The aggregate global pool of domestic savings has grown over the last 20 years from US$7.5 trillion to US$23.3 trillion. Domestic savings in least developed countries alone has grown from US$13 to US$218 billion over the same period. Digitalization allows micro-savings from the informal sector to become part of the formal financial system and gives those already using the financial system more options. This raises the possibility of increasing the proportion of long-term development financing needs being met from domestic resources through accessible savings products linked to local sustainable investment. This has potential to reduce the cost of capital, international debt burdens, and vulnerability to foreign exchange movements.
Overview of this Catalytic Opportunity
Opportunities |
 Channel domestic savings into development financing. |
Scale |
Global savings pool has grown over two decades from US$7.5 trillion to |
SDGs |
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citizens as.. |
Small savers and co-beneficiaries of sustainable infrastructure. |
Use cases |
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Next steps |
Policy makers should form national coalitions with infrastructure, finance and payment platform businesses to build ‘low-cost-high integrity’ digitalized financing solutions to enable micro-savers to finance local infrastructure. |
The Bangladesh pathfinder initiative is developing a pilot of this model. The Bangladesh pathfinder initiative plans to use mobile payment platforms to aggregate small savings, drawing inspiration from early experimentation by the Central Bank of Kenya’s M-Akiba retail bond.
M-Akiba
Next Steps: Policy-makers and regulators should encourage market innovation in data-driven lending, equity and debt platforms, integrating broader sustainability criteria into financing criteria, and ensuring that algorithms are unbiased in their treatment of women, minority groups and/or other ethnic, religious and social groups and their enterprises.
