The group of the 19 most advanced economies in the world, the European Union, and mostly recently the African Union, the G20, has published a policy guide on how the development and deployment of digital public infrastructure (DPI) can advance financial inclusion and productivity gains in the Global South.
The 78-page document, produced by the World Bank and the G20 Global Partnership for Financial Inclusion (GPFI), examines DPIs and their role in the financial sector. It examines how they can be an effective driver of financial inclusion and productivity, the potential areas for further exploration, as well as some case studies and use cases involving countries in Africa, Asia, Europe and Latin America.
With an interoperable and open system, DPIs can foster inclusive economies and enable vulnerable groups to have access to critical services easily and securely through expedient payment platforms, the document notes, adding that such infrastructure also have the potential to lead nations towards meeting the United Nations’ Sustainable Development Goals (SDGs). India recently signed an agreement with the UNDP to promote DPIs as a way of meeting the SDGs.
Citing the India Stack which comprises the Aadhaar digital ID and the interoperable UPI digital payments platform among other DPIs as an example, the G20 believes DPIs can serve people not just in the financial sector, but also in the domains of health, education and social welfare.
The policy publication holds that while “DPI has the potential to help countries leapfrog their digital transformation,” it can also “play a critical role in accelerating this digital transformation in an inclusive way.”
It also remarks that while there has been a remarkable progress in global financial inclusion efforts thanks to emerging digital financial services (DFS), there is much that still remains to be done and DPIs can play the trick.
“DPIs, if well managed, can lower transaction costs, catalyze innovation, foster competitiveness and interoperability, enhance individual user experiences and choice, and, though their design, provide new avenues to address many of the risks inherent to DFS.”
For the private sector, DPIs can create opportunity for innovations, higher efficiency, and enable access to new markets and credits, if the enabling institutional and market conditions exist, it notes.