What is technology financing?
The term “technology finance” refers to a loan that can be used to replace or buy new pieces of technology for a company, whether it’s for a minor refresh or a full infrastructure overhaul. Hardware or software, these technologies include: computers, notebooks, tablets, and mobile phones
Importance of Technology Funding
There is an importance of technology financing. such as –
- Aid for the development
Cost savings and efficiency improvements through more prompt and precise replies, lower fraud risks, and a deeper comprehension of consequences all contribute to the more effective program and project design and implementation thanks to the use of digital technology in the delivery of development cooperation.
The UN High Commissioner for Refugees (UNHCR) collects biometric registration data from Syrian refugees in Jordan and Lebanon, which is then used by organizations for the authentication of identity at ATMs and points of sale.
During the Ebola crisis in Sierra Leone, for example, digitalizing payments to response personnel helped reduce strikes, fraud, and travel time for workers, all of which are ways in which blockchain technology might aid improve coordination during humanitarian emergency response.
- Business and Trade
As the use of digital technology and internationalization rise, so do commercial possibilities. With the help of digitalization, small firms and entrepreneurs in underdeveloped nations can get access to international markets. Furthermore, it facilitates the birth of brand-new avenues for income generation, employment, and business creation.
According to UNCTAD, ICT services currently employ almost 100 million people worldwide, the vast majority of whom live in industrialized nations. About $189 billion, or 7% of global B2C e-commerce, was transacted across international borders in 2015.
However, emerging nations’ ability to compete on the global market will be greatly aided by their incorporation into the digital economy, therefore shifting trade patterns brought on by digitalization (such as re-shoring, outlined above) may have unintended consequences
- Financing at the national level
Better public service delivery and tax collection are two ways in which a government’s ability to gather, process, and act on information can increase the efficiency of fiscal policy. When it comes to managing public funds, digitalization improves efficiency and reduces overhead expenses (PFM). More and better data, improved data management systems, and more powerful computers all have positive effects and can contribute to more effective policymaking.
Estimates suggest that converting cash-based government payment transactions to digital ones might save poor countries about one percent of GDP each year, with about half of the savings going directly to governments. Government transfer payments in India may now be made directly to individuals because of the country’s national biometric identity scheme and a concerted public effort to improve financial inclusion, which has greatly reduced leakage.
- Financing In the Private Sector
Financial technology (fintech), which is enabled by digital means, provides new business models for delivering financial services and is important to financial inclusion in many developing nations. Digital financial services, such as mobile phone-based money, payments, and banking, are provided by a wide range of fintech companies, from startups to existing telecom corporations and online retailers that leverage ICT capabilities and customer bases to serve their own customers.
There are many ways in which fintech can help people in poor nations gain access to financial services who have historically been denied it because of geographical or other barriers.
- Problems with debt and the system
The capacity to gather more and better data can enhance credit analysis, making credit available to a wider range of agents. In a broader sense, digitalization has the potential to increase economic data collecting, back up early warning systems, and heighten readiness in the face of risks.
However, the regulatory regime, which is now based around financial service-providing companies rather than activities, faces additional difficulties from the provision of financial services outside of conventional supervisory and regulatory frameworks. Regulators have begun to take action in the context of international exchanges of virtual currencies,
- Data and Information
Huge amounts of data are being produced by digital technologies and the Internet, and this has led to discussions about data ownership and its appropriate applications. Governments must find a middle ground between protecting citizens’ privacy and limiting productive technological progress.
Besides, capacity building in data management and data and process standardization is also required. It is important to increase our efforts to promote the exchange of successful policies and regulations.
Therefore, Kenya is the birthplace of mobile finance. the authorities and regulators in Kenya are often cited as an example of a country that has successfully implemented legal and regulatory frameworks. they do it to govern the widespread adoption of digital technology.