Infrastructure, health in danger of underfunding, IMF warns

The International Monetary Fund (IMF) have cautioned central governments in Sub-Saharan Africa including Ghana to ensure that in its quest to responding to climate change it does not sacri ce basic needs such as schooling, health, and infrastructure services.

According to the Regional Economic Outlook for Sub-Saharan Africa report 2023 titled ‘The Big Funding Squeeze’, it is important that resources allocated towards climate change do not crowd out those devoted to basic needs and other development goals.”

The report further revealed that critical development needs, like schooling, health, and infrastructure services, are in danger of not being adequately lled under the funding squeeze. Most governments have limited scal space, hampering their ability to protect the most vulnerable and allocate su cient funds to essential development sectors.

Limited nancing makes it particularly challenging to address the ongoing food security crisis that is a ecting the region. If the di culties in addressing basic needs were not enough already, climate change is presenting additional spending pressures on shrinking

By Eugene Davis

scal budgets. For instance, cyclone Freddy—one of the latest in a series of climate shocks to the region—has battered vulnerable families and communities in southern Africa, but countries have limited means for climate adaptation.

For the African continent alone, adaptation costs could reach $50 billion per year by 2050, in a 2-degree Celsius scenario (GCA 2021), and mitigation costs for a clean energy transition in Africa have been estimated at around $190 billion per year until 2030 (IEA 2022).

public sources estimated at about $22 billion in 2020, as shown in Figure 13 (Analytical Note “Closing the Gap: Concessional Climate Finance and Sub-Saharan Africa”).

Advanced economies have also fallen far short of a 2009 pledge to mobilize $100 billion a year for climate actions in developing countries.

“It is important that resources allocated towards climate change do not crowd out those devoted to basic needs and other development goals. Ocial development assistance, for instance, has been declining over the last two decades, and despite a temporary surge during the COVID-19 pandemic, aid ows are likely to shrink further over the near term.”

Other Flows: $0.6bn

Public grants

$7.5bn

Private ows

$3.1bn

Public concessional debt

$7.7bn

Public non-concessional debt: $3.5bn

Source: Climate Policy Initiative

The report however, states that climate funding to the region remains well below these needs, with private and

Additionally, the report recommended that more support from advanced economies is needed to ensure that the essential development needs of African countries are adequately nanced, with the objective of fostering strong, resilient, and inclusive growth. Furthermore, climate nance must come on top of current aid ows rather than replacing them.

The Fund also suggests that governments should unlock more concessional nance. Sub-Saharan African countries Story continues on page 3

Story continued from page 2 encounter challenges in accessing concessional climate nance, in part because requirements vary greatly across nancing providers. For example, climate funds—a key channel for concessional nancing—have the potential to be scaled up signi cantly to help meet the region’s climate adaptation and mitigation needs. However, the numer- ous access requirements and project selection criteria for these funds’ present serious hurdles for countries in the region seeking to access this nancing. To help unlock concessional nancing, development partners—including the IMF— can support countries in building and strengthening capacity. Priority areas include governance and public nancial management, develop- ment of adequate data and climate strategies, formulation of legal and regulatory frameworks, and nancial system reforms.

Also, there is the call to increase private climate nance. The private sector has the potential to mobilize significant climate nance in the region as it does in the rest of the world.

This can be done by developing the use of nancing instruments like green bonds or sustainability-linked bonds and attracting private institutional investors. Increasing the attractiveness of private climate nance will require better data to support nancial risk monitoring and analysis on performance indicators, but also more transparency and disclosure.

Mobile money services are growing faster than predicted around the globe, as digital services continue to rise in popularity, according to the GSMA’s annual ‘State of the Industry Report on Mobile Money 2023’, published today.

The report, published annually by the GSMA and funded by the Bill and Melinda Gates Foundation, demonstrates that rates of adoption are even quicker than expected, with the number of registered mobile money accounts growing by 13% year on year, from 1.4 billion in 2021 to 1.6 billion in 2022. While it took the industry 17 years to reach the rst 800 million customers, this is extremely signi cant growth as it has taken just ve years to reach the next 800 million.

In 2022, daily transactions via mobile money reached $3.45 billion, exceeding the $3 billion amount predicted in 2021. Total transaction value for mobile money grew by an incredible 22% between 2021 and 2022, from $1 trillion to around $1.26 trillion.

However, in many areas worldwide, more work is still needed to help give underserved communities access to safe, secure and a ordable nancial services. With 1.4 billion people worldwide remaining unbanked, the GSMA Mobile Money Programme is working with mobile operators and industry stakeholders worldwide to create a robust mobile money ecosystem, increasing the relevancy and utility of these services and ensuring their sustainability.

The 2023 report shows there are now 315 live mobile money deployments across the globe, with peer to peer (P2P) transfers and cash-in/cash-out transactions still among the most popular use cases. Bill payments using mobile money grew by 36% year-on-year – faster than any other use case - and the industry continues to focus on use case diversi cation, playing an important role in digitising economies.

Pandemic-driven uptake

As the world increasingly moves on from COVID-19, mobile money services have continued to show resilient growth that was instigated during the pandemic. Up to 400 million accounts were added during the pandemic alone. This rapid uptake is largely due to the technology’s role in enabling millions of people across low- and middle-income countries to access digital nancial services. This upward trend continues, with the number of accounts active on a 30-day basis also growing by 13 per cent year-on-year to 401 million in 2022.

The report also shows that, during 2022, mobile money-enabled international remittances grew by 28% year on year –to $22 billion. During the pandemic, many diasporas sent more funds via mobile money to friends and family than ever before. As a result, international remittances grew signicantly in both 2020 and 2021, as many senders favoured mobile money for its e ciency, speed, safety and cost-effectiveness. The trend continued in 2022, albeit at a slower rate.

Closing the gender gap

Mobile money is also continuing to drive nancial inclusion for the world’s unbanked, particularly amongst women in rural communities, where access to mobile money can play a transformational and empowering role.

However, according to the latest GSMA data, there is still a mobile money gender gap that has shown signs of widening over the last year, particularly in India, Indonesia and Pakistan. Mobile phone ownership is one of the main drivers of the mobile money gender gap, however, a number of other barriers and

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Story continued from page 3 cultural norms also prevent women from adopting mobile money. As a result, women in low- and middle-income countries are currently 28% less likely than men to own a mobile money account.

Growing agency networks

The number of mobile money agents also increased signicantly last year, with a 41% increase between 2021 and 2022. The overall number of agents went from 12 million in

2021 to 17.4 million in 2022. The number of active agents increased by 25% to 7.2 million in 2022. A lot of this growth came from Nigeria, where a more liberal regulatory regime meant an increase in mobile money providers. Agents continued to prove to be an invaluable part of mobile money services and were responsible for two-thirds of all cash-in transactions in 2022.

“It is promising to see the continued growth of mobile money worldwide. Mobile money has a orded millions of unbanked and underserved people in low- and middleincome countries access to digital nancial services, for the rst time,” said Max Cuvellier, Head of Mobile for Development, GSMA. “However, even with this signi cant growth, there is still a long way to go to bring those services to over a billion people worldwide who remain unbanked. The GSMA is therefore encouraging governments worldwide to keep developing the enabling policies that can support mobile money deployments and further boost the growth of this crucial ecosystem. Doing so helps accelerate the digitization of national economies and build nancial resilience, allowing communities to support themselves in uncertain times.”