Streamline policies on digital economy – Experts advise

There is an urgent need for central governments, regulators and other relevant stakeholders to streamline policies which enhance partnerships in the digital economy, as this is the only way recent gains from the digital transition will be consolidated. This was the rallying call from a panel of digital finance experts speaking on the topic ‘Powering Africa’s Digital Economy: Platforms, Partnerships & Policy’, at the second edition of the Standard Chartered Digital Banking, Innovation and Fintech Festival. They said while the rapidly advancing digital economy provides African nations with a unique opportunity to exponentially transform various aspects of their respective economies, fragmented policies, uneven partnerships and under-used platforms could derail any progress that will be made. The Deputy Chief Executive Officer of Pan-African Payment and Settlement System (PAPSS), John Bosco Sebabi, maintained that the platform remains arguably the most important financial development on the continent. But for PAPSS – which was introduced to enhance payments across the continent and reduce costs to businesses, including more than US$5billion lost to third-party transactions – there must be a significant buy-in by central banks, as they are the most important institutions in respective financial jurisdictions. “Central banks are the cornerstone of financial markets and they can support by joining the platform themselves, as ultimately they offer settlement facility for that jurisdiction and authorise the institutions under them,” Mr. Sebabi said. He suggested that PAPSS is not necessarily an end in itself but a tool to promote intra-African trade, and by extension development of member states economies; adding that the platform’s success will be measured by growth in trade across the continent, which is currently estimated to be between 13 and 18 percent. This pales in comparison to the approximately 60 percent, 40 percent and 30 percent intra-regional trade that has been achieved by Europe, North America and Southeast Asia respectively While acknowledging that central banks cannot outpace innovation, he reiterated calls for them to be abreast with emerging and expected technological developments. “We know it is not possible for regulators to be ahead of technology on the market, but we can achieve one thing: that is central banks which move with the market,” the PAPSS Deputy CEO noted. General Manager, Technology & Operations, Ghana Interbank Payment and Settlement Systems Limited (GhIPSS), Kwadwo Ntim, said central governments and regulators must continue to swiftly provide policy guidance if the digital economy is to progress. He said government, due to its reach, must also encourage the use of existing payment and settlement systems to execute its transactions. “We need government to use payment systems and services for its transactions; that way, the private initiatives leading in development of the space will see improved returns – and when this happens it will encourage them to continue investing,” he stated. He added that there should be dedicated support for Fintech service providers and infrastructure operators, with additional efforts aimed at reducing the cost of using such platforms for the end consumer. Chief Digital & Fintech Officer with the MTN Group, Serigne Dioum, was optimistic that with the right strategies and channels to execute them, an entirely digital economy is possible. “We want to fight against cash, not banks and Fintechs; and we all have a part to play,” he said, adding that the cash-lite agenda will be achieved if more merchants are roped into the ecosystem and are willing to accept digital payments. “We want to build a stronger ecosystem so that transactions are made without first having to make withdrawal, and this will require more merchants accepting payments,” he pointed out. This comes as the local arm of MTN recorded 57 percent and 53.4 percent growth in the volume and value of mobile money respectively in the third quarter, “driven by higher levels of P2P activity over prior quarters and strong cash-out transactional activity”. A member of SC Ventures & Global Head, Solv Jiten Arora, added that financial institutions must become more innovative in the offerings they provide to Micro, Small and Medium sized Enterprises (MSMEs), as the latter are evolving in their needs, demands and expectations. “Platform businesses are the way to get embedded financing and embedded capabilities into the hands of small businesses; but these have to be embedded in digital transactions and they must be completely digital, as this is the only way they can operate at scale. They must have access to information, alternate scoring models and a sustained path toward digitalisation,” he explained. Taking her turn, Director of Partnerships, Proxtera Singapore and Member, SC Ventures, Aparna Jhajharia, said she was confident that the digital transition will be sustained as the basic building blocks – improved telephone and Internet access – are in place and continue to be developed; adding that the active participation of policymakers in forward-looking conversations “gives an added layer of hope”. “Increased education and awareness, especially for MSMEs – most of which are family-run businesses, will ensure that these foundational blocks are built upon,” she added.

There is an urgent need for central governments, regulators and other relevant stakeholders to streamline policies which enhance partnerships in the digital economy, as this is the only way recent gains from the digital transition will be consolidated. This was the rallying call from a panel of digital finance experts speaking on the topic ‘Powering Africa’s Digital Economy: Platforms, Partnerships & Policy’, at the second edition of the Standard Chartered Digital Banking, Innovation and Fintech Festival. They said while the rapidly advancing digital economy provides African nations with a unique opportunity to exponentially transform various aspects of their respective economies, fragmented policies, uneven partnerships and under-used platforms could derail any progress that will be made. The Deputy Chief Executive Officer of Pan-African Payment and Settlement System (PAPSS), John Bosco Sebabi, maintained that the platform remains arguably the most important financial development on the continent. But for PAPSS – which was introduced to enhance payments across the continent and reduce costs to businesses, including more than US$5billion lost to third-party transactions – there must be a significant buy-in by central banks, as they are the most important institutions in respective financial jurisdictions. “Central banks are the cornerstone of financial markets and they can support by joining the platform themselves, as ultimately they offer settlement facility for that jurisdiction and authorise the institutions under them,” Mr. Sebabi said. He suggested that PAPSS is not necessarily an end in itself but a tool to promote intra-African trade, and by extension development of member states economies; adding that the platform’s success will be measured by growth in trade across the continent, which is currently estimated to be between 13 and 18 percent. This pales in comparison to the approximately 60 percent, 40 percent and 30 percent intra-regional trade that has been achieved by Europe, North America and Southeast Asia respectively While acknowledging that central banks cannot outpace innovation, he reiterated calls for them to be abreast with emerging and expected technological developments. “We know it is not possible for regulators to be ahead of technology on the market, but we can achieve one thing: that is central banks which move with the market,” the PAPSS Deputy CEO noted. General Manager, Technology & Operations, Ghana Interbank Payment and Settlement Systems Limited (GhIPSS), Kwadwo Ntim, said central governments and regulators must continue to swiftly provide policy guidance if the digital economy is to progress. He said government, due to its reach, must also encourage the use of existing payment and settlement systems to execute its transactions. “We need government to use payment systems and services for its transactions; that way, the private initiatives leading in development of the space will see improved returns – and when this happens it will encourage them to continue investing,” he stated. He added that there should be dedicated support for Fintech service providers and infrastructure operators, with additional efforts aimed at reducing the cost of using such platforms for the end consumer. Chief Digital & Fintech Officer with the MTN Group, Serigne Dioum, was optimistic that with the right strategies and channels to execute them, an entirely digital economy is possible. “We want to fight against cash, not banks and Fintechs; and we all have a part to play,” he said, adding that the cash-lite agenda will be achieved if more merchants are roped into the ecosystem and are willing to accept digital payments. “We want to build a stronger ecosystem so that transactions are made without first having to make withdrawal, and this will require more merchants accepting payments,” he pointed out. This comes as the local arm of MTN recorded 57 percent and 53.4 percent growth in the volume and value of mobile money respectively in the third quarter, “driven by higher levels of P2P activity over prior quarters and strong cash-out transactional activity”. A member of SC Ventures & Global Head, Solv Jiten Arora, added that financial institutions must become more innovative in the offerings they provide to Micro, Small and Medium sized Enterprises (MSMEs), as the latter are evolving in their needs, demands and expectations. “Platform businesses are the way to get embedded financing and embedded capabilities into the hands of small businesses; but these have to be embedded in digital transactions and they must be completely digital, as this is the only way they can operate at scale. They must have access to information, alternate scoring models and a sustained path toward digitalisation,” he explained. Taking her turn, Director of Partnerships, Proxtera Singapore and Member, SC Ventures, Aparna Jhajharia, said she was confident that the digital transition will be sustained as the basic building blocks – improved telephone and Internet access – are in place and continue to be developed; adding that the active participation of policymakers in forward-looking conversations “gives an added layer of hope”. “Increased education and awareness, especially for MSMEs – most of which are family-run businesses, will ensure that these foundational blocks are built upon,” she added.