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Digital Public Infrastructure (DPI) Key to Closing MSME Credit Gap in Low and Middle-Income Nations

A recent report by global wealth and asset management company Lighthouse Canton highlights the potential of Digital Public Infrastructure (DPI) in bridging nearly 50% of the credit gap faced by Micro, Small, and Medium Enterprises (MSMEs) in low and middle-income countries. The findings were presented in the aftermath of the 2023 G20 summit during India’s presidency.

Impact of DPI on MSME Credit Access: The report emphasizes that leveraging DPI can not only address existing digital divides but also facilitate inclusive and sustainable development. It estimates that the effective use of DPI has the capacity to close the credit gap for 16-19 million additional MSMEs in such nations, making credit access more accessible.

World Bank Recommendations and G20 Policy: Aligning with World Bank recommendations, the report underlines the significance of DPI in advancing financial inclusion and productivity gains for MSMEs. The World Bank’s G20 Policy Recommendation paper in September emphasized how DPIs, including digital payment systems and data exchange platforms, can enhance credit access for MSMEs through digital channels.

Examples of DPI: DPI encompasses interoperable, open, and inclusive systems, with examples such as digital ID systems like India’s Aadhaar and digital payment systems like Brazil’s Pix and India’s UPI. These platforms aim to provide essential public and private services.

Strategic Investments and GDP Growth: The report suggests that strategic investments in open credit, digital retail payments, and Government-to-Person (G2P) systems could potentially boost the GDPs of low and middle-income countries by 1-2%. It highlights the economic value of digital IDs, such as AADHAR, unlocking potential improvements equivalent to 3-13% of the GDP in these nations, with an average improvement of 6%.


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