ObjectivesFund scope
The promise of digital technologies in Pacific Island states goes beyond payments to encompass many digital and mobile financial services. Previous initiatives in Fiji, Tonga, Samoa, the Solomon Islands, and Vanuatu addressed the high cost of innovative technologies, cash-intensive problems related to agent-led remittance business models, and unaffordability of operational and compliance measures, with varied results. This time, Fintech and mobile phone technologies (e.g., mobile money, digital currencies, blockchain, and cloud platforms) are the focus as they can reduce the cost of financial services, ensure transactional transparency (including remittance transfers), help micro-small-medium entrepreneurs and business owners find their footing, and level the socio-economic landscape for vulnerable and marginalized people—especially rural women.
At the outset of the COVID-19 crisis, early phases of the Pacific Digital Economy Programme used digital technology to create new opportunities for digital financial service operators to accelerate and enhance financial inclusion despite social distancing and containment measures. Services have, and continue to, enable contactless and cashless transactions like QR merchant payments and tap-and-pay solutions. Despite traction, the challenge is the underutilization of services, lack of products for low-income populations, and poor last-mile coverage continue to prevent stakeholders from realizing the full potential of financial inclusion across the Pacific region.
The SDGs and digital financing
Large parts of the Pacific remain unbanked and are at risk of being excluded from the rapidly developing global digital economy and related opportunities. Significant investments in core digital infrastructures of participating countries (e.g., under-sea fibre optic cables) made it possible for programme stakeholders to double down to establish and increase digital connectivity across the region. Current action has the potential to hit SDG targets and affect the lives of Pacific Islanders by:
- Using digital Fintech services and tools as accelerators and enablers of access to (and delivery of) basic services for excluded and vulnerable populations.
- Leveraging digitization as a central solution for overcoming lack of infrastructure and covering vast distances and/or introducing access to isolated areas.
- Cutting the costs of uncertainty, asymmetries of information, and securitization of transaction information amongst a few widely dispersed players.
- Breaking down barriers that hamper access to information, communication, learning, and exchange.
In this new phase of programming, digital innovation is treated as a source of solutions that can be turned into business models to improve livelihoods, creating space for inclusivity, and improving management transparency and government accountability.
Strategic framework and theory of change
Pacific Digital Economy Programme partners are creating inclusive digital economies by addressing specific market constraints and narrowing the digital divide to affect the lives of all Pacific Islanders. The focus is first on reaching rural communities, women, rural labour mobility employees, and micro/small/medium entrepreneurs through the application of a market development approach where programmers better understand select market systems and apply contextually sound solutions that address underlying market dysfunctions and lead to improved efficiencies, effectiveness, and sustainability.
The programme approach in all five countries leverages the roles of current actors in the marketplace, supporting them to continue with what works or motivating them to change behaviour. It is an approach that draws on lessons learned from other UNCDF programmes that achieved change by applying market development practices and using knowledge gained from a decade’s worth of activities in the Pacific. Strengthening systems and relationships between market and sector actors de-risk new business models, make digital solutions more inclusive, and reduce the digital divide.
Programmatic theories of change cover five years of interventions that will roll out in a phased manner. Because the inception phase takes place in the first two years, a solid foundation will build more complex programming activities. All action requires buy-in from public and private sector stakeholders. Activities fall under four separate work streams:
- Enabling policy and regulatory environment.
- Open digital payments ecosystem.
- Inclusive innovation.
- Empowered customers.
Outputs and outcomes under each work stream influence stakeholders and help drive the expansion of digital economies in the Pacific—be it through mobile network operators, universities, banks, insurance providers, or Fintech firms. On the government side, support provided to officials and representatives ensures policies and regulatory frameworks are in place and allows for market development. Customers also receive information that incentivize them to use new digital products and services.
> $55M 
$55M - $25M
$25M - $5M
< $5M
