Ideas & Updates

LEARNING SERIES >> Institutional capacity-building on digital payments is needed if recommendations are to achieve sustainable national transformation

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Building capacity within government agencies that champion digital payments

Bangko Sentral ng Pilipinas (BSP) has a goal to give every Filipino access to digital financial services. In support of this, leadership from the central bank and the government has ensured the implementation of recommendations from two diagnostics conducted with the help of the Better Than Cash Alliance. Part of this work included developing a model that would enable BSP to track data to reveal how digital progress was advancing in real time, identifying any corrective actions needed to keep targets on track. To take ownership of this data model and thereby build its own capacity, the bank brought on additional team members for its payment systems oversight department. BSP has thereby become self-reliant in this data-driven digitization, following the lead of the technical assistance from the Alliance. This has resulted in the success of BSP achieving its 2020 target of 20 percent of monthly payments being made digitally.

In May 2020, the Ghanaian Ministry of Finance launched the country’s Cash-Lite roadmap, as a direct follow up from the country diagnostic. As part of the implementation process, the Alliance funded a full-time resource within the Ministry of Finance. We also helped to set up the digital payments coordination unit responsible for implementing the roadmap’s recommendations and facilitating government-led digital finance initiatives. These initiatives build on others, led by the Vice President, that have proved crucial enablers of accelerating digital payments, including mobile money interoperability, digital identification, and a digital address system.

100+ statisticians from Senegal’s national bureau of statistics were trained by the Alliance to do data validation

In the case of the diagnostic for Senegal, its Agence Nationale de la Statistique et de la Démographie (national bureau of statistics) spearheaded the data collection and analysis itself (rather than an external consultant doing it). This ensured the full support and ownership of the government to further develop its digital transformation agenda. The Alliance trained over 100 statisticians from the bureau to do the data validation across 20 economic sectors representing over 2,000 companies and individuals. In addition to having the capacity to collect these data towards digitization, Senegal has also created a government unit to nationally coordinate the uptake of digital payments.

The Alliance collaborated with the National Bank of Ethiopia (NBE) to draft the National Digital Payments Strategy (NDPS). Approved by the Council of Ministers, the strategy will be implemented over the next three years. Based on one of the recommendations, a unit within the NBE has been created to lead the payments directorate. Some of the directives were developed in partnership with United Nations Capital Development Fund (UNCDF), including expanding agent banking services and paving the way for fintechs to participate in the provision of financial services. We are continuing to work with NBE to build and strengthen its capacity to coordinate and implement Ethiopia’s national strategy effectively. This includes building the necessary project management tools and ensuring institutional capacity for the collection and analysis of gender-disaggregated data, which helps guarantee inclusion.

Diagnostics facilitate evidence-based and data-driven decisions, and lead to more value

For the Philippines and Senegal, the diagnostics developed with the support of the Alliance have been especially useful in prioritizing payment streams and use cases. In the Philippines, BSP is now able to use its diagnostic to stimulate pathways to sustainable digitization based on reliable findings. BSP has upgraded the model behind the diagnostic and developed a data-collection framework that enables it to independently update data at more regular intervals. The core team at BSP has been trained to update this model, too, guaranteeing that data are collected directly and consistently from the supply side for quarterly updates and ensuring that the information is continually relevant to measuring progress against digitization plans in the Philippines. 

Digital payments have helped to transform the Senegalese healthcare sector, with the launch of an innovative digital payments system for its universal health insurance agency. This supports the government to achieve 75 percent universal health coverage for its population. Members of the community are now able to pay for healthcare plans for themselves or their family members digitally and remotely. In Senegal as in many parts of the world, an illness can push entire families into poverty, so ensuring access to coverage through digitized payments is transformative for people. The payment platform has also helped to streamline remittances sent home by Senegalese people living abroad, to support their relatives’ healthcare costs – the Ministry of Economy estimates these remittances amounted to more than US$85 million in 2017  

100% of SSN payments to 8.7 million beneficiaries have been digitized by the Government of Bangladesh

In Bangladesh, the 2021 diagnostic has picked up on some of the lessons learned in the implementation of the first diagnostic from 2016. That first report guided the strategy for digitizing social safety net (SSN) payments, which at the time were all being made in cash. This was a manual process in which funds were transferred to executive officers’ accounts in every union and the cash was disbursed from bank branches – usually a long way from where beneficiaries lived. In the five years since, however, 100 percent of SSN payments to 8.7 million beneficiaries across the country have been digitized by the Government of Bangladesh. Today, beneficiaries receive payment into their own accounts through mobile financial services, and this has cut their travelling times and costs, made the process more transparent, and prevented the leakage of funds. Some challenges have emerged during this implementation, however, due the low levels of digital financial literacy among people using these services, including problems with PIN management and the potential for fraud. The latest 2021 diagnostic for Bangladesh aims to address such issues that can emerge after digitization, in line with the UN Principles for Responsible Digital Payments also published this year.

The process of building sustainable institutional capacity to drive the digitization agenda is challenging but rewarding. The ability of governments to implement recommendations from diagnostics relies on their continued efforts and sufficient capacities to manage and coordinate resources, and on an efficient data-collection process. Success in the diagnostic process and in the implementation of digital payment recommendations in priority areas can inspire opportunities for further digitization efforts that will drive change and contribute to the advancement of Sustainable Development Goals.

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The views expressed in the United Nations-based Better Than Cash Alliance blogs are those of the author(s) and may not necessarily reflect the official position of the organization.