Category: Finance

On recentring people鈥檚 voices to decolonise FinTech narratives

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In 2009, I was interested in studying the phenomenon of M-Pesa as a legal scholar鈥攋ust a year after its launch and intense rollout. My standpoint enabled me to see the initial regulatory paradoxes that M-Pesa presented. In 2010, I began my PhD, exploring what a regulatory framework should look like. My analysis focused on the complexities presented by the storage and transfer of customer funds within mobile money systems. Central to were themes of financial regulation, consumer rights, financial stability, conceptualising 鈥榝inancial inclusion鈥�, and the meaning of 鈥榖anking the unbanked鈥�. At the time, the study was significant, in understanding the contractual tensions between mobile money users and Safaricom, a non-bank entity, which provided services akin to a traditional bank鈥檚 deposit system鈥攜et did not appear to be subject to the same regulatory restraints as conventional banks. Crucially, banks and financial institutions had historically dominated much of the financial system, through practices due to colonialism. Therefore, M-Pesa caused much upheaval to established banks, but simultaneously provided hope for the excluded. Various actors extended this new hope, in the 鈥榮uccess鈥� narrative of M-Pesa. Its beneficial use as a storage and transfer system was extolled as , and the restatement of its trajectory was and continues to be modelled across the developing world. The global development and digitalisation agenda have subsumed M-Pesa鈥檚 pervasive influence, both valorising the pathways to 鈥榙evelopment鈥� and 鈥榠nnovation鈥� through FinTech with a singular aim of 鈥榝inancial inclusion.鈥�

As a result, Kenya has become the site of contestation for overwhelming empirical research, interest, and knowledge production, particularly by Western scholars and institutions. A 鈥榞old rush鈥� has emerged, and the scramble for knowledge extraction has intensified across academic disciplines and across methodologies. Studies from Ghana, Senegal and Kenya dominate. The study of 鈥榙evelopment鈥� in all its iterations has gained a new development. However, much of the ways in which mobile money (M-Pesa) and FinTech are discussed and framed demonstrates a Western understanding of the everyday lives of the Kenyans who use it. Scholars, activists, and proponents often situate the premise of its use as being between two paradigms: advancing through the enhancement of global development aims, and its function as a tool that includes Kenyans in extractive cycles of financialisation. Both of these are true.

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On recentring women鈥檚 grassroots struggles to decolonise FinTech narratives

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Drawing realised by artist Pawel Kuczy艅ski for Serena Natile’s book

I came to the study of fintech as a feminist socio-legal scholar researching the gender dynamics of South-South migration. While doing fieldwork in Kenya for my PhD in 2012, I came across M-Pesa, a mobile money service used by locals as an instrument for transferring money from urban to rural areas. From the start of my research in 2011 to the completion of my PhD in 2016, ongoing studies on M-Pesa were mainly celebratory. It was acclaimed as an innovative instrument for poverty reduction, development, and gender equality and was enthusiastically supported by donors and international financial institutions such as the World Bank and the International Monetary Fund (IMF), as well as by tech entrepreneurs and corporate philanthropy. Its success story was so uncontested that I decided to change my research question to focus on the gender dynamics of digital financial inclusion, rather than on my initial interest, migration.

The key narrative of M-Pesa鈥檚 success in terms of gender equality was, and still is, that it facilitates women鈥檚 access to financial services, providing them with a variety of opportunities to improve their own livelihoods and those of their families, their communities, and ultimately their countries. In the specific case of M-Pesa, a basic-mobile-phone-enabled money transfer service is considered more accessible and available than transferring money via mainstream financial institutions such as banks, and more reliable and secure than informal finance channels such as moneylenders or the handling of cash via rotating credit and savings associations (ROSCAs). This claim is based on three assumptions: first, that women have less access to financial services than men have; second, that women would use their access to finance to support not only themselves but also their families and communities; and third, that digital financial services are better than informal financial channels because they overcome the limits of cash, ensuring traceability and security. These assumptions motivated advocacy and investment in digital financial inclusion projects and the creation of ad hoc programmes and institutions, all strongly focused on the question of how digital technology can be used to facilitate women鈥檚 access to financial services.

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Decolonising for Whom? Recentring grassroots struggles and voices in the 鈥榙ecolonising fintech鈥� narrative

serenanatile1 Comment

By and

Over the last few years 鈥榙ecolonisation鈥� has become an increasingly popular subject in Western academia. Broadly considered the process of recognising and undoing the intellectual and institutional structures that enabled and maintain the reproduction of imperial power, calls for decolonisation have opened uncomfortable debates about epistemological privilege, forcing us to confront biases and injustices and to revisit hidden histories and visions for the future. While these debates remain essential, particularly at a time of political authoritarianism, racism, and violence, they also highlight the contradictions in Western academia between decolonisation as a fashionable conceptual trend and its real commitment to justice.

In formerly colonised communities, generational consciousness of colonial oppression and struggles to recover land, property, wealth, and political institutions have created a lived experience of the long-term consequences of colonialism, usually conceptualised as 鈥榗oloniality鈥�, that is not a concept but a reality. This experience has shaped movements and protests in the Global South, including within universities. An example is the movement in South Africa, which followed the significant decline of government subsidisation of universities with discriminatory consequences for the disadvantaged Black population without historical wealth and economic privilege. Similar protests concern the recognition of and fight against pillars of colonial power including philanthropists such as British colonialist Cecil , who accumulated wealth by appropriating land, enslaving people and extracting resources, and used that wealth to shape knowledge production.

Other significant protests involve resistance against such as Western financial infrastructures, corporations and international institutions i.e. the International Monetary Fund (IMF) and the World Bank. A  recent example is the ongoing youth-led (Gen Z) round of protests in Kenya , motivated by demands to reject the IMF-supported that, if approved, would have imposed a fresh round of government cuts to basic services and austerity measures on Kenyans. The young people protesting in the streets of Nairobi showed awareness of the colonial legacy and long-term impact of the 1980s structural adjustment policies (SAPs) on the lives of people 鈥� particularly those at the lower end of the income distribution, and demanded economic sovereignty as the only way to achieve social justice. The protests were successful in impeding the adoption of the Bill, but many young people paid with their lives, as the government deployed a deadly military response to the protests. 

The demands for decolonisation are based on ending economic and epistemological oppression, two interrelated aims, each grounded in colonialism. Reclaiming knowledge and the economic means that allow its production and dissemination has always been at the centre of decolonisation as an opportunity to remake societies, nations, and the world itself for the better. In its fight for justice, decolonisation is a grassroots struggle against colonial and neo-colonial rulers and rules, as well as against all global and local actors and structures that enable and reinforce those rules. For this reason, grassroots voices need to be at the centre of any decolonisation project.

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De-dollarisation and Internationalisation of Other Currencies: Geopolitics and Implications for Dollar Diplomacy

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By Sangita Gazi and Christabel Randolph

, International Monetary Fund (IMF) states that 鈥榌t]he dollar鈥檚 share of global foreign-exchange reserves fell below 59 percent in the final quarter of last year, extending a two-decade decline鈥�. However, surprisingly, the decline in the dollar is not associated with the 鈥榠ncrease in the shares of the pound sterling, yen, euro, and other long-standing reserve currencies.鈥� Instead, the shift in the dollar鈥檚 share in the reserve currency system went in two directions鈥攁 quarter into the Chinese renminbi and three-quarters into the currencies of smaller countries that have historically played a limited role as reserve currencies. This piece examines the shifts underlying this trend with a focus on increased regional alliances in trade and payment systems technology. We conclude with forecasts and implications for a more multipolar monetary order and 鈥榙ollar diplomacy.鈥�

Since the onset of the Covid-19 pandemic, geopolitical tensions and economic stagnation have led to fragmentation in cross-border trade and payment systems. The ongoing Ukraine-Russia conflict and international sanctions imposed by the Western economies have also contributed to this situation by causing disruptions for countries with trade relationships with Russia, particularly for essential commodities like fuel, grain, and oilseed. Moreover, many countries are running low on U.S. dollar reserves amidst inflation, prompting them to consider alternative currencies for cross-border trade settlements. This is further exacerbated by the aggressive rate hikes by the Federal Reserve in an attempt to contain domestic inflation within the U.S. The historical correlation between the U.S. dollar and commodity prices has been disrupted for the first time. As a result, evidence suggests a degree of regional fragmentation in trade-related activities and the use of alternative currencies, leading to a shift away from the U.S. dollar as the primary currency for international trade. For instance, in March 2023, the yuan was the most widely used global currency, surpassing the U.S. dollar and euro.

Further, central banks from emerging markets and developing economies seek to diversify their foreign currency reserve composition. The shift began in April 2022, after key Russian banks were removed from SWIFT following Russia鈥檚 invasion of Ukraine. China increasingly uses the yuan to buy Russian commodities, such as oil, coal, and metals, settling their bilateral trade with Russia in Chinese currency instead of dollars. In a similar effort, India has made several initiatives to create bilateral trade relationships with countries like Bangladesh, the United Arab Emirates, and Malaysia to internationalize the rupee and use it to settle cross-border trades. This trend toward exploring alternative currencies may affect the global financial landscape. Still, its impact about newer currencies鈥� volatility and regulatory systems.

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Financial Statecraft and its Limits in the Semi-Periphery

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Over the past decade, two, intertwined research agendas on (IFS) and (SF) have proposed to identify how an increasingly finance-dominated global capitalism incorporates the (Semi-)Peripheries.

The IFS research agenda recognizes that a 鈥渟ubordinate鈥� national currency comes with a risk premium increasing the costs of financing public debt 鈥� in other words, the current, US dollar-based currency hierarchy acts as a structural fiscal constraint in the Global South, limiting the scope for badly needed public investments. Foreign capital 鈥� in the form of foreign currency-denominated sovereign and private debt-, foreign aid, and foreign direct investment – is then to this artificial and unfair developmental constraint.

The SF agenda examines how this straightjacket on fiscal space has been further compounded with the liberalization of global capital mobility over the past forty years, diffusing credit-based accumulation strategies from the Core to the Peripheries: from socially and environmentally vital public goods and transformative industrial policies towards developmentally regressive strategies of accumulation driven by speculation and asset-price inflation.

Programmatic visions for liberating (semi-) peripheral economies from the dual constraints of a national fiscal space suffocated by the global currency hierarchy and globally mobile capital flows which deepen financialization are underdeveloped. Two scales of action are plausible: At the international level, , but it remains uncertain what forms of international financial solidarity and collaboration, if any, will materialize under its aegis. The national level comprises an alternative scale as the State continues to be perceived as the most likely candidate for ringfencing domestic social, environmental, and developmental objectives from the pressures of global capital mobility and the structural constraints of the global currency hierarchy.

In a with P谋nar E. 顿枚苍尘别锄, we study the politics governing the management of money in Hungary and Turkey, two semi-peripheral economies where the executive has built a vast array of direct and indirect tools to intervene in monetary policy, retail banking and credit allocation to manage financial subordination.

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Gendering the debt crisis: Feminists on Sri Lanka鈥檚 financial crisis

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By Kanchana N. Ruwanpura, Bhumika Muchhala and Smriti Rao

Countless images of women carers flitted through April-July 2022 on Sri Lankan television screens, social media, and newspapers. Carers with young children, mothers with new-borns leaving them with equally young children while they stood in queue for gas or kerosene, children doing their homework on tuk-tuks while their parents got in line for petrol and diesel. Yet, Sri Lankan policy pronouncements rarely mention working-class women. In a country where women comprise 52% of the population, this is astounding. Especially so when the dominant three foreign exchange earners for the country 鈥� garments, tea exports and migrant workers to the Middle East 鈥� rest on the efforts of women workers. 

In the current response to Sri Lanka鈥檚 debt crisis, the voices and needs of working-class women are once again being ignored by policymakers, despite the evidence all-around of women intensifying their unpaid labour even as the conditions under which they perform paid labour deteriorate. 

As feminist economists, our argument is straightforward: debt justice is a feminist value and principle. And at the core of our understanding of debt justice is the principle that working class women cannot be made to pay for the 鈥榦dious debt鈥� generated by the recklessness and corruption of (almost entirely male) Sri Lankan political elites.

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Building up debt traps: Risk, climate adaptation and microfinance

vincentguermond1 Comment

How to adapt to a changing climate is one of the foremost questions of our era. In the last decade, microfinance has shot to prominence as a highly-promoted tool of adaptation to climate and environmental change. In commissioned by the Grameen Foundation and Oxfam US, Dowla argues that 鈥榳ithin the populations that will be most affected by global warming, the plight of many individuals is linked to the ability of microfinance institutions to adapt to the consequences of climate change鈥�.

With access to already-existing as well as newly-adapted financial products and ser颅vices, the argument goes that people and communities will be better placed to . 鈥楪reen microfinance鈥� would facilitate adaptation in two key ways: via coping capacity enhancement, and via adaptive capacity enhancement. Recommended strategies include improving access to microcredit for climate change responses as well as promoting insurance schemes to reduce the burden of climate risk on society.

In contrast to these emerging discourses and practices that frame microfinance as a key tool of climate adaptation, our recent research with rice farmers in rural Cambodia finds that microfinance loans are leading to an over-indebtedness emergency that significantly undermines borrowers鈥� long-term coping and adaptive capacity in a changing climate. Such loans often push households to borrow more, work more, sacrifice food quality and quantity, quit farming, and erode and sell their assets, including land. The cost of financialised coping strategies can trap rural populaces in financial obligations which they struggle to service and which manifests ultimately as over-indebtedness. Microfinance ends up promoting : one that is individualised, incremental, and geared towards the further integration of populations into processes of capital accumulation.

This form of adaptation is highly profitable. Indeed, as Dowla argues in that same , each new climate-linked shock 鈥榦pens up opportunities for the microfinance institutions and their clients鈥�. Yet the corollary to this profitability is that the costs of such an adaptation tend to be borne by the poor, who find themselves exposed not only to the rigours of the environment but now the global market too.

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Who鈥檚 in control? Wall Street Consensus, state capitalism, and spatialised industrial policy

Ilias ALAMI1 Comment

By Seth Schindler, Ilias Alami and Nick Jepson

Recent trends may well have puzzled critical observers of global development policy. On the one hand, we witness the rise of聽what Daniela Gabor has aptly termed聽the聽鈥�,鈥櫬燼n emerging聽paradigm聽promoting聽the mobilisation of private finance as a developmental priority.聽Southern states are encouraged to聽re-engineer聽their聽domestic financial systems around securities and derivatives markets, create聽鈥榠nvestable鈥� opportunities in聽sectors such as聽infrastructure, water, climate adaptation, health and education, as well as聽deploy聽policies that聽specifically 鈥榙e-risk鈥櫬爄nvestment聽for global investors. In this formulation Southern states are subordinated to global financial capital and their policy space is significantly constrained.

On the other hand, however, we observe a tendency towards , wherein states are increasingly active within markets, as entrepreneurs and owners of capital as well as regulatory agents in the world economy. Across the income spectrum states have embraced the role of agents of transformation and development. In the , one way these trends manifest is in the proliferation of new modalities of spatialised industrial policy underpinned by . Examples include the China鈥揚akistan Economic Corridor, Indonesia Vision 2045, the Plan S茅n茅gal 脡mergent, Morocco鈥檚 New Development Model, and the developmental aspects of Mexico鈥檚 Fourth Transformation such as the Tehuantepec Isthmus Interoceanic Corridor. Some of these plans have benefitted from the rise of China and its multitrillion-dollar Belt and Road Initiative, which traditional development actors now increasingly seek to counter by providing .

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