Digital commerce is a central and growing feature of the global economy. But in the world’s least-developed countries, uptake remains low. Firms in emerging and frontier markets are not selling their products online because they do not have reliable internet access due to inadequate physical infrastructure, poor policy and legal infrastructure, and lack of political commitment. These barriers prevent entrepreneurs—especially women and members of other vulnerable groups—from taking advantage of digital commerce to reduce poverty, especially with cross-border trade in goods and services. The Digital Economy and Market Development (DEMD) activity seeks to address the need for an open, transparent, and competitive digital commercial environment by supporting USAID Missions, Bureaus, and Independent Offices (MBIOs) to develop, implement, and measure cutting-edge approaches in the technical areas of digital economy development, trade capacity building, private sector development, and improving the business enabling environment.
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The expansion of intra-Africa trade will be critical in supporting long term economic growth. Currently intra-Africa trade accounts for only 10% of African countries’ total trade. Reducing barriers to cross-border digital payments for micro, small and medium sized enterprises is necessary to support this increase in intraregional trade. MSMEs account for over 80% of the businesses in COMESA, and although many of them engage in cross-border trade they currently depend heavily on cash transactions due to the lack of an interoperable payment system.
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The COMESA Business Council (CBC) is implementing a Digital Financial Inclusion (DFI) program that supports the design, development, and deployment of an integrated regional digital retail payment system that is low-cost, interoperable, and fraud resistant. By developing a digitally inclusive instant regional payment platform the CBC aims to onboard cash based MSMEs into digital marketplaces, increase the volume of cross border transactions and intraregional trade, and support financial inclusion. The initial pilot of the model will focus on eight countries (Zambia, Malawi, Uganda, Kenya, Ethiopia, Mauritius, Egypt and Rwanda) and eventually be rolled out to all COMESA countries. The platform is currently under development, and the CBC is seeking assistance in developing the regulatory framework that will facilitate the pilot of the business model.
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The CBC has identified several key policy areas for harmonization to support digital financial inclusion including consumer protection, cybersecurity, anti-money laundering/combating the financing of terrorist (AML/CFT), electronic transactions, and data privacy and protection. The CBC has asked the DEMD activity to provide support in developing a uniform COMESA digital financial consumer protection framework.
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Expanding access to digital financial services can create substantial benefits but also carries increased risks for users. The existing consumer protection regulatory framework in many countries has not kept pace with the evolution of digital financial services. Existing regulations must be harmonized as well as updated to ensure they address risks associated with mobile payments, consumer data ownership and protection, and consumer education.
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The USAID Digital Economy and Market Development project is seeking a Regional Digital Financial Inclusion Policy Specialist for a limited term, part time engagement, who will support efforts to develop an example harmonized policy framework for digital financial inclusion across these 8 target countries. The consultant will conduct desk research into existing policy, and interviews with policy makers and other key stakeholders in the sector. Based on this research, the consultant will develop an example framework for regulation, as well as roadmap for implementation of the framework within these countries.