Digital payments can help accelerate climate action by speeding up aid

In the wake of a natural disaster, rapid financial aid can mean the difference between life and death for emergency victims.

Launched last December by the UN-based Better Than Cash Alliance and other partners, the call to action advocates for inclusive digital payments for emergency responses and climate resilience.

The initiative advocates for three key areas, namely expanding digital public infrastructure (DPI) and digital payments, closing the digital divide to improve access to digital payments, and putting vulnerable communities at the center of climate adaptation.

It is currently endorsed by governments of the Philippines, Ethiopia and Ghana, along with the Vulnerable Twenty (V20) Group, the World Food Programme, and Mercy Corps.

“Climate resilience building demands collective action and we are glad to have Alliance members and partners championing the role of digital payments for climate action.

"This call to action also features a repository of lessons and solutions, where there is an opportunity to learn from each other on what works and what doesn’t,” says Isvary Sivalingam, Southeast Asia Lead at the Better than Cash Alliance, another UN-based global partnership that advocates for the use of responsible digital payments to achieve Sustainable Development Goals.

GovInsider sits down with Sivalingam to find out more about how digital payments can support climate action and the initiative’s next steps.

Digital payments for more timely response and aid transparency

“A key challenge in emergency response is the speed of delivery and in some cases, transparency - whether the funds are reaching the intended people,” says Sivalingam.

Less than one per cent of all climate finance trickles down to Indigenous and local communities and there is a need to ask intermediaries where the money is going, an Indigenous leader said at COP28.

Sivalingam explains that digital payments, where the infrastructure supports it, have the potential to deliver aid to the intended individual's bank account almost instantly, and up to two days depending on where the money is coming from.

The COVID-19 pandemic has been a major event leading to digitised social protection systems, says Sivalingam, especially when it comes to government-to-person payments.

“There have been since significant improvements made in digital payments and ID infrastructure, as well as general internet connectivity,” she says.

GovInsider earlier reported how a robust digital ID system enables secure digital payments. With digital payments, the Philippines government managed to roll out the “largest social protection programme in Philippine history” with the COVID-19 social amelioration programme.

Data and digital payments enable leaders to pre-empt response to disasters

“The world now has the capacity to predict the occurrence, severity, and trajectory of natural disasters... And because we know these things in advance, we can prepare to do a lot more for the recipients,” says Sivalingam.

Due to the Philippines’ vulnerability to natural disasters, the United Nations Development Programme in the Philippines and the Australian government earlier partnered to help members of the public take necessary precautions before the disasters happen, reported GovInsider earlier.

Having a “larger window” between the prediction and actual occurrence allows humanitarian actors and governments to identify potential individuals – based on income levels, or other specific vulnerabilities they might face – and coordinate aid efforts.

"This anticipatory approach offers the opportunity to onboard vulnerable individuals a few months ahead of the event, open financial transaction accounts, familiarise them with use of these accounts, ” she explains.

In this regard, five UN organisations have jointly implemented a pilot in the Philippines to test anticipatory typhoon response. By using early warning systems and scientific advances to predict typhoons, the pilot aims to mitigate and minimise the impact of typhoons on people's livelihoods.

Sivalingam adds that a digital approach to delivering cash assistance is aligned with the government’s efforts in building the country’s national interoperable QR payments programme, known as the Paleng-QR Ph programme, which is jointly developed by the central bank and government.

Interoperability helps promote financial inclusion among the lower-income, and levels the playing field for financial service providers of all sizes, she adds. In the case of the Paleng-QR Ph program, it is targeted at “public markets and local transportation, particularly tricycles,” according to its website, or places people patronise day to day.

Reaching the last mile: Remaining gaps to bridge

Sivalingam acknowledges the long-standing challenges that come in the way of the initiative. These include bridging digital divides faced by people living in rural areas, as well as vulnerable communities like women, youth and Indigenous communities.

This is especially so in the Philippines, Indonesia, and other archipelagic countries where there is higher risk of climate vulnerability.

This digital divide will ultimately impact financial access, she adds. For example, smallholder farmers with smartphones can more easily purchase insurance to cover crop failures and invest in more climate resilient crops than those without.

Lastly, Sivalingam also highlights the importance of DPI in addressing some of these challenges. She shares that the Better than Cash Alliance is working closely with the Indian government to share their experiences and perspectives on how DPI advances financial inclusion.

Havard Business Review also earlier reported on the critical role of DPI in enabling essential emergency payments, citing a study which found that countries with some degree of DPI were able to reach more citizens when rolling out cash-transfer programmes.