COVID-19: Team Europe supports African, Caribbean and Pacific countries to access finance through digital technology

This article is brought to you in association with the European Commission.

The European Commission, together with the Organization of African, Caribbean and Pacific States (OACPS), has signed today a new initiative of €14.5 million with the United Nations Capital Development Fund (UNCDF) to unlock the potential of digital finance to benefit more than 600,000 women, youth and entrepreneurs across African, Caribbean and Pacific countries.

“Today more than ever, digital technologies have a central role to increase access and usage of affordable financial products and services that meet people and business needs as well as accelerate economic recovery from the coronavirus pandemic. This is why, as reflected in our EU Strategy with Africa, we want to join forces with Africa to foster a digital transformation that also helps us close the digital gender divide”, said Jutta Urpilainen, Commissioner for International Partnerships. “If we want to achieve the Sustainable Development Goals, digital solutions are key to create more jobs and improve basic services such as health and education.”

“Our work responding to COVID-19 in 2020 showed that access to digital finance and infrastructure was a major determinant of how resilient societies and businesses were in the face of the shocks caused by the pandemic”, said Henri Dommel, UNCDF Director of Financial Inclusion. “This partnership with the EU will boost the response to the pandemic and economic recovery of ACP countries using digital finance as a tool to reach the last mile.”

Mobile money is the provision of financial services through mobile technologies. It allows paying bills and getting money by using mobile apps. It also creates new opportunities for businesses and individuals while growing in all regions of the world, both in urban and rural communities. Nevertheless, there is a long way to go as 1.7 billion adults remain unbanked, especially women and youth. This represents 46% of adults in the developing countries. Thanks to this EU funded initiative, UNCDF will support key policy reforms for digital transformation as well as create inclusive financial services tailored to the needs of women and youth, including innovative savings products and credit.

The joint action will be implemented in different countries in Africa (Gabon, Niger, Malawi and Ethiopia) as well as in the Caribbean (Trinidad and Tobago and Eastern Caribbean States) and in the Pacific region (Vanuatu, Samoa, Timor Leste, Tonga and Fiji).

This initiative is fully in line with the recent launch of the new Digital 4 Development Hub, aimed at building strong ties across the globe to make the digital revolution an opportunity for everyone.

Background

The coronavirus global health crisis is severely harming livelihoods and sending hundreds of millions into poverty. Although economic recovery appears far off, the crisis has also encouraged incentives for economic transformation, demonstrating the immediate benefits of financial inclusion. In spite of the progress made in the past ten years, supporting digital finance is critical for governments and people to create a conducive ecosystem for economic recovery and provide a tangible response to coronavirus.

Although much is still unknown on the socioeconomic consequences of coronavirus on women and youth, the disease is especially harming those who generally earn less, save less, hold more insecure jobs and therefore have less capacity to absorb economic shocks. The situation of women and youth in Least Developed Countries (LDC) is likely to deteriorate faster than in more developed countries.

The UN Capital Development Fund (UNCDF) makes public and private finance work for the poor in the world’s 46 least developed countries. UNCDF offers ‘last mile’ finance models that unlock public and private resources especially at the domestic level, to reduce poverty and support local economic development. The UNCDF strategy ‘Leaving no one behind in the digital era’ is based on over a decade of experience in digital financial inclusion in Africa, Asia and the Pacific. To achieve this vision UNCDF uses a market development approach and continuously seeks to address underlying market dysfunctions that exclude people living in the last mile.