Page 231 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

1 Introduction

It is widely agreed that digital liquidity is an important goal for developing markets. It enables BoP individuals
and businesses to receive, retain, and pay with eMoney – providing safety, greater access to credit, income
growth, and other documented benefits. The end goal of digital liquidity involves eMoney circulating within
the local BoP economy. This includes BoP-to-BoP transactions, as well as payments from and to entities
such as schools, mobile network operators (MNOs), governments, and family members. In this end state,
there is much less need to incur costs for cash-in or cash-out transactions. A consumer’s eMoney receipts
(salary, remittances received, crop sales, loan proceeds, etc.) align with their eMoney uses (purchases, loan
repayments, investments, savings, loans to friends, etc.).

Figure 1 – eMoney lifecycle

Achieving this goal is difficult as it requires eMoney to be better than cash for many use cases. But there has
been some progress, eMoney has a strong value proposition for remote person to person (P2P) and person to
business (P2B) remittances and airtime top-ups. Continued progress requires eMoney to be better for health
care payments, salary payments, grocery purchases, and so on. There is some evidence that eMoney is starting
to work for other use cases, such as school payments.

Ensuring more balance between an individual’s eMoney receipts and uses facilitates this transition. As
individuals receive eMoney, they need a near-equivalent opportunity to use that eMoney for schools, groceries,
loan repayments, and other expenses. These flows must also be synchronized since the BoP does not have
the luxury of retaining eMoney for future purchases if they have near term cash needs. Without an equal
opportunity, users must cash-out (or cash-in) which mitigates much of eMoney’s core value propositions.

Use cases and the need for balance are mutually dependent since more eMoney use cases make the balance
easier to achieve.
Accordingly, agriculture value chains are an interesting topic to study in this regard. A large portion of the BoP
participates in agriculture and these value chains bring money into and out of the BoP economy (crop sales,
seed purchases, etc.). Therefore, at least in theory, agriculture value chains would allow a large number of
individuals to receive and spend eMoney in an important part of their lives.

This report looks at agricultural value chains and whether they are a potential vehicle for increasing digital
liquidity:

• How much of the population do they reach?

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