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Singapore: Integrated Financial Ecosystems for Least Developed Nations

A Memorandum of Understanding (MoU) between the Monetary Authority of Singapore (MAS) and the United Nations Capital Development Fund (UNCDF) was recently signed to work together to create integrated and digitised financial ecosystems for MSMEs from least developed nations (LDCs).

“MAS is excited to partner with UNCDF to develop Integrated Financial Ecosystems to help MSMEs from LDCs connect digitally and gain better financial access,” says Sopnendu Mohanty, Chief FinTech Officer, MAS.

He added that the IFEs will provide digital infrastructures to equip micro, small, and medium-sized enterprises (MSMEs) with the necessary skill sets to build their operations and acquire access to funding through digitally verifiable credentials and inclusive credit assessment methods.

By facilitating better access to funding through open digital infrastructures, the partnership will assist MSMEs in improving their digitalisation capabilities. To begin with, MAS and UNCDF will work together to create the Pacific Islands Integrated Financial Ecosystem (PIIFE) to increase the digital connectivity of MSMEs and firms in Singapore and the Pacific Islands.

For participating MSMEs, the PIIFE will provide an open digital infrastructure in three areas:

  1. First is the financial empowerment of MSMEs through content that promotes broad financial literacy and skill sets for participating MSMEs, the successful completion of such online courses would produce verifiable digital certificates.
  2. Second is that MSMEs can more easily access secured and unsecured funding as well as financial services thanks to the Financial Trust Framework. This intends to make it possible for financial institutions to evaluate the creditworthiness of MSMEs using verifiable digital credentials and alternative data sets, such as a history of on-time supplier payments and timely tax payments to the appropriate authorities.
  3. And the third area is increasing commercial potential thanks to online commerce finding tools. These provide a scalable network of business-to-business ecosystems that can aid MSMEs in expanding domestically, throughout Asia, and in other growing areas.

The PIIFE is a collaborative project between public organisations, financial institutions, FinTechs, tech solution providers, and players in the Pacific Islands and Singapore.

According to UNCDF Officer in Charge Mourad Wahba, this collaboration represents the joining of two like-minded and specialist organisations seeking equitable and sustainable development through digital finance in the wide and lively Pacific Island region. They are excited to use their knowledge and expertise to create a digital ecosystem customised to the specific needs of Pacific Island people and enterprises.

Furthermore, Neha Mehta, Regional Lead for UNCDF in the Pacific, emphasised that the MSME and informal sectors create the most job possibilities in Pacific Island countries. The collaboration with the MAS will accelerate digitalisation and access to new data sources from traditional financial data and non-traditional data sources, fueling the growth story of MSMEs and SMEs.

It will improve the appraisal process for SMEs and allow for the expansion of the SME loan company. It has enormous potential for increasing total productivity and enhancing the Pacific region’s economies, hence raising the living standards of Pacific Islanders.

OpenGov Asia earlier reported that the MAS, the Bank of Ghana (BoG), and the Development Bank of Ghana (DBG) signed an MoU to establish the Ghana Integrated Financial Ecosystem (GIFE). The GIFE intends to improve financial skills and access for MSMEs in Ghana, as well as to provide more chances for Singapore-Ghana trade and financial services cooperation.

The GIFE is a collaborative endeavour in Ghana and Singapore by public organisations, financial institutions, FinTechs, and digital solution suppliers. According to the MAS, GIFE is an important step toward greater collaboration between the two central banks and significant emerging markets.

The GIFE aims to outperform existing approaches to financial inclusion by combining support mechanisms powered by smarter data that MSMEs and financial institutions can use based on their requirements.

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