The UN Secretary-General’s Task Force on Digital Finance has today launched an Action Agenda that justifies how harnessing digitalisation can empower citizens to be in control of their finances. This will in turn ultimately align with the needs collectively manifested in the Sustainable Development Goals (SDGs).
Supported and funded by Germany, Italy and Switzerland, the Task Force brings together 17 leaders from across finance, technology, policy, regulation and international development to engage with dozens of countries and hundreds of financial institutions, governments and regulators, civil society organisations, think tanks and expert groups to envisage how digitalisation can accelerate financing of the SDGs.
UN Secretary-General António Guterres highlights that: “Digital technologies, which are revolutionizing financial markets, can be a game-changer in meeting our shared objectives. The Task Force on Digital Financing of the Sustainable Development Goals provides leadership to harness the digital revolution.” This is outlined in the UN report ‘People’s Money: Harnessing Digitalization to Finance a Sustainable Future’.
Learning from Covid-19
As the social and economic aftermath of Covid-19 has demonstrated, digital finance was of paramount importance when ensuring that billions of people around the world had the digital tools to work, spend and socialise. As a result of these learnings derived from experiencing the impact of Covid-19, the Task Force has identified opportunities in the digital finance space that can support long-term financing for SDGs.
- Aligning the vast pools flowing through global capital markets with the SDGs.
- Increasing the effectiveness and accountability of public finance that makes up a major part of the global economy.
- Channelling digitally-aggregated domestic savings into long-term development finance.
- Informing citizens how to link their consumer spending with the SDGs.
- Accelerating the lifeblood financing for the employment and income-generating world of small and medium-sized businesses.
This call to action not only breaks down what it takes to deliver these catalytic opportunities, but how investments, new capabilities and governance innovations can bolster the pathway towards achieving the SDGs. Alongside this, the Action Agenda highlights how to overcome digital risks that if unmitigated, could increase financial exclusion, discrimination and inequality.
Digital finance in action
Ahead of the launch, a number of Pathfinder Initiatives were established to showcase the influence the Action Agenda could potentially have.
Examples include Bangladesh directing domestic micro-savings into investments in sustainable infrastructure, such as roads or bridges, sanitation systems or hospitals. This would ensure significant reductions in the cost of capital, as well as economic multiplier effects as dividends flow to poorer Bangladeshi citizens.
Zimbabwe’s leading payments platform EcoCash is also working with digital investor exchange IEX and UNCDF to launch the world’s first stock exchange that pulls automatically generated payments data from businesses to provide robust due diligence and credit ratings and in turn, much-needed debt and equity financing windows for fast growing and innovative Zimbabwean SMEs.
In addition to this, the Green Digital Finance Alliance has put together a measurement framework which assesses infrastructure, policy and investments enabling sustainable digital finance. The data gathered from this framework will help formulate policy and regulatory design, which has digital finance with national SDG priorities and generate knowledge around sustainable digital finance practices.
Collaboration and consolidation
Over time, banks have invested over $1 trillion to expand, consolidate and implement emerging technologies and this is set to continue as the sector gradually progresses following the coronavirus pandemic.
The financial services industry was forced to rapidly evolve and transform digital business models under these new circumstances, which occasionally meant that leapfrogging through banks' digital transformation agendas was required.
Further to this, banks in close alignment with governments had to carry out the allocation of a large amount of credit facilities, modify offerings in support of clients’ needs and changed behaviour while also instituting rapid, flexible and effective measures to keep operations stable.
Maria Ramos, co-chair of the UN Secretary-General’s Task Force on Digital Finance says: “We have an historic opportunity to accelerate and expand the transformative impact of digitalization. In particular, digital finance, which in this crisis became the lifeline for millions across the world, extends the boundaries of financial inclusion by empowering citizens as savers, investors, borrowers, lenders and tax-payers in a way that gives them choice and power over their money.”
Achim Steiner, administrator of UNDP and co-chair of the UN Secretary-General’s Task Force on Digital Finance adds: “Digital finance's dramatic potential for transformative impact is being revealed by the COVID-19 pandemic. Digital transfers enable governments to get support to people in need, crowdfunding platforms have mobilized 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 digitalization to be a true force for delivering on the Sustainable Development Goals, 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.”