce the risk of transmitting COVID-19 and have led many to embrace digital payment, in business and in personal practice. Fintech leaders are proving that underserved communities can be reached through financial technologies. Significantly, this helps foster financial stability for the formerly excluded.

Female-led fintech, Oraan, is working toward financial equality in Pakistan because women make up 48% of the population but only 6.3% of the formal economy. Oraan developed a platform that allows for digital savings groups. Savings groups can help empower women and ensure financial equity as they are well-established financial tools.

The Road to Universal Access

Because financial inclusion can fight poverty, digitized financial services are an effective way to improve access and inclusion. Online banking communities are empowering individuals and opening up opportunities for economic growth. By facilitating conversations about finances, informing underserved groups on the best financial practices and ensuring digital finance infrastructure is accessible, the world can make greater strides toward financial inclusion.

– Payton Unger
Photo: Flickr

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The WomenConnect Challenge: 9 Innovative Projects Empowering Women

Innovative Projects Empowering WomenIn a booming technological world, the gender digital divide continues to suppress women’s access to technology and the global economy. In low- and middle-income countries, women are 10% less likely to own a mobile device than men and are 23% less likely to use the internet. A 2019 report from the GSMA highlights four main reasons for the divide, including affordability, literacy and tech-literacy rates, safety and security and relevance to daily life. The report also estimates that closing the digital divide in just mobile internet usage by 2023 could increase GDP growth by $700 billion in low- and middle-income countries over the next five years.

Through the U.S. government’s Women’s Global Development and Prosperity Initiative (W-GDP), presidential advisor Ivanka Trump and USAID Administrator Mark Green launched the WomenConnect Challenge. With this funding, initiatives seek to shrink the barriers of digital illiteracy and “technophobia” fueled by a lack of complex resources, such as Internet access or formal education. That these barriers unequally limit women and girls leaves entire populations further and further behind in an increasingly digital world. In the first round of the challenge in 2018, USAID awarded more than $2 million to an initial nine innovative projects empowering women and closing gender-based digital divides. The W-GDP initiative hopes to connect 50 million women in developing nations by 2025.

The First Projects that Received Funding

  1. Mali Health – Launched in 2019, the Mali Health application’s trial run proved useful in the lives of 65 women, most of whom live under the poverty line. The women were provided with a smartphone as well as training on the app’s features. The app allows users to search for medical information, advertise their small businesses and connect with larger markets using voice navigation in their native language. An upcoming feature will allow users to voice-record their medical questions and receive a recording back from a doctor. Surveys from the trial run indicate that innovative projects empowering women with knowledge and information boost women’s views on gender equality.
  2. GAPI and Bluetown – GAPI-SI and technology partner Bluetown established the Women in the Network program in Ribaue, Mozambique in late 2019. The project created content “clouds” for locals to access at lower costs than traditional network access, as well as a rent-to-own cell phone program. Additionally, the program is training a team of Ribaue women in technology and internet use so that they may bring this knowledge to their peers and promote widespread connectivity.
  3. GramVaani – Meri Awaz Meri Pehchan, or “My Voice My Identity,” is an app from GramVaani enabling women to connect with other women and spread important information securely in Bihar, India. The application is voice-based, removing the literacy barrier from the equation. Women are trained as “reporters” and visit rural communities to play informational recordings. They gather voiced comments on topics ranging from government programs and water availability to women’s rights. Innovative projects empowering women such as GramVaani make an impact through the dissemination of knowledge, a resource that cannot be taken for granted.
  4. Viamo – The Calling all Women program from Viamo makes use of a voice-based informational platform called the 3-2-1 Service, which allows individuals to share valuable information for free on topics like health, hygiene and financial literacy. The information has reached more than 150,000 people in Tanzania and Pakistan. Additionally, Viamo’s program includes recorded lessons for women on mobile technology and the internet to help bridge the gender digital divide.
  5. Humanitarian OpenStreetMap Team (HOT) – HOT’s project #LetGirlsMap trains women and male allies to map data from Tanzanian villages and report significant issues via mapping platforms. The program has reached 78 villages and has partnered with schools to gather and disseminate knowledge on gender-based violence and economic literacy. Such innovative projects empowering women and girls help them to confront gender norms and inequality while learning about technology and the economy.
  6. Evidence for policy design (EPoD) India at the Institute for Financial Management and Research (IFMR) – EPoD’s project Mor Awaaz utilizes a preexisting government program that is distributing 2 million mobile phones to women in rural India. Mor Awaaz offers training and voice recordings for women on technological literacy and has reached 11,000 women so far, eliminating barriers like caste, mobility and affordability.
  7. AFCHIX – Innovative projects empowering women like AFCHIX are addressing inadequate internet access in impoverished communities. AFCHIX created four women-led “community networks” in Kenya, Namibia, Morocco and Senegal. In these countries, women in community networks lead development projects to bring internet access to their communities and learn the skills needed to upkeep the hardware. The women serve as both technicians and role models.
  8. Equal Access International – Based in Northern Nigeria, Equal Access International created the Tech4Families program to address the cultural norms that prevent women from accessing technology. Tech4Families launched a radio production in August 2020 consisting of 12 episodes that teach listeners about the benefits of technology and justify women’s use of technology via religion and social concepts. The program will be meeting with families to discuss the show’s impact and the next steps toward destigmatizing the idea of women in tech.
  9. Innovations for Poverty Action (IPA) – Low-income women in the Dominican Republic are often unable to access credit from financial institutions because they do not have a credit score. IPA, along with the World Bank, a couple of American universities and other institutions use machine learning and specialized algorithms to redo the credit-earning criteria for women, separately from men. This will allow more women to gain financial credit. Many women state that they will use the money for entrepreneurial endeavors, feeding their families and investing in education.

– McKenna Black
Photo: Flickr

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UPI in India: Changing Banking for Millions

UPI in India
In 2016, the Unified Payments Interface (UPI) system launched in India. Its goal was ambitious: a level playing field for small businesses and impoverished communities through re-imagined banking. In the midst of a global pandemic that has forced a socially distant lifestyle, UPI has never been more important nor more successful.

UPI’s Humble Beginnings

UPI’s primary purpose was to become an online platform that would eliminate bureaucratic and socioeconomic barriers to financial transactions. The goal was to allow anybody, from small Kickstarter businesses to multinational banks, to have the same access to banking capabilities.

UPI creates a standard set of rules for everybody on the platform—all Indian banks have access. Thus, smaller banks have equal opportunities to reach people as big ones. This goal is feasible due to UPI’s innovative techniques. With UPI, the party collecting money from an individual is decoupled from that individual’s bank account. This allows third-party apps such as Google Pay, PhonePe and Amazon Pay to collect and administer transactions without excess burden to the customer.

UPI makes things even more consumer-friendly by eliminating the need to enter long bank account and routing numbers for transfers. A virtual payment address, a simple username akin to an email address, replaces detailed information.

Finally, it is important to note that UPI serves a myriad of functions in the financial world. Simple peer-to-peer monetary transactions are carried out seamlessly. Advanced maneuvers are also handled with ease, including merging banking features from different banks, micro pensions and digital insurance.

UPI’s Growth

Since its launch, UPI has seen tremendous growth in both users and the number of transactions. Its user base is strong—recent numbers indicate over 100 million users. Its goal is to reach 500 million users by 2022. While this seems ambitious, early critics of the program did not expect UPI to gain the traction it has already.

The novel coronavirus impacted UPI both positively and negatively. During the worst of the lockdown, UPI’s transaction count decreased. People staying at home lowered demand for the platform’s services. However, since May 2020, UPI has boomed in both the number of transactions and the amount of money transferred. The number of transactions grew by 12% in July 2020, with 1.49 billion in the month of July 2020. UPI saw 822 million transactions in July 2019, indicating exponential growth during the last year. Similarly, the amount of money transferred in July 2020 was up to 2.9 trillion Indian Rupees, while July 2019 saw only 1.46 trillion Rupees.

As of July 2020, UPI reports services at 164 banks across India. With service 24 hours a day, seven days a week, UPI is lengthening its reach and its impact on the financial marketplace of India.

Looking to the Future

Looking forward, COVID-19 has provided a new opportunity for UPI and digital banking in general. India wants to decrease the amount of physical currency in circulation, and the pandemic has shown many people the virtues of online banking. For example, young adults wary of infecting their older parents have helped an older generation get on UPI and utilize everything it has to offer.

UPI’s recent boom focuses back to the platform’s original goal: creating an even playing field for all people, regardless of background or socioeconomic status. In 10 or 20 years, it would not be surprising to see all banking conducted virtually. Therefore, it is crucial to create a solid infrastructure that eliminates a system of preferential treatment based on wealth. UPI is helping to fight that fight.

– Evan Kuo
Photo: Flickr

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4 Ways Digital Currency Can Improve the African Economy


Since the beginning of the digital age, there have been several advances in the world of digital currency. From mobile banking apps to mining for cryptocurrency, the use of physical bills and coins is becoming less common. The potential of this new technology in developing countries, particularly for those in Africa, cannot be ignored. Here are four ways digital currency in Africa can improve the economy.

4 Ways Digital Currency in Africa Can Improve the Economy

  1. Transferring money is easier and faster when combined with technology. For those who cannot waste time waiting for money to travel from one location to another, digital currency in Africa would allow for conveniently instantaneous transfers. Additionally, more companies are taking notice of the strong potential market for digital currency in Africa and the positive impact it could have on citizens and businesses. Airtel Africa, a telecommunications company serving East, West and Central Africa, has recently partnered with Mukuru, an online remittance company, allowing Mukuru customers to instantly send money transfers directly to Airtel Money customers across 12 African countries. This means that people can make intra-Africa payments from Southern Africa, where Mukuru has a major presence, to other nations in Africa. Users would also benefit from no longer going to an agent to receive international payments physically. Once Airtel Money customers receive the money, they can use it to pay bills, purchase goods and services or even cash out at one of Airtel Africa’s branches or kiosks. This will allow African citizens to get the most out of their money.
  2. Managing personal income leads to greater financial literacy. As the use of digital currency spreads, people are increasingly exposed to the language of business as well as standard banking practices. For those living in countries with low financial literacy rates, this could be the difference between economic stability and poverty. The implications of digital technology in Africa are astronomical due to the previous lack of education on these financial principles across the continent. In Somalia, the current rate of financial literacy is estimated to be 15%. On the other side of the spectrum, Botswana has a rate of over 51%—the highest in all of Africa. With this first-hand knowledge, more people will be able to learn how to manage their finances properly.
  3. Digital currency allows for more connections between African citizens and the rest of the world. The use of digital money transfers not only allows those living in Africa to pay and request money from people within their continent but also those around the world. With the recent partnership between Airtel Africa and Mukuru, small business owners in Africa can now establish business relationships with people in Europe, Asia and the United States, among others. As these relationships continue to grow, the digital currency can flow freely between Africa and the rest of the world, opening the continent up to high-dollar investments from more developed regions and, in time, lead to a potential rise in the African economy.
  4. More women have access to their finances. Only 37% of women in Sub-Saharan Africa have a bank account compared to 48% of men—a gap that has only widened in the past few years. The numbers are worse in North Africa, with around two-thirds of the adult population remaining unbanked and the gender gap for access to financial education standing at an 18% difference, the largest in the world. However, with the rise of digital technology in Africa, more women can become empowered and take control of their finances. Female entrepreneurs rarely apply for loans as a result of low financial literacy, risk aversion and fear of losing their businesses. If these women were to utilize digital banking technology, they would be able to pay employees, investors and, most importantly, themselves more efficiently. As more and more women manage their finances, they will be able to lift themselves out of poverty and strengthen their local economies.

As digital currency in Africa continues to flourish, more entrepreneurs, families and willing investors will be able to witness the rise of the African economy. Money transfers and online banking will likely support the growing economy as it joins the rest of the world in the technology age. With continued global support, African citizens will be able to lift their economy to new heights.

– Daniela Canales
Photo: Flickr

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Digital Cash Transfers in Cote d’Ivoire

Digital Cash Transfers in Cote d’IvoireCote d’Ivoire had been consumed by civil conflict at the beginning of the century. However, the conflict ended in 2011, soon after the election of Alassane Ouattara. Since then, Cote d’Ivoire has been one of the fastest-growing countries in the world. However, its growth has failed to reach large portions of the population as the country still struggles with a 46.1 percent poverty rate while an additional 17.6 percent of the population lives on the edge of poverty. In 2014, the World Bank Group started working to initiate digital cash transfers in Cote d’Ivoire to assist the poorest and most disconnected.

The Rise of Mobile Money in Cote d’Ivoire

From 2012 to 2018, the number of active mobile money users grew from less than 1 million to more than 9 million. Of note, the number of mobile cellular subscribers increased from 18.1 million to 33.81 million during the same time frame. With a population of less than 28 million, it is evident how popular the use of technology is becoming in the country. Ivorians have adapted to using mobile money for several reasons:

  • Person-to-person cash transfers in Cote d’Ivoire are easy to operate.
  • Due to high fees and the historic failure of several banks in the country, more Ivorians are turning away from licensed financial institutions. In 2017, 34 percent of Ivorians had mobile money accounts compared to 15 percent with bank accounts.
  • There is a rising trend in the digitalization of secondary school feels.
  • Migrants are digitally transferring remittances back home.
  • Paying bills digitally is growing.

How the Cash Transfer Program Works

According to the World Bank, the program operates as follows: “(i) a targeting system for cash transfers; (ii) a social protection household registry; (iii) a cash transfer payment system using digital mobile money technology; and (iv) management information system and capacity-building.”

For the actual transferring of money, the government of Cote d’Ivoire has partnered with the digital financial service organization, Orange. The Account of the Ministry of Social Protection sends a wire transfer to Orange. Then, it creates e-money and puts it into the digital accounts of the intended recipients. The recipients can then access and use their money electronically or cash-out.

Initial Constraints of the Program

Despite the widespread use of mobile devices in the country, there are a few issues with the implementation of the program. Many beneficiaries already owned mobile phones. However, others are given a device through which the program struggled to adapt. Financial literacy has been another issue as some beneficiaries are unsure about how much to withdraw and how much to save. Moreover, the lack of understanding of the importance of the PIN number resulted in some beneficiaries sharing sensitive information, thus compromising their accounts. Regulatory issues such as the requirement of a state-issued ID also created challenges in ensuring beneficiaries are eligible to continue to receive their transfers.

Successes of the Program

Peer-to-peer and community-oriented training focus on increasing knowledge surrounding the operation of devices and building awareness about security best practices with accounts. Those without a proper state-issued ID have been informed on how to obtain one. In addition, exemptions have been provided which allow beneficiaries to designate a trusted transfer recipient within the household or community. This led to 100 percent of beneficiaries receiving their payments in 2018.

By going digital, administrative and transactional costs are limited. As of April 2019, 300,000 poor individuals have benefitted from the program, more than half of whom are women. Additionally, as of the same date, 720,000 individuals have been registered with the social program’s registry. This expands the number of potential future social program beneficiaries.

Overall, the implementation of cash transfers in Cote d’Ivoire is an excellent example of how technology can assist those who are most financially vulnerable and most disconnected from the rest of society.

– Scott Boyce
Photo: Flickr