By Ambareen Musa
Fintech can help close the estimated $2.5 trillion annual gap in sustainable development goals, writes Ambareen Musa, founder & CEO of Souqalmal.com
Just a few weeks from now, the world’s leaders will converge in New York for the most important week in the diplomatic calendar: the United Nations General Assembly. And top of the agenda is: How to achieve the 2030 agenda and the SDGs (sustainable development goals).
Last year I had the privilege of being asked by UN Secretary-General António Guterres to serve on a task force exploring that question from a very specific angle: How to harness the power of financial technology, or fintech, to help close the estimated $2.5 trillion annual gap in SDG financing. No single source of financing - public or private - can generate that amount. But fintech is changing the game.
It’s hard to overstate how dramatically the digital revolution is transforming the world’s financial systems. This is certainly true for financial inclusion, the worldwide effort to make safe, affordable, and effective financial services universally available. This also happens to be my personal passion, both in my role as CEO of Souqalmal and as a volunteer consultant on financial literacy initiatives.
For decades, nearly half the world’s population was shut out from mainstream financial services, resorting to private moneylenders when they had to borrow and hiding cash at home when they could save. Now thanks largely to fintech, the World Bank reports that the share of adults with an account at a financial institution or through a mobile money service rose 7 percentage points globally (from 62 percent to 69 percent) in just the three-year period between 2014 and 2017. In developing economies, the increase was even more dramatic: from 54 percent to 63 percent.
Financial inclusion is important as a goal in itself and as an enabler of other SDGs. But financial inclusion is just one piece of a much larger picture.
Digitalisation has also completely transformed financial institutions: Citigroup’s CEO says that they now think of themselves as a technology company with a banking license. Digitalization has changed the way investors identify and analyse opportunities, the way insurers pool risk, the way markets move and allocate capital. It has certainly changed the way regulators approach their work, most recently as they deal with cryptocurrencies not backed by their own (or any other) sovereign nation.
The UN Secretary-General’s Task Force on Digital Financing of the SDGs is a brain trust from all these constituencies: commercial bank CEOs, central bank governors, finance ministers, stock exchange presidents, and fintech entrepreneurs like me.
It is by design a public-private collaboration - along with banking and tech CEOs, and has a strong representation from the Bretton Woods institutions, including the heads of UN Women, UNDP, UNICEF, UN-DESA, and the CEO of the World Bank. Members come from different geographies, bring different experiences to the table, and have different perspectives.
The goal is to seek an answer to one of the most important questions of our time: How can we ensure that the digital revolution transforming global finance will be one that creates a sustainable future for the planet and its people?
There are already tantalising hints. One of our Task Force’s members, Eric Jing, is CEO of Ant Financial. Just a few years ago, they launched the “Ant Forest” app, which combines fintech with gamification. Ant Forest users earn points by making carbon-light lifestyle choices: taking the bus instead of the car earns points, walking earns even more, and so forth.
Task force member Patrick Njoroge is governor of the Central Bank of Kenya, famously home to M-Pesa, the world’s first mobile money offering to achieve massive scale. Perhaps less well known is his country’s M-Akiba bond offering. Thanks to fintech, the government can sell securities in very small amounts (the equivalent now of USD 26), which working-class Kenyans can actually invest in. This ability to mobilize domestic savings can not only lower the external borrowing costs for national treasuries, but also give ordinary citizens a personal stake in their countries’ development.
The task force recently completed its white paper of research into the state of the digitalization of finance. Our team is hard at work finishing the interim report of recommendations to the Secretary-General to be presented during September’s General Assembly. We have a global Call for Contributions, open until October 31, to crowd-source the best ideas about how to harness the power of digital financing for the greater good.
On one point the task force membership is in unanimous agreement: Our work goes far beyond just producing a smart report. Each of us is mindful of the historic opportunity we have been given, and are determined to put forward a concrete, actionable set of recommendations and to create the momentum for lasting change.
You too can submit your ideas through the Call for Contributions. And stay tuned for more updates on the Task Force’s work through next month’s General Assembly and beyond.
Ambareen Musa is founder & CEO of Souqalmal.comFor all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.