Digital Public Infrastructure (DPI) has the potential to close nearly half of the credit gap faced by Micro, Small, and Medium Enterprises (MSMEs) in low and middle-income nations, a recent report from Lighthouse Canton has revealed.
Highlighting the outcomes and prospects post the 2023 G20 summit under India's presidency, the report emphasizes that India is a case study and a pioneer of digital transformation for other G20 nations in the evolving global DPI paradigm.
The use of DPI can also ease credit access for an additional 16-19 million MSMEs in such countries, the report observed.
It highlighted that investing strategically in sectors like open credit, digital retail payments including UPI, and broadening Government-to-Person (G2P) systems, could boost the economies of less wealthy nations by 1-2 per cent. Having digital IDs, like AADHAR, could bring economic benefits equal to 3-13 per cent of the GDP in these countries, with an average improvement of about 6 per cent, it added.
In the area of climate conservation and environment protection, DPI can accelerate carbon capture by 5-10 years in low and middle-income countries, while also preserving 0.2-0.4 million hectares of unique forest area in these regions, it adds.
Focusing on India's banking industry, the report indicated that the adoption of Digital Public Infrastructure (DPI) has dramatically lowered the cost of customer onboarding, from $23 to a mere $0.1. Additionally, banks utilising e-KYC have seen their compliance costs halved from $0.12 to $0.06. Furthermore, for some Non-Banking Financial Companies (NBFCs), the adoption of DPI has resulted in an 8 per cent increase in SME lending conversion rates, a 65 per cent decrease in depreciation costs, and a 66 per cent reduction in fraud-related expenses.
The report highlighted two major successes of the summit:
Inclusion of the African Union
India's G20 presidency achieved a significant milestone by securing the African Union's (AU) permanent membership, empowering the AU for knowledge exchange and technological advancements. The G20 Digital Innovation Alliance fosters innovation. AU's G20 inclusion strengthens diplomatic ties, fostering collaborative efforts. This facilitates joint ventures, addressing Africa's challenges. The AU gains a platform for financial assistance advocacy, focusing on poverty reduction and healthcare.
Formation of the Global Biofuel Alliance
During its G-20 Summit presidency, India leveraged the platform to demonstrate its progress and best practices in striving for net-zero emissions. As the presiding nation, India initiated the establishment of the Global Biofuel Alliance (GBA), advocating for the use of sustainable fuels in the worldwide transition to cleaner energy. Reports indicate that the global biofuels market, valued at $116.46 billion in 2022, is projected to reach approximately $201.21 billion by 2030, experiencing a Compound Annual Growth Rate (CAGR) of 8.3 per cent from 2021 to 2030.
The report shed light on other key themes that were discussed during the summit such as healthcare equality and digital health projects, with a particular emphasis on the crucial role of women in socio-economic transformation.
“Effective deployment of digital public infrastructure (DPI) can address existing digital divides and enable inclusive and sustainable development. As a continually evolving concept and a suite of shared digital systems, DPI can be nurtured and utilized by both the public and private sectors. Since it is founded on open standards and specifications and has secure and resilient infrastructure, all countries, particularly G-20 member nations, can take advantage of DPI in rendering society-wide public services.” said Sumegh Bhatia, managing director, and CEO of Lighthouse Canton India.
