“Africa Policy Accelerator” project to address the regulatory barriers to digital financial services
UNCDF is partnering with the Bill and Melinda Gates Foundation on an “Africa Policy Accelerator” project to provide better digital financial services to millions of people. The project leverages UNCDF's presence in Africa and its regulatory technical assistance capacity.
Project background
The potential impact of implementing DFS regulatory reforms in Sub Saharan Africa (SSA) is considerable. The last Global Findex in 2017 found that 57.4% of adults in SSA do not have a formal financial account. At least 416M adults in Sub Saharan Africa are either unbanked or underbanked. The large-scale use of digital financial services in Africa has shown the potential to provide better services to millions of people who need them. Governments play an important role in facilitating better access, namely through smart policy and regulatory reforms.
Key regulatory constraints include lack of licensing for non-banks to offer payments and deposit accounts, restrictive agent regulations, which prevent the expansion of distribution networks, and account opening requirements which make it difficult for poor people to access DFS.
The UNCDF Policy Accelerator is uniquely positioned to work with governments to address these constraints and unlock the benefits of DFS.
Project goals
1. Support countries across SSA and North Africa in adopting DFS regulatory and supervisory frameworks
The frameworks will:
Enable a competitive and inclusive DFS ecosystem
Protect consumers and the financial system
Increase government commitment to DFS as an economic development enabler
Create foundations for regional finance and trade harmonization
Deepen capacity and familiarization with DFS models and risk management tools
2. Support regulators and policymakers
We will support regulators and policymakers by:
Guiding policy development through careful consideration of policy choices, their potential market impact, and alignment with industry incentives
Ensuring evidence-based decisions by using systematically collected market data (both supply and demand) to inform regulation and guide policy priorities
Enabling constructive public/private dialogue among stakeholder to regularly discuss specific market constraints and align public and private incentives
This also includes dialogue among regulators, to clarify jurisdictions, share data, and rally behind a common economic vision
Facilitating exposure to global practice so local regulators understand their choices in the context of emerging trends and how these can be applied (or avoided) in their domestic markets
Deepening familiarity with inclusive DFS that helps different actors in the government to understand the broad impact of DFS on various elements of the ecosystem that drive inclusivity
3. Release a public version of our “technical assistance toolkit” that regulators and policymakers can use to guide their work on digital financial services and financial inclusion
We plan to start releasing our technical assistant toolkit at the end of 2020.
Project partners
The Africa Policy Accelerator project works in close coordination with several partners, including CGAP, World Bank Group, Better Than Cash Alliance, Alliance for Financial Inclusion, and United Nations Secretary General’s Special Advocate (UNSGSA) for Financial Inclusion.
For more information, please contact:
Ahmed Dermish: ahmed.dermish@uncdf.org
Authors
Ahmed Dermish
Alexis Ditkowsky