The role of digital identification and payments in supporting resilience during the COVID-19 pandemic

Image: Intersect.

The Abdul Latif Jameel Poverty Action Lab (J-PAL) Africa, based within SALDRU, launched the Digital Identification and Finance Initiative (DigiFI Africa) in 2019. DigiFI Africa generates rigorous evidence on how African governments, private companies, and NGOs can leverage digital payments and identification systems to improve lives through better public service delivery, governance, and financial inclusion. This post highlights two updates from the DigiFI Africa team – their involvement in the G7 partnership on women’s digital financial inclusion, and recent findings on the role of a Universal Basic Income (UBI) in supporting pandemic resilience.

The role of a (digital) universal basic income in supporting pandemic resilience

In 2017, Abhijit Banerjee, Michael Faye, Alan Krueger, Paul Niehaus, and Tavneet Suri, in collaboration with Innovation for Poverty Action (IPA) and GiveDirectly, launched a randomised controlled trial in Kenya to test the effectiveness of a Universal Basic Income (UBI) in eradicating extreme poverty. With the onset of the COVID-19 pandemic, the researchers conducted (and will continue to conduct) phone surveys, with those in the original randomised control trial in May 2020, in order to measure the effects of the pandemic and how they were mitigated by a UBI. To assess how outcomes in the COVID-19 survey have changed since the onset of the pandemic, they compared this to data from the standard endline survey of households conducted during the randomised controlled trial, between August and December of 2019.

Overall, the study found that transfer recipients experienced better food security and physical and mental health than those who had not received transfers, along with some positive impacts on public health. However, long-term, regular transfers led to an increase in risk-taking commercial activities. Pre-COVID-19, beneficiaries had diversified their income streams by creating new non-agricultural enterprises, which resulted in an increase in profits without substantial changes in labour or agricultural earnings. However, when the pandemic hit, these enterprises were not spared and the income gains they witnessed pre-COVID-19 were wiped out but they did not close down.

Read more on the J-PAL blog.

DigiFI Africa: A pillar of the G7 Partnership for Women’s Digital Financial Inclusion in Africa

DigiFI Africa is a member of the G7 partnership on women’s digital financial inclusion in Africa. As part of the partnership, J-PAL Africa will focus on supporting gender-specific research to ensure that digital innovations promote the economic empowerment of women through DigiFI. Through DigiFI, J-PAL Africa plans to:

  • Generate robust evidence on the gender effects of digital identification and payment reforms in priority countries,
  • Build local capacity by supporting African and non-resident African Scholars, and
  • Establish strong government relationships to generate and disseminate policy-relevant research, as well as strengthen institutional cultures of evidence-based policy.

The first G7 convening was held virtually on 23 September, and focused on Catalyzing Digital Financial Services for Women Across Africa: Supporting Recovery, Resilience, and Innovation During COVID-19. The event highlighted how the COVID-19 pandemic has had a disproportionate impact on women, particularly across the African continent, and the need for African governments and donors to accelerate investments in digital financial inclusion to support women, many of whom are among the most marginalised.

During the event, commitments were made from South Africa’s President Cyril Ramaphosa to ensure women’s digital financial inclusion. South Africa made a commitment of $500,000 to the South African Women Impact Fund, which seeks to empower women financially. In addition, the President announced that 40 percent of all public procurement will be reserved for women-owned businesses.

Learn more on the J-PAL blog.

Learn more about DigiFI Africa

To learn more, please read DigiFI’s research agenda or the recently launched blog series.