Technology is increasingly moving from physical to digital implementations. Opportunities to improve access in developing nations is becoming easier, faster, and more critical. There is a need to maintain pace with higher income countries. In-need countries are partnering with public and private infrastructure from more developed economies. This helps them to gain easy and inexpensive access. South Africa’s Independent Online (IOL) highlights the efforts being undertaken by Chinese authorities to expand digital access in developing countries:
“Memorandums of Understanding on building the Digital Silk Road were signed between China and 17 partner countries. China has also established a Silk Road E-commerce bilateral cooperation mechanism with 23 countries and built 34 cross-border land cables and multiple international submarine cables with neighbouring countries. In recent years, China’s information technology, as well as relevant hardware and software products, has been widely used in countries and regions along the Belt and Road. A number of cooperation projects in the field have been implemented, benefiting local communities.”
Embedding Technology into the Economy
The Chinese government sees an opportunity to embed its physical and digital technology into the economies of many developing nations. They are utilizing private technology enterprises, such as Huawei, Alibaba and Baidu. The Chinese government is doing this in partnership with government investments. They are building inroads, not just with governments, but with the general population. The IOL article highlights how this investment ties closely with the payments infrastructure:
“In Kenya, a “mobile wallet” application co-developed by China and Africa has become an indispensable transfer, paying, receiving and loaning tool for local people. Under the technical support of the Chinese side, the application is now under stable operation and comes with rich functions. According to statistics released in March this year, the application has gained over 30 million monthly active users.”
Prepaid Tools through Digital Access
As I’ve covered in my report “Digital Wallets: Moving Beyond Payments With Expanding Options” and will highlight more in my upcoming “2023 Outlook: Prepaid” viewpoint, the digital wallet is an increasingly necessary tool for consumers, merchants and financial institutions. This is especially true in the developing world within Latin America, Africa and Asia that have higher preponderance of underbanked and unbanked populations. These consumers require non-traditional resources that prepaid mechanisms can provide but need those mechanisms connected to the digital infrastructure to remain linked to the current economy.
In the prepaid market, this represents a large driver of industry growth. We’ve seen recent trends of these regions being more aggressive with their use and innovation around prepaid instruments as a primary source of payment technology. Not only are countries in the developing world utilizing prepaid to reach consumers, but they are linking with investments from leading countries to drive innovation in areas as diverse as private payment networks to cryptocurrencies. China’s investments allow their state-owned and state-supported enterprises to have first mover advantage in reaching these communities.
Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Mercator Advisory Group.