Never let a serious crisis go to waste.” Innovators around the world are taking the saying seriously, responding to the disruption caused by the COVID-19 pandemic with creative digital solutions.
The initiatives we highlight here are markedly diverse: the overnight transformation of Sri Lanka’s 125-year-old live tea auction; the world’s first central bank digital currency in The Bahamas; and the rapid pivot from a taxi-hailing app in Kampala, Uganda, to a thriving e-commerce platform.
All three share a common characteristic: an innovative, entrepreneurial spirit born of an urgent need. The Bahamas initiative responded to a need to extend financial services to residents of remote islands whose lack of access was exacerbated by extreme weather. In Sri Lanka, the tea industry—fundamental to the economy and employing millions—came to a sudden halt when COVID-19 prohibited the weekly tea auction from convening. And in Uganda, people’s ability to get food and medicine and earn an income was severely hampered by the pandemic lockdown.
While the ingredients for success vary in each country, there is one constant: there was an enabling environment for these initiatives to germinate and quickly become reality. The end result? Innovative, homegrown initiatives that help millions of underserved people be financially included and have a better shot at prosperity.
The Bahamas: first digital currency
In October 2020, The Bahamas leapfrogged into the digital vanguard with the launch of the world’s first central bank digital currency—the sand dollar.
Pegged one-to-one to the Bahamian dollar and using a blockchain-backed digital token, the new currency is available to people and businesses to buy and sell goods and services and send money to each other. Sand dollars are issued and regulated by The Bahamas’ central bank.
The Bahamas territory is spread out over 700 islands—making it unprofitable for commercial banks to have ATMs or physical branches on remote, sparsely populated islands. Extreme weather events make the cost of maintaining infrastructure even steeper. As a result, the most vulnerable often lack access to financial services.
The need to serve the unbanked and underbanked population, along with a drive to modernize the payment system, spurred the central bank’s introduction of the new digital currency.
“We didn’t start with the idea of a central bank digital currency,” says John Rolle, governor of the Central Bank of The Bahamas. “We focused on eliminating as many obstacles as possible for persons having access to the equivalent of a deposit account or a mobile wallet account to conduct transactions.”
Following successful pilots the central bank began distributing sand dollars to Bahamian commercial banks, payment system providers, and money transfer operators. Funds are placed in clients’ digital wallets, which allow access to various amounts of money and transaction thresholds.
Anke Weber, IMF mission chief for The Bahamas, attributes the fast rollout and growing interest to the need created by 2019’s devastating Hurricane Dorian and the COVID-19 pandemic.
It is still early days, with only $130,000 worth of sand dollars in circulation compared with $500 million Bahamian dollars. Customers’ initial reaction has been positive.
Those who are using the sand dollar enjoy the ease, faster turnaround, and lower costs.
“When I first heard about the sand dollar, I was extremely excited,” says Brandon Kemp, founder of Tin Ferl, a popular pop-up food park in Nassau. “The amazing thing about the sand dollar is that there are no fees or transaction costs. So, if I need to pay one of my staff, I can do it right there in the moment; they receive it literally within seconds, and everybody is happy with that.”
Using the sand dollar doesn’t even require a bank account or a mobile phone, although that’s how most transactions take place.
And while it wasn’t designed with the pandemic in mind, users uniformly cite the safety of a cashless transaction as a key reason for adopting the digital currency. “What convinced me to go with this sand dollar is mainly because of COVID,” says Mikia Cooper, an attorney at law firm Twenty Twenty and Associates.
As countries around the world experiment with central bank digital currency, lessons from The Bahamas’ experience will no doubt be watched closely.
Sri Lanka: tea auction transformed
For many, Sri Lanka (formerly known as Ceylon) and Ceylon tea are synonymous. The country’s economy and society are deeply intertwined with the majestic tea leaf. Today, 10 percent of Sri Lankans derive an income from the tea industry, which generated more than $1.2 billion in export revenues in 2020.
For more than 125 years, the tea industry has depended on a tradition-steeped auction where hundreds have convened twice a week at the Ceylon Chamber of Commerce to buy and sell Sri Lanka’s finest leaves.
When COVID hit, the world’s oldest tea auction, which had functioned without fail for more than a century, was suddenly unable to bring together buyers and brokers for the weekly bidding. Plantations and factories had nowhere to sell their product, buyers were left in a lurch, and millions were at risk of losing their income.
Sri Lanka’s tea auction faced an urgent need to reinvent itself.
“The whole country said, right—now there’s 2 million people whose lives depend on this industry . . . we need to look after them,” says Anil Cooke, CEO of Asia Siyaka Commodities, who led the task force charged with digitalizing the auction.
With brokers and buyers unable to meet in person, the challenge was not just to find an alternative to the live auction, but to get it up and running and yielding good prices—immediately.
Sri Lanka’s tea industry had been mulling a switch to a digital auction for more than 20 years. But the auction’s nuanced dynamics—which drew on an innate knowledge of complex tea blends, frenetic in-person competition to draw top bids, and real-time market feedback—had stymied previous attempts.
With the stakes as high as ever, a team comprising the Sri Lanka Tea Board, technical experts, the government, brokers, auctioneers, and others came together to find a solution.
Local IT company CICRA Holdings led technical development, working with brokers trained to interpret the dynamics of in-person bidding and with deep knowledge of tea categories and grades. To succeed, the e-platform would have to reimagine all the human and technical variables of the live auction.
Within days, some 300 people had taken part in simulated training programs, with sessions running up to the night before the launch.
“I am happy to say that within a very short period of time, about seven days, we managed to build a solution . . . [and] made history on April 4, 2020, by having the first digital auction going live,” says Boshan Dayaratne, CEO of CICRA.
Not only is the new system COVID-safe, it’s also faster, more strategic, and cost-effective—and even yields higher prices. The online auction has also improved transparency and efficiency and reduced duplication of work.
Benefits are being felt locally as well. D. Gayan, supervisor of the Dessford Tea Estate, says the continuity of sales has enabled them to continue operations and pay workers.
A. Rajakumari, a “plucker” who harvests tea by hand, says that “even though we had a virus last year, those of us in the estate got our salaries. It’s because of this work that, even during the corona problem, I was able to happily run the home and live comfortably with our children.”, IMF writes.