Assessing the People’s Republic of China’s Influence on Digital Finance and Fintech in Emerging Markets

Background:

While much analysis has examined the nature of the People’s Republic of China’s (PRC) influence on telecommunications (5G) and core Internet infrastructure, much less has been done on how that influence affects the digital financial economy that relies on this infrastructure. This includes payment system providers that process billions of dollars of payments involving sensitive financial information for millions of people in emerging markets globally.

This project’s scoping assessment will quantify and assess the nature and implications of the influence from (a) the PRC and (b) firms that originate in China on digital payments and FinTech marketplaces across emerging markets where USAID operates. For example, Huawei is the IT vendor and payment systems provider for some of the most widely used mobile money services across Asia and Africa, processing billions of dollars of payments involving sensitive financial information for millions of people. Likewise, investment flows from Chinese firms are an attractive source of funding for FinTech startups seeking to be acquired, mid-sized firms seeking to scale, or investors seeking to exit their investments in FinTechs across Africa and Asia, two regions in which exits are more difficult to execute. This granular-level data on PRC investment and ownership at a sector or firm level in the FinTech marketplace is currently neither available nor aggregated in a systematic way.

This project will fill that critical gap by conducting a scoping assessment to map out how to measure the economic or other linkages between the PRC (both Government and firms that might be subject to the influence of the Government) in verticals like e-commerce and digital payments in emerging markets, primarily in Africa and Asia.
Once influence and related risks are better understood, the assessment will then seek to understand the implications for USAID’s development and humanitarian assistance priorities as well as for partner-country stakeholders and end-consumers. These implications might be positive, negative, or neutral, depending on the specific type of linkage and the actors involved.

USAID aims to engage one qualified team with significant experience in analyzing and monitoring digital financial ecosystems, including both public and private investment and capital flows, conducting political risk assessments, and with knowledge of the PRC’s economic foreign policy such as the Digital Silk Road.