World Bank execs see digital public infrastructure as catalyst for financial inclusion

Three top executives of the World Bank have argued that efforts made to facilitate digital payments during the peak of the coronavirus pandemic should be ramped up by leveraging the power of digital public infrastructure (DPI) to make digital payments by government for welfare schemes more sustainable.

In a blog post on the Bank’s website, Christine Zhenwei Qiang, director of digital development global practice; Michal Rutkowski, global director for social protection and jobs, and Jean Pesme, global director of finance, cite examples in several countries where government-to-people (G2P) payments were possible for those who had DPI in place such as databases, digital ID systems or digital payments platforms.

The authors agree that while such digital payment systems with the help of DPI created an opportunity for financial inclusion with many more people creating bank accounts or mobile wallets as was the case in Colombia and Brazil, there is need to remove certain barriers to make G2P payments more permanent and relevant.

Countries using existing digital identity systems and databases reached 51 percent of their population with support benefits during the Covid pandemic, according to the post, compared to 16 percent on average for those countries that could not.

“The collective experiences of countries which embraced digitization during the pandemic to deliver social assistance payments represents a unique opportunity for progress, but that progress cannot be guaranteed without coordinated action, learning, and investment,” the writers posit, adding that there is still a long road ahead in ensuring that these efforts translate into long-term development goals.

The trio holds that in order for governments to develop DPI as a means of supporting their digital payment endeavors, “decisive action by stakeholders across the public and private sectors” is needed, just as lessons have to be learned “from the successes and pitfalls from the COVID-response experiences to ensure programs can support long-term development goals, including the need to increase financial access points and improving financial products and services.”

To them, learning lessons from the Covid experience can be an opportunity for countries to be able to “ultimately provide the shared rails for payments streams which have the capacity to increase convenience, inclusion, and empowerment of their recipients.”

The Philippines digital ID system was not ready to be used for public payments during the country’s Covid response. The government’s challenges in delivering those payments, the authors write, prompted an acceleration of the PhilSys rollout.

During a forum organized last month on the sidelines of the United Nations 77th General Assembly, global stakeholder and donor organizations reflected on the need for global coordination and collaboration on the development of DPI as a way of helping nations meet some of the UN Sustainable Development Goals.

Article Topics

biometrics  |  digital identity  |  digital public infrastructure  |  financial inclusion  |  government services  |  national ID  |  social protection  |  World Bank