Yemisi Izuora
Multilateral banks are known as mega-infrastructure supporters, funding the likes of new roads, bridges and power plants in developing countries.
The IFC has disbursed $205 million to date into 29 financial technology investments; creating over 4,800 jobs in three years and digitally connecting people through new services has created new economic and employment opportunities.
Although physically connecting people and cities are still the bread and butter of World Bank and its affiliates, the digital space is becoming more important.
At the International Finance Corporation (IFC), a member of the World Bank that focuses on the private sector in developing countries, a conscious decision was made five to seven years ago to looking more closely into the digital space as part of its financial inclusion program for developing regions.
The internet has revolutionized how people connect and find employment, making digital services as important as roads and bridges, explained Vivek Pathak, IFC director for East Asia and the Pacific.
“We will still need a lot of the brick and mortar infrastructure, but 20 years ago, being connected through roads, airports, ports, roads were good enough. Today that is not good enough,” Pathak said.
More than ever before, emerging populations can tap technology to connect rural and urban communities and achieve financial inclusion, he added.
“Traditionally, all this was happening in California, in Silicon Valley. Today, there’s as much happening in Silicon Valley as in Hangzhou, Shenzhen, Bangalore or Myanmar, as long as you have the internet,” he said.
To date, the IFC has disbursed a cumulative $205 million into 29 financial technology equity investments with 16 percent of the fintech portfolio in East and South Asia.
Those investments have reportedly created 4,876 jobs across 15 companies from 2014 to 2016.
The fintech investments reached 59 million customer accounts in 2016 — almost double from the year before — of which an overwhelming 50 million were likely to be unbanked.
One of the IFC’s investments, where it put $31 million, is in Truck Alliance, an Uber-like service for trucks in China. It connects long haul freight drivers with clients, overturning longstanding traditions that saw drivers spending days looking for jobs with shippers who gave them little choice in the destinations.
Now, the drivers — and shippers — can find more compatible matches via the program. It was an early-stage investment by the IFC in December 2016.
Pathak said his team is in the early stages of digital investment, although they are open to even cutting edge technology like artificial intelligence and virtual reality.
The World Bank is not the only development bank delving into the digital realm: The Asian Development Bank is also getting into the scene. One of its initiatives involves partnering the Australian government to spur innovation and access to finance through fintech in Cambodia, Laos, Myanmar and Vietnam.