Part one of this blog highlighted the need for Solomon Islands’ digital transformation agenda to be guided by sound data and research, and to regularly measure its progress. This has been made easier with the launch of UN Capital Development Fund’s Inclusive Digital Economy Scorecard (IDES) in April 2021.

This week’s article looks at the benefits of fostering inclusive digital economies for everyday Solomon Islanders and the wider Pacific region, citing the YouSave LoMobile micro-pension product as a prime example.

Launched as a pilot in 2019, the product allows people to use mobile airtime credit to be deposited into their voluntary retirement savings account at the Solomon Island National Provident Fund (SINPF). In a country with very limited bank branch network and no mobile money service available, this solution allows the SINPF to leverage a network of more than 8,000 mobile airtime credit resellers to offer a very convenient way for people working in the informal economy to save up for their pension.

To incentivize the use of this service, the government announced a 10 percent tax refund on the airtime for members that use these airtime credits for pension savings. Additionally, the SINPF agreed to reduce the minimum deposit fee from SB$10 to SB$5. Such incentives are helping the uptake of the service towards addressing some of the challenges identified earlier in this article. As a result of these incentives, the SINPF saw the average daily deposit value increase with more than 90 percent. Up to mid this year, more than 29,000 Solomon Islanders (of which 53 percent women) have enrolled in the scheme, with over SB$29m (US$3.6m) recorded in savings. These numbers are expected to further increase in the coming years as the impact of COVID-19 gradually subsides. As one of the world’s first such pension scheme, the success of this service demonstrates the developmental impact when various stakeholders in the digital ecosystem, such as the Central Bank, tax authorities, mobile network operators, a provident fund and a development partner like UNCDF, all put their heads together in overcoming the unique market challenges in Solomon Islands.

An inclusive digital economy has the potential to accelerate growth and development in the Pacific by, among other things, boosting financial inclusion among marginalized groups. Access to important services such as e-banking, e-commerce and mobile payments could be life-changing for the archipelago’s vulnerable communities that are typically at risk of being excluded from these developments, such as women, youth, elderly and people with disabilities. On that note, Solomon Islands scored 50 percent for digital inclusiveness, with a gender inclusiveness score of 78 percent, meaning that half of the key population segments and 22 percent of women cannot participate in the digital economy.

Bridging this divide carries huge potential benefits. According to a 2017 World Bank report, improved internet access and connectivity could potentially add more than US$5 billion to regional GDP and create close to 300,000 jobs by 2040. The gains could be much higher in the larger Melanesian markets (Papua New Guinea, Fiji, Solomon Islands and Vanuatu). The report estimates that information and communication technology-related opportunities could lead to additional per-capita income growth of around 20 percent in PNG, 7 – 10 percent in Fiji and Solomon Islands, and around 5 percent in Samoa and Tonga. The Solomon Islands digital financial inclusion project is poised to take advantage of these technological developments.

The scorecard makes specific recommendations on how Solomon Islands can capitalize on the ‘transformative’ fiber optic submarine cable completed in 2019, linking Honiara to the major East Coast Internet Hub in Sydney. UNCDF, with partners at UNDP, will work with the public and private sector stakeholders in Pacific countries, such as Fiji, PNG, Samoa, Tonga, Timor-Leste and Vanuatu to develop their own IDES scorecards, as they are facing very similar economic, environmental and geographical challenges to Solomon Islands. All these stakeholders are critical to get on board in the process to ensure we leave no one behind in the digital era.