AERC-SOAS Conference Cast Spotlight on Digital Finance and Inclusion in the Time of the Pandemic

Digital finance is revolutionizing the role of financial institutions, the behaviour of financial markets, and the scope of financial instruments in developing as well as developed economies.

The African Economic Research Consortium (AERC) in collaboration with the School of Oriental and African Studies (S0AS) held a two-day conference to explore inclusive financial services policy platform in the time of Covid-19.

The digital finance revolution is in full swing. It is one of the megatrends in global finance today.

Digital finance is revolutionizing the role of financial institutions, the behaviour of financial markets, and the scope of financial instruments in developing as well as developed economies.

It is transforming our daily economic activity such as sending and receiving money, paying bills, reshaping business models, facilitating financial inclusion and driving regulatory changes.

Indeed, during COVID-19 and associated lockdown across the globe, digital finance has been the lifeboat for sustaining financial transactions and economic activity, especially in Africa and many developing economies.

However, there are many serious gaps in knowledge, policy and practice that require urgent attention.

For example, existing literature has not identified the crucial country characteristics which facilitate the use of digital finance: Why is the diffusion of digital finance, especially FinTech, high in some countries and very low in others?

In addition, notwithstanding the fact that the UN 2030 Agenda for Sustainable Development and the G20 High-Level Principles for Digital Financial Inclusion highlight the importance of digital financial exclusion in promoting inclusive growth and sustainable economic development, some research questions remain unanswered and innovations in policy and practice are urgently required.

For instance, what policy initiatives are governments putting in place to ensure that digital finance supports the growth of the private sector in developing countries, or empower women through financial inclusion, or promote financial literacy, trust, and confidence?

Speaking during the opening ceremony, H.E. Dr. Mahamudu Bawumia, Vice President of the Republic of Ghana who was the Guest of Honour at the official opening of the seminar said the Pandemic did not only uncover some of the socioeconomic vulnerabilities in our societies, but the COVID experience also highlighted some of the endless possibilities in leveraging digital technology to drive an inclusive growth powered by greater access to finance of the unbanked and a more efficient payment system.

“That the financial system plays a critical role in economic development and growth has long been established in the economic literature. Today’s conversation pushes that well-known maxim of finance and development further up in a digital ecosystem. We will all agree that the COVID-19 Pandemic did not only uncover some of the socioeconomic vulnerabilities in our societies, but the COVID experience also highlighted some of the endless possibilities in leveraging digital technology to drive an inclusive growth powered by greater access to finance of the unbanked and a more efficient payment system,” said H.E. Dr. Bawumia, Vice President of the Republic of Ghana.

The second keynote was delivered by Dr. Vera Songwe, Under-Secretary-General at the United Nations & Executive Secretary of the United Nations Economic Commission for Africa.

“Many economies in Africa remain undiversified due to low levels of innovation and investment, limited productive capabilities, and low quality of education. Financial innovation to support financial inclusion is a promising option to increase opportunities for firms and households, thus translating growth into less inequality. The private sector, as the engine of growth, can help catalyze investment in infrastructure and industrialization and so can contribute crucially to post-COVID-19 economic recovery. The digital revolution underway in Africa, currently mainly based on mobile phone networks, presents opportunities for scaling up alternative finance and sustainably developing private sector finance,” Dr. Vera Songwe, Under-Secretary-General at the United Nations & Executive Secretary of the United Nations Economic Commission for Africa said during the conference.

On his part, AERC Executive Director Prof. Njuguna Ndung’u in his opening remarks said: “The UN 2030 Agenda for Sustainable Development and the G20 High-Level Principles for Digital Financial Inclusion highlight the importance of digital financial developments in promoting inclusive growth and sustainable economic development. Digital financial transformation is a major trend in global finance and digital platforms are transforming the role of financial institutions, behaviour of financial markets and the scope of financial instruments. It is important to note that digital financial platforms are an efficient enabler of financial inclusion and financial development.”

The opening ceremony was also marked by a presentation by Professor Victor Murinde, Director of Centre for Global Finance, SOAS University of London, who launched a book on inclusive financial development.

The AERC-SOAS Inclusive Financial Services Policy Platform featured new research findings on the above issues. The event was based on the Economic and Social Research Council (ESRC) research grant under the Development and Economic Growth Research Programme (DEGRP) on “Delivering Inclusive Financial Development and Growth”.

The event brought together key stakeholders who have important roles to play in shaping new research findings, paving new policy directions, and initiating innovative practices in the areas of digital financial inclusion and sustainable economic development.

Specifically, participants from policymakers, the banking industry, private sector practitioners, financial sector regulators, and fellow researchers questioned new research findings in light of the main pressing issues in Africa and globally.