Home Resilience Governments make fresh call for ‘responsible’ digital payments in climate-change fight

Governments make fresh call for ‘responsible’ digital payments in climate-change fight

COP28: Camilo Tellez (Better Than Cash Alliance), Tigist Mohammed (deputy director-general, Information Network Security Agency, Ethiopia), Dr Altaf Ul Alam (additional secretary, Ministry of Finance, Bangladesh), Benjamin Diokno (finance secretary, Philippines), Dr Martin Frick (World Food Programme), Isvary Sivalingam (Better Than Cash Alliance) and Shruti Sharma (Better Than Cash Alliance) at today’s launch event in Dubai | Credit: ©UNCDF / Nasser Alqatami

Governments of nations including the Philippines and Ghana have joined international organisations including the United Nations (UN) World Food Programme and UN-housed Better Than Cash Alliance to launch a fresh ‘call to action’ to encourage ‘responsible’ digital payments.

Those behind the global push – launched today (4 December) at the COP28 gathering in the United Arab Emirates (UAE) – are urging further governments, humanitarian actors, international and global financial institutions, and private sector, particularly financial service providers, to use responsible digital payments for ‘timely emergency response and preventive action’.

Their central message is that digital financial inclusion can enable people most impacted by climate change to be more ‘financially resilient to shocks and stressors’ and that ‘anticipatory action can be seven times less expensive than emergency response’.

Ethiopia’s government, as well as the Vulnerable Twenty (V20) Group – the co-operation initiative of economies systemically vulnerable to climate change – and humanitarian aid organisation Mercy Corps are also backing the call, which has three pillars: expanding digital payments and digital public infrastructure for a ‘more climate-resilient future for all’; ‘closing the digital divide by increasing access and connectivity to reduce climate-vulnerability’; and ‘putting women, youth, indigenous peoples and communities in fragile and climate-vulnerable areas at the centre of adaptation planning’.

The initiative is looking to build on previous work in this area, including nine ‘Principles for Responsible Digital Payments’ published by the Better Than Cash Alliance – a partnership of governments, the private sector and international organisations – a couple of years ago. The alliance at the time called on governments to ‘lead by example’ to ensure that most societies’ shift from cash towards digital payments takes place in a ‘responsible’ manner.

RELATED ARTICLE UN-based alliance calls on governments to ensure ‘responsible’ digital payments – our news story (4 October 2021) on a Better Than Cash Alliance report, which included the recommendation that governments consider embedding in legislation the responsible digitalisation of governmental payments

Aligned with V20 priorities

Philippines finance secretary Benjamin Diokno launched the call to action during one of the many fringe events organised at COP28.

“The Philippines recognises that improving climate resilience and disaster response, through digital payments, requires responsible digitisation of social safety nets,” Diokno said in the initiative’s main (24-page) ‘Responsible Digital Payments To Accelerate Climate Action’ call for action report. “This includes improving financial services and infrastructures for digital payments, among others.”

The minister for climate change and environmental co-ordination of Pakistan, whose government joined the Better Than Cash Alliance eight years ago with a commitment to ‘bring millions more Pakistanis into the economy’ by digitising payments, has also endorsed the initiative. Ahmed Irfan Aslam states that the country’s first National Adaptation Plan, which was published in July, “echoes the Better Than Cash Alliance’s emphasis on inclusion”.

Ghana’s finance minister Ken Ofori-Atta, who is also chair of the V20, described the call to action as “strongly aligning with the V20’s commitment to enhancing social and financial protection in the face of climate change.”

“This initiative champions the digitisation of social transfers, crucial for efficient and direct support to those most vulnerable to climate impacts,” he said. “It emphasises the importance of digital connectivity, especially in remote areas, to ensure effective delivery of social protection programmes. Moreover, it prioritises empowering marginalised groups such as women, youth, indigenous peoples, and communities in fragile areas, aligning with the V20’s focus on inclusive and targeted resilience efforts.”

Ofori-Atta highlighted the role of ‘mobile money’ in helping inclusion for the unbanked in Ghana, as well as policies such as the African nation’s National Financial Inclusion and Development Strategy fostering a conducive environment for digital finance.

Women ‘disproportionately affected’ by climate change

About 3.6 billion people are ‘vulnerable to climate change, disproportionately affecting women and marginalised groups’, according to the campaign, which highlights that in the past decade, 80 per cent of 250 million people displaced by climate-related events in emerging economies were women.

“For those on the front lines of climate change, the majority of whom are women, receiving digital payments before the crisis hits means being able to prepare for the climate shock,” said Better than Cash Alliance managing director Dr Ruth Goodwin-Groen.

“For those of us who care about women on the front lines, our money can be seven times more efficient if we take this approach. Together with our members, we are calling on other governments and humanitarian actors at COP28 to join us taking action to rapidly increase climate resilience through inclusive responsible digital payments,” she added.

“We know that half of the cash that we provide goes to women, which is already a really good thing. But rarely does it go into an account in their name. If eradicating hunger and extreme poverty is at the core of WFP’s business, then digital payments are too,” said World Food Programme assistant executive director Valerie Guarnieri. “We have the responsibility to provide that first-time access to a bank, or to mobile money, while also helping governments to do the same in their government-to-person (G2P) payments systems, which we’re increasingly supporting.”

The new call for action also builds on commitments made by Better Than Cash Alliance members including the governments of the Philippines, Bangladesh, Colombia, Ethiopia, Guatemala, Mexico and Rwanda at a roundtable earlier this year in New York City focused on ‘digital payments, adaptive social protection and anticipatory action to build climate resilience’.

Project examples provided

The call for action’s principal document contains in-the-field examples of activity under each of the three pillars.

In respect of pillar one – expanding digital payments and digital public infrastructure – examples include initiatives in Haiti (World Food Programme); digital ID in Cameroon (UNHCR) – specifically a pilot programme issuing biomet­ric-based IDs to 6,000 refugees from the Central African Republic; and ‘anticipatory relief’ in Bangladesh (WFP and various partners).

For pillar two – increasing internet access and connectivity – examples include initiatives in the Philippines (USAID Better Access and Connectivity project – US Agency for International Development/ BEACON); Somaliland (delivery of cash and voucher assistance to households in 17 villages using interactive voice response: CARE, GSMA and Telesom); and a livestock insurance project in Pakistan (GSMA and EasyPaisa).

For pillar three – ‘putting women, youth, indigenous peoples and communities in fragile and climate-vulnerable areas at the centre of adaptation planning’ – examples include a further WFP ‘anticipatory cash’ project (in this case in Somalia); and Global Forest Watch (GFW)’s use of a digital system using geospatial data to generate near-real-time deforestation alerts.

COP28 began on 30 November and will run until 12 December. ‘COP’ stands for ‘Conference of the Parties’, with the ‘parties’ being the countries that signed up to the original UN climate agreement in 1992.