The G2Px initiative brings global knowledge and expertise across sectors to contribute to the broader agenda of improving government-to-person (G2P) payments through digitization in ways such that it accelerates critical development outcomes such as financial inclusion and women’s economic empowerment. In partnership with the Bill and Melinda Gates Foundation, G2Px operates across the World Bank Group with global practices and units working on social protection, payments systems, financial inclusion, digital development, governance and gender.
The goal of the G2Px initiative is to move from digitizing cash transfer payments primarily to improve program efficiency to also contributing to long-term development outcomes such as financial inclusion, fiscal efficiencies and women’s economic empowerment. G2Px aims to establish best practices and to radically improve G2P payments at scale, especially to the poor and to women, by focusing on end-to-end digitization and integration with digital payment ecosystems. This will be achieved by combining global knowledge across sectors, sharing country experiences and by leveraging existing and future World Bank country engagements that support large social assistance programs and integrate them into a 21st century digital payments ecosystem.
Why do we care about getting G2P payments right? Because better G2P payments have the potential to:
- Reduce direct cost to government;
- Reduce fraud and corruption;
- Increase convenience for recipients, and;
- Create pathways to financial inclusion and women’s economic empowerment (WEE).
As we move into an increasingly digital world, governments across the globe are leveraging new technologies to deliver services better, faster and more transparently. Globally, nearly a quarter of adults receive payments from the government – whether through public sector wages, pension, or social protection programs. Developing countries spend an average of 1.5% of GDP on such programs; as such, small efficiency gains have significant fiscal impact for countries, particularly since cash distribution can be prone to leakage such as fraud.
Unfortunately, while governments and practitioners have focused on the benefits of digitization in terms of individual program efficiency, digitization has not always delivered benefits to the end-user, who must still must turn up, stand in line and receive cash or a smart card loaded with e-money from a field administrator or a payment service provider – therefore, the user experience is much the same as that for non-digital payments. In addition, a focus on digitization for efficiency’s sake has often overlooked key opportunities to design digital payments such that they drive long-term benefits for recipients such as financial inclusion and WEE. In fact, just 50% of payments are currently linked to a bank account. In most of those countries the option of manual payments co-exists, often used in remote or less financially or technologically connected areas. Despite the impact that sending payments to a bank account (or other fully functional transaction account) can have on financial inclusion and WEE, G2P digitization efforts to-date have been primarily focused on efficiency gains for government. There is an unmet opportunity of better payments in social protection and other G2P to advance economic and financial inclusion, especially for women and other groups that have been historically been under- or un-included.
G2P digitization with a focus on efficiency gains is an important, but insufficient, step to achieving the full potential of G2P payments. Accounts, where they exist, are often dormant and used only for receipt of government payments. With the impressive gains that countries have made in making G2P digitization a reality, there is a growing opportunity to push further towards models that integrate digitization with efforts to promote recipient choice and which have greater impact on long-term outcomes.
G2Px seeks to refine our understanding of both the benefits and challenges in order to create a roadmap to ensure that governments and the technical advisors that support them are empowered to design G2P programs not only for short-term efficiency gains for single initiatives but also for government-wide efficiency gains, and, for recipients, a seamless user experience in the short-term and maximum empowerment benefits in the long-term. This roadmap, complemented by in-country case studies and technical assistance, will help to build a global movement for ensuring that all G2P specifically state financial inclusion and WEE as objectives and design programs accordingly.
