A biweekly publication of the UN Task Force on Digital Financing of the SDGs for its members and other stakeholders.
August 30, 2019
Key staff from the Central Bank of Kenya team of Task Force member Dr. Patrick Njoroge and from United Nations Capital Development Fund (which hosts the Task Force secretariat) played lead roles in organizing the inaugural Global Fintech Hackcelerator @ Kenya, a competition for start-ups looking to advance business plans aligned with the Sustainable Development Goals. Produced by KPMG Digital Village, the competition sought innovative fintech start-ups with real solutions across the following 10 categories:
Sustainable farming 
Financial literacy
Women’s empowerment
Insurance for the underinsured
Alternative identity
Alternative credit scoring
Payments and remittances
Banking and finance
Applicants addressed specific problem statements that had been co-crafted by Central Bank of Kenya, UNCDF, and Monetary Authority of Singapore (MAS and CBK were also the co-conveners of last month’s “Fintech in the Savannah” conference where the Task Force had a major presence). 
In the end, the Hackcelerator competition received 45 submissions from 10 countries. Fifteen teams were shortlisted to participate in the shark-tank style “Demo Day” on August 9 at the Kenya School of Monetary Sciences; among the judges were Anthony Gacanja, director of information technology at Central Bank of Kenya, and UNCDF’s own Nandini Harihareswara, digital finance regional technical specialist. (See below for complete list of judges).
The two winners, announced by Dr. Njoroge himself in the closing ceremonies, will advance to the Singapore Fintech Festival in November. There they will present their solutions at one of the largest industry gatherings in the world: the 2018 Singapore Fintech Festival drew more than 45,000 participants from 130 countries. 

The two winners of the Global Fintech Hackcelerator @ Kenya were:
Category. Banking and finance

Problem statement How might we enable the unbanked or underserved to build convenient, secure, and reliable access to safety nets—that is, sources of funds for emergencies or other life events—that address key barriers including trust, distance/mobility, and lack of awareness to help cushion economic shocks?

Kwara’s solution. Community-based informal finance clubs are a time-honored feature of African life. They go by different names—ROSCAs (rotating savings and credit associations), SACCOs (savings and credit cooperatives),  stoekvels , merry-go-rounds, and others. But the basic principle is the same: neighbors come together to pool their savings and then take turns borrowing from, and repaying into, the resulting pot. Kwara’s breakthrough is to marry the social capital and trust of the grassroots SACCO model with Silicon Valley-style know-how. They are currently working with six SACCOs in Kenya with a total of 25,000 savers and the equivalent of USD 80 million in assets. Kwara has been able to digitize these savings groups, giving them a standardized, powerful ERP (enterprise resource planning) tool which helps solve what is notoriously one of the primary barriers to digitization. (It should be noted that the back-end ERP systems are a challenge to digitization for many smaller organizations and sectors, not just SACCOs.) With Kwara, a SACCO can welcome new members digitally, cut loan processing time from several weeks to a matter of days, and even offer instant loans. All of this saves the SACCO time and money. It also makes the SACCO more attractive and convenient for people to join, and thus to start building up safety nets (in the form of savings and access to credit) that they can leverage when in need. Another safety net-aligned breakthrough: Kwara uses the power of data analytics to allow individual SACCO members to build credit scores based on their transaction histories. Those histories will be the key that unlocks access to new products and services that can help build even greater personal and household financial resilience.
Bureau Vente Ltd (BVL)
Category. Sustainable farming  

Problem statement. How might we monitor and financially reward farmers who are farming sustainably?

BVL’s solution. BVL began by noting that the majority (70 percent) of farmers sell their goods at a deep discount to middlemen who will take care of transporting the product to market, an obviously vital service but one whose costs cut significantly into the farmers’ margins. BVL focuses on adding value to that middleman role. Working mostly on coffee value chains, a critical segment of African export agriculture, they have collected data on more than 100,000 farmers in Uganda, Rwanda, and DR Congo. The data includes farm registration, inspection, coffee production and purchases, logistics, and crop financing. BVL’s value proposition for coffee buyers is the traceability its data set provides. Wholesale buyers (and the retail consumers to whom they ultimately on-sell) are increasingly willing to pay extra to ensure the traceability of the products they purchase. For the farmers, the value proposition is the much better price BVL can pay to them (thanks to the higher price buyers are willing to pay for the traceability factor).

The judges described the field of finalists as very strong, with many excellent ideas coming from the runners-up. Among those: 

  • Tujenge – offering services such as customer data analytics to mom-and-pop shops that wouldn’t normally have access to such sophisticated insights 
  • Kasko helps banks and insurance providers launch products within 4-6 weeks
  • Lami hopes to “democratize insurance” by creating a platform for developers that can make the creation of insurance products easier and cheaper
  • mPaya – when analyzing the credit of micro, small, and medium enterprises “how they default today, we knew yesterday.” Existing alternative data, if cross-tabulated and analyzed well, gives a good idea of a customer’s ability to repay.
  • PesaKit – provides “last mile agent assistance” with an API Chatbot, e-float services, and Pesakit “sell features.” This is an interesting and important business model in the digital finance ecosystem. That ecosystem depends (at least for now) on agent networks to handle the “cash in, cash out” functions of mobile money. Those agents face significant challenges, especially around liquidity management, to manage a function that is, for many of them, a sideline to their core business. New offerings such as PesaKit that can help agent networks stay in the game and succeed are vitally needed.

  • Allwyn Barreto, Partner, Financial Services Consulting, KPMG Singapore
  • Anthony Gacanja, Director of Information Technology, Central Bank of Kenya
  • Nandini Harihareswara, Digital Finance Regional Technical Specialist, United Nations Capital Development Fund
  • Gerald Kasimu, Partner and Head of Advisory, KPMG Advisory Services Limited
  • Timothy Mwaniki, Head, Solutions Delivery, National Bank of Kenya
  • Johnson Ondicho, Business Development Lead, Digital Financial Services and Mobile Payments, KCB Limited
  • Nahashon Rutto, Manager, Financial Solutions Discovery, Safaricom PLC

The  Friday Reader thanks UNCDF’s Nandini Harihareswara who contributed to this article.
Two weeks ago, Task Force secretariat director Tillman Bruett led a wide-ranging and thoughtful Think Shop discussion in Bangalore, the "Silicon Valley of South Asia." August 19 and 20 expanded the conversation to Delhi and Mumbai, respectively, where the conversations shifted from technology to finance and policy. Dozens of leaders from those sectors were at the table in both cities. Among the key takeaways:
India has made tremendous advancements on the basic infrastructure and the supply side of finance.  This has been achieved largely thanks to the linking of direct government benefit transfers with the so-called “JAM Trinity.” JAM consists of  Jan Dahn (the no-frills bank accounts that the Indian government mandated be made available to all citizens), the  Aadhar national ID system (similar to the US social security system except that it is based on biometrics), and  mobile networks. The numbers are impressive.

  • There are now 1.24 billion people with digital ID thanks to the Aadhar system.  
  • Mobile has made huge advancements in connectivity, with 1.15 billion connections.
  • 380 million bank accounts have been opened thanks to government efforts through the Pradhan Mantri Jan Dhan Yojana (PMJDY) financial inclusion program.  
  • The government is moving the equivalent of USD 108 billion through the formal financial sector in public direct benefits, channeled through private-sector digital channels.  
  • The government has calculated its savings due to digitalization at USD 20.6 billion through various efficiencies in its direct benefit transfer program. 

Think Shop participants believed that the basics of the JAM model could be exported to other countries, with adaptions made to local contexts.
This progress has been made quickly, and its potential has not yet been fully exploited. Bank accounts have been opened, but usage remains fairly weak, and new business models beyond payments transactions have been slow to materialize. As one participant in the Delhi Think Shop put it: “We’ve built a great railroad, but passengers are not riding.” In urban areas, the user experience of digital financial services varies greatly, and Think Shop participants in both cities felt it could be improved. One weakness is the absence of incentives (and presence of disincentives related to taxation) for merchant acceptance networks to grow. The use of digital payments is often linked to short-term incentives (such as cash-back offers) that do drive short-term behaviors but have not to date translated into making digital payments a permanent part of most Indians’ routines.
As in Bangalore, participants highlighted the possibility of “two Indias” as a threat. Participants differed somewhat on whether the split was between urban versus rural, or between digitally literate and not. But there was general agreement that the digital divide is real and consequential, affecting everything from access to finance (and everything that comes from that in turn), to news and information, and to effective social services delivery. Closing that gap will not be a simple matter but must be an urgent priority. One important tactic: building out robust consumer protections and avenues for recourse. Especially in rural areas, there is greater trust in real money under the mattress than digital money in the cloud. This will likely remain the case without significant human touch to instill trust.
Data collection and data privacy issues keep evolving. The rich treasure trove of data in India remains fragmented across jurisdictions and across formats, analogue and digital. A key step is to digitize India’s records at every level which Think Shop participants agreed will require a strong mandate, funding, and enhanced human resources. Especially in the rural areas, the civil servants who directly interact with citizens lack the skills to do their work digitally so record-keeping at that “last mile” continues to be done manually. “The government needs to focus on digitizing the last-mile delivery—where government interacts with citizens. Until we invest in the human capacity we are going to need in order to standardize our own requirements across the country, we will not be able to take full advantage of our data,” as one Think Shop attendee said. Participants also noted that in the absence of clear and consistent guidelines for how data should be secured and shared, the default is “don’t share.” That position is safest, and probably also most consistent with existing law, but it also limits the government’s ability to develop its own services or to involve the private sector in developing digital financing solutions for key areas such as agriculture, sanitation, and health. Action on data privacy and sharing is urgently needed, and there was a strong belief among Think Shop participants that an  Aadhar -based consent system will be a unique and strong starting point for Indians to manage some of the most critical pieces of their own data. This could also lead to new models of consent-based data sharing, and possibly even payment for data sharing.
Pay-as-you-go financing models, so key to SDG-aligned priorities in Africa, are less pronounced in India. One key challenge that participants noted is mindset. Public services such as water, sanitation, health, and education are widely seen as the government’s job to deliver. At the same time, even if tax collection could be greatly strengthened, there simply is not enough public purse to deliver the diversity and level of SDG-aligned services at the scale required. The government has acknowledged the important role the private sector must play to finance and develop business models if they are to accelerate the SDGs. The basis for these services to grow does appear to be in place. India hosts a number of companies that have developed PAYGO business models, such as D-Light which delivers on-demand solar services although their market at the moment is across Africa rather than at home. In India, the government has established common service centers—nearly 3,000 of them run by the Ministry of Commerce and Information Technology—which provide access to basic documentation and government services, often for a fee. There is some experimentation by the government around “Uber models,” for example by the Ministry of Agriculture to develop for-hire tractors and farming equipment. Water stations which are pay-for-portion are also beginning to appear in most railway stations and other public areas. Other SDG-linked PAYGO models underway in India include telemedicine services with digital payment for remote medical advice. The potential for on-line education in India is also immense. And as participants noted, toll roads are widely accepted and used, suggesting that the population may be less resistant to paying for public goods than is often assumed.  
Participants saw a distinct role for digital financing to advance MSME finance. India’s 46 million micro, small, and medium enterprises are the backbone of the country’s economy, as MSMEs are in many other countries. And as in other countries, the smaller mom-and-pop stores are most at risk of starting out under-capitalized and failing within a few years. Most MSMEs just need short-term, small-balance business credit (which is not what most banks do) and they need it instantaneously (also something most banks don’t do). Fintech was initially seen by the banks as a threat, but this perception is starting to shift. A common sentiment across all three Think Shop cities (Bangalore as well as Delhi and Mumbai) is that what an SME needs is instant funding . The speed of transfer is very important, and the ability to meet that need, and to deal in small ticket sizes, both play to fintech’s comparative advantages. In short: There is a big gap in MSME finance and a big opportunity for fintech players to fill that gap  if data on MSME payments and transactions can be shared.  

At press time, the Task Force secretariat is preparing a formal report of the rich discussions and learning that came out of the 10-day, three-city tour of India to be posted on our website in the coming days. Our thanks to the many Think Shop attendees in all three cities for their enthusiastic participation and for the wealth of experience and insight they brought to the table.

The  Friday Reader thanks UNCDF’s Abhay Parheek for contributing to this article and for the photos from Delhi and Mumbai Think Shops.
It’s Android’s World. You Just Deliver Valuable Personal Information to It  

Smartphone use has exploded over the past decade, approaching 50% of the global population, and Google’s Android mobile operating system is the reason for the vast majority of that growth. This world map of mobile OS market share shows that while Apple Inc.’s iOS remains competitive in phone-swamped countries including the U.S. and the U.K., and maintains a firm lead in Japan, Android owns the markets that have growing left to do. (Source: Bloomberg Business Week, August 12, 2019 issue, created from World Bank data.) 
Chinese women are embracing entrepreneurship in unprecedented numbers, and the digital economy is driving the trend. At this week’s “The World She Made” conference sponsored by Alibaba  (parent company of Ant Financial, whose Executive Chairman and Chief Executive Officer Eric Jing is a Task Force member), Alibaba chairman Jack Ma noted that women’s repayment rates on loans were 27  percent better than those of men on MY Bank, an Ant Financial online bank. He also noted women’s consumer power as the decision-makers for most family purchases, and the revolutionary role that digital technology has played in expanding opportunities to start businesses. The singer Rihanna, along with Melinda Gates (who with Mr. Ma co-chaired the Secretary-General’s High-Level Panel on Digital Cooperation), and Task Force member Phumzile Mlambo-Ngcuka, executive director of UN Women, were among the luminaries who joined “The World She Made” this week.  LINK

Hat tip to Meng Yan,  sherpa  to Task Force member Eric Jing (Executive Chairman and Chief Executive Officer of Ant Financial Services Group).
Next Sherpa Meeting Scheduled
All sherpas (and those Task Force members who have not appointed sherpas) received Save-the-Dates for  Wednesday, 16 October (9 AM to 5 PM) for the next working session as the Task Force finalizes its report of findings. The meeting takes place in Washington, DC—many thanks to the Ant Financial team of Task Force member Eric Jing for hosting. There will also be a welcoming reception the evening before, Tuesday 15 October from 5 PM to 8 PM
This list will be updated with links for registrations as those become available for public events.
September 17: New York 
United Nations General Assembly

September 27: New York 
Good Servant, Poor Master: Capturing the Promise and Managing the Risk of Financial Technology for a Sustainable World. Task Force-produced Summit meeting, in conjunction with UN Week, to discuss findings of our work. Registration will be limited to 200; Permanent Mission of India to UN and Ministry of Foreign Affairs of the Netherlands are co-hosting. MetLife Foundation is providing sponsorship support.

September 24-25: New York
WEF Sustainable Development Impact Summit

October 4: Amsterdam
Dutch Fintech and Sustainability Stakeholders' Meeting
(follow up to 5 July roundtable)
Inquiries to Joost Slabbekoorn

October 15: Washington
Welcoming reception (evening) for Task Force sherpas

October 16: Washington
Sherpa working session

October 18-21: Washington
World Bank/IMF Fall Meetings
The Friday Reader is a biweekly publication produced by the secretariat of the United Nations Secretary-General's Task Force on Digital Financing of the Sustainable Development Goals. It is intended for the members of the Task Force, their staff, and other interested parties. Please direct comments or questions to DFTF.Secretariat@uncdf. org
Funding for the Task Force is provided by the UN Multi-Partner Trust Fund Office, with the generous support of the Governments of Germany and Italy.
DigitalFinancingTaskForce.org | @UNDFTaskForce | Twitter: #DigitalFinancingTF