At the beginning of May UNCDF hosted a workshop in Beijing to launch the i3 Program, funded by the MetLife Foundation, in China. Organized in partnership with the United Nations Development Programme (UNDP) and the China International Center for Economic and Technical Exchanges (CICETE), the workshop explored China’s experience using digital technologies to advance development and financial inclusion.

The event brought together just over 70 participants from Asia and Africa. There was significant representation from prominent Chinese academic institutions, banks, non-bank financial institutions, and government agencies. International guests from Africa, Asia, Europe and the US also attended to learn about China’s experience in digital financial services and the possible applicability of that experience to their own countries’ contexts. The event comprised of two parts: an opening ceremony and workshop, followed by 2 days of field visit for international guests. This blog sums up the discussion during the workshop; in a separate blog you can read about the field visit.

The workshop that followed the launch ceremony was held over the course of one day in Beijing and consisted of a number of high-profile speakers presenting on topics that included the changing nature of employment, agricultural value chains and SME’s, and digital financial inclusion in China.

The conference was opened by Mr. Nicholas Rosellini, the United Nations Resident Coordinator in China, who emphasized the commitment of the UN to work with the Chinese government to improve the lives and wealth of people globally and spoke on how the UNSG’s Task Force on Digital Financing of the SDGs and UNCDF’s presence in China will contribute to this goal. He was followed by Zhang Yi, the Deputy Director General of CICETE, Agi Veres, the Resident Representative in China for UNDP, and Tillman Bruett, the Director of the UNSG’s Task Force on Digital Financing of the SDGs.

The keynote speech was given by Zhang Chenghui, Former Director General, Financial Institute, Development Research Center of the State Council on the subject of “Digital Financial Inclusion in China - Addressing Poverty Alleviation and Meeting the SDGs”. Ms. Zhang confirmed the government’s commitment to eliminate poverty in China by 2020 and related the findings of her recent report examining the current state of financial inclusion in China, as well as recommendations about how to employ digital financial services to improve financial inclusion. They interviewed rural financial institutions and residents in 38 counties identified as impoverished. There are significant positive developments; 89% of the farmers have bank accounts and the government has been successful in digitalizing agriculture subsidies payments. However, improvements are needed; 29% of respondents reported that they were “unsatisfied” or “extremely unsatisfied” with the financial services they received, systematic and targeted financial literacy education is scarce, and only 14.31% of the farmers interviewed had insurance. Lack of access to credit services was highlighted as a key barrier to providing inclusive financial services. Ms. Zhang Yi suggested that digital financial services could help overcome this barrier, with the collation and sharing of digital credit scoring information representing a key opportunity.

Her keynote speech was followed by a number of presentations and panel discussions, the first being introduced by Matthew Blake from the World Economic Forum on the topic of “The changing nature of employment: the effect on financial health and the role of digital finance”. He spoke about the driving forces behind changes to employment as being driven by four key technologies: AI, big data analytics, cloud technology, and high-speed mobile internet. When surveyed for the World Economic Forum Future of Jobs Report (2018), 50% of companies expect to see a reduction in workforce by 2022 due to automation and 42% of respondents said they expected to see a significant shift in the skills needed by employees by 2022. This represents both an opportunity and a risk, while jobs are declining there is also a rising demand for distinctly human skills such as creativity, critical thinking, persuasion and negotiation. However, at the moment there is insufficient focus on reskilling to and upskilling with employers focusing on high-value employees rather than at-risk employees.

Following this presentation there was a panel discussion on agricultural value chains by Francois Coupienne, Digital Economy & Innovation Program Manager from UNCDF. He talked about the critical role of agriculture in eradicating poverty, and the need for an added 600 million jobs in the next 15 years due to a growing workforce, mainly in Asia and Sub-Saharan Africa, where most formal jobs are generated by SME’s. He was joined by a panel from Ant Financial, CD Finance, EcoCash (a mobile money service which controlled around 99.8% of the mobile money market in Zimbabwe in 2017), and Wing, an agent-based money transfer business based in Cambodia and Myanmar. The panel compared the progress in their respective markets, from digitally literate farmers in China to a burgeoning usage of social media as an e-commerce platform in Myanmar. The panel discussed the advantages and challenges of digitizing agricultural value chains. The panel discussed the shared struggle across markets to gather comprehensive data on value chains and talked about the need to overcome famers’ perception that digital products are insecure. However, they likewise shared a viewpoint on the potential of digitizing value chains, suggesting that the data gathered can help farmers learn more about agricultural techniques adapted to their specific region, and help to prepare farmers for climate change.

To introduce how the i3 Program aims to improve financial health, Mr. Krishna Thacker, Asia Regional Director of the MetLife Foundation, took the floor just before the lunch break. He talked about how the I3 Program is moving beyond the idea of financial inclusion, or access to basic services and education, to the idea of financial health. He characterised financial health as the ability to manage day-to-day financial needs, face unexpected financial challenges, and the opportunity for people to find more security and mobility. He was joined by Mariel Beasley, Principal of the Common Cents Lab at Duke University. Common Cents Lab helps fintech companies use behavioral economics to design and test solutions that increase financial wellbeing for low- and middle- income people. She spoke about the need to design for behavior, as simply educating people on how to make better financial choices rarely leads to a change in behavior. In fact, she cited a study which suggested that purely content-based financial literacy interventions explained only 0.1% of the variance in financial behaviors.

The afternoon was spent in a workshop to generate ideas and input for the United Nations Secretary General’s Task Force on Digital Financing of the Sustainable Development Goals’ draft interim report to the Secretary-General. The UN Secretary-General called for the creation of a Task Force on Digital Financing of the Sustainable Development Goals to identify how digitization is reshaping finance and to identify, theorize, and propose how best these changes can be harnessed to achieve the SDGs. This workshop was designed to draw on China’s unique experience in digital financing. Discussion centred on four main thematic areas; decent work and jobs, access to basic services, and climate action.

Looking Forward

UNCDF has just begun their work in China, and in the coming months they will be partnering with a number of institutions including CD Finance and Anhui Xinan Bank to provide technical support to deepen impact at the last mile. Alongside this, UNCDF is partnering with regional and municipal-level government agencies to establish innovation challenges with start-ups and incumbents. In addition, UNCDF will be releasing a number of publications with the intention of sharing China’s experience in using digital financial services to improve financial inclusion. Stay tuned to read more on what UNCDF is learning about digital services in China.

By Rose Payne.