Harnessing the Promise of Digital Finance
By Patrick Njoroge
On August 26, 2020, the United Nations Secretary-General (UNSG) António Guterres launched
the report of his Task Force on Digital Financing of the Sustainable Development Goals (The
Taskforce), on which I have served for the last 18 months. The report titled, “People’s Money:
Harnessing Digitalization to Finance a Sustainable Future,” focuses on the needs of ordinary
people. The financial system, the report concludes, must serve individual citizens, as savers,
investors, borrowers, and taxpayers. It must leverage digital technology to put people back in the
driver’s seat of their finances, so that they can invest in themselves and their families,
communities, countries, and the planet. Governments, regulators, and financial institutions
should support and facilitate the disruptions that will get us there.
Launching the report, the UNSG António Guterres said, ‘‘Digital technologies, which are
revolutionizing financial markets, can be a game changer in meeting our shared objectives. The
Task Force on Digital Financing of the Sustainable Development Goals provides leadership to
harness the digital revolution.’’ Digitization can propel us towards achieving the Sustainable
Development Goals (SDGs). The global response to the coronavirus pandemic (COVID-19)
crisis demonstrates how digitization can be harnessed to support vulnerable people, reduce
inequalities, sustain livelihoods and maintain our social fabric.
Harnessing digitalization to develop a citizen-centric financial system to accelerate financing for
the SDGs requires the development of digital financing ecosystems. Governments and regulators
are seeking to support digital financing ecosystems through infrastructure development, active
industry engagement, supportive regulatory frameworks and demand side capacity building.
In the East African Community (EAC), we have been at the frontier of digital finance. Since
2007, digital financial services have transformed our financial sector and indeed the lives of East
Africans. During the pandemic, EAC countries including Kenya, Rwanda, Uganda and Tanzania
have been global leaders in encouraging the use of mobile money to address the health and
economic dimensions of COVID-19. Measures including waiver of charges on low value mobile
money transactions and enhancement of mobile money limits, have facilitated official and
personal transfers across the region in a time of great need.
Notably, the Taskforce drew significant inspiration from the advances in digital finance in the
EAC. This included a convening in Nairobi in July 2019 during the Afro-Asia Fintech Festival.
The Taskforce supported a Hackathon launched at the festival to draw on innovative ideas from
African fintechs on how to leverage technology to support financing of the SDGs. Not
surprisingly, the two winners were from EAC countries-Kenya and Uganda with solutions on
how to promote savings through Savings and Credit Co-operatives and financing of sustainable
coffee value chains. The 2020 edition of the Hackathon scheduled for August 31 seeks to harness
the use of technology in addressing the health and economic impacts of the COVID-19
pandemic, and has seen a positive response from EAC fintechs.

The EAC has made giant strides in harnessing digital finance, but much more is needed. There
remains a significant gap in funding of the SDGs in infrastructure, health, education and social
services. This SDG financing gap particularly in health and education has widened with the
adverse effects of the pandemic. Our Micro, Small and Medium Enterprises (MSMEs) remain
grossly underfunded, yet they are at the heart of our economies. With the increasing linkages
between our countries, economies of scale are imperative for digital business models. This can
be achieved through building regional ecosystems.
The EAC already has a long history of co-operation on a wide array of socio-economic issues
including responding to emerging technologies. One of the report’s key recommendations is on
building of regional digital financing ecosystems. In particular, the East Africa region is
identified as a prime candidate for such a system. Increasing the market would allow the full
benefits of digitalization to be realized. Building local demand and encouraging widespread
adoption of digital financing by users and incumbent financial sector players requires deepening
of domestic and regional markets.
An EAC digital financing ecosystem would expand the market for financial solutions aligned to
SDGs, promote regional cooperation and governance. More importantly, it would bring more of
our citizens into the financial system, support economic growth and shared prosperity. SDG
aligned digital finance solutions would increase access to critical social services including
education, health, water and sanitation and infrastructure. We would also be able to innovatively
catalyze lending to our MSMEs across the region by addressing their key barriers particularly
lack of physical collateral.
The Central Bank of Kenya (CBK) has been collaborating with the Monetary Authority of
Singapore over the last two years, to learn how to foster a vibrant financial-technology sector
that stretches across Africa and Asia. The EAC is a natural foundation for this initiative and
CBK stands ready to work with other policymakers, regulators, private sector players and
fintechs in realizing this vision of a regional digital finance ecosystem.
Undoubtedly, with opportunities comes risks. As we grow digital finance across the region,
cyber risk comes to mind as a significant systemic risk. To their credit, EAC Central Banks are
already working to jointly develop common cyber security regulatory standards. This will
enhance cyber security information sharing, co-ordination and strengthen our defenses as digital
finance scales up across the region.
This is a historic opportunity to harness digitalization in reshaping finance that must be grasped
now, given the urgency to finance the SDGs, the short window of change resulting from a period
of digital disruption, and the potential to maintain the digital momentum of the current crisis.
Patrick Njoroge is Governor of the Central Bank of Kenya.