The digitization of financial services has enabled significant innovation in the provision of credit in low- and middle-income countries (LMICs), which some hail as a transformative development with potential to drive financial inclusion, reduce poverty, and spur economic growth. However, others associate digital credit with a proliferation of misconduct, consumer abuses, and over-indebtedness, which can have severe consequences for the most vulnerable consumers and amplify inequality.
This report, produced in collaboration by the Center for Effective Global Action (CEGA) and Innovations for Poverty Action (IPA), and supported by the Bill & Melinda Gates Foundation, aims to bring evidence and data to bear on this debate. In particular, it emphasizes the narrower topic of airtime loans and Mobile Instant Credit (MIC), small consumption-oriented digital loans, where there is now a critical mass of impact evidence. We acknowledge this sector is dynamic and some evidence cited may already feel dated given the constant commercial innovation. Nevertheless, we hope this curation of relevant evidence and data contribute to a shared vocabulary, reference base, and conceptual framework that advances the discussion on the relationship between the digitization of credit and development.
