Digital Identification and Finance Initiative in Africa
Across Africa, governments have the potential to use digitization of financial services and identification to improve governance, enhance public service delivery, catalyze private markets, and drive complementary policies with transformative impacts for citizens.
A growing number of African governments have already begun pursuing the digitization of select Government to Person (G2P) payments, while others are integrating access to and delivery of key services under one unique, biometrically-authenticated ID system. Early research suggests there is vast opportunity across Africa for digital technologies to help reduce leakage in the delivery of social protection and other public goods and services, to increase fiscal capacity, to reduce corruption, and, most importantly, to boost the welfare of citizens, particularly marginalized groups and women. Yet, there remains a glaring lack of rigorous, peer-reviewed evidence on how governments can most effectively leverage digital payments and ID systems.
DigiFI Africa aims to fill this evidence gap by funding cutting edge research projects focused on the study of innovative government payment systems, IDs, and reforms. The scope of funding aims to include projects across a range of possible DFS and governance interventions, including but not limited to:
- Migrating cash-based G2P payments into digital channels,
- Using ID technologies to eliminate ghost workers from government payrolls and other social programs,
- Linking banks and other private sector service providers into digital ID systems to broaden access to their services,
- Migrating price subsidies for commodities into direct benefit transfer (DBT) payments,
- Using payments and ID systems to broaden the tax base in a progressive manner, and
- Linking other government services (such as health and education) to digital ID and payment systems.
Recognizing the importance of prompt and reliable information on the performance and impact of reforms, the initiative will take a two-pronged approach, funding:
- Formative research that includes pilot and high-frequency monitoring systems to assess the status and health of payments and ID programs at various stages of reforms, and
- Rigorous randomized evaluations to assess the impact of roll-outs of promising payment and ID reforms.
Research projects will be selected by a Board comprised of academics and policy stakeholders. The initiative will additionally help build the capacity of local researchers to conduct rigorous, high-quality evaluations by integrating them as lead investigators and co-authors on funded research projects and creating a pilot fund targeted at local researchers.
We expect the evidence produced by this initiative will encourage African governments to accelerate policy and regulatory reforms, and ramp-up investments in infrastructure needed to scale digitization of financial services and identification. The research should also inform governments on how best to design and implement reforms to maximize benefits to citizens and mitigate risks.
Tavneet Suri (MIT)
Support for this initiative comes from the Bill and Melinda Gates Foundation.
Questions or comments? Please e-mail Aimee Hare at [email protected].