What Nigeria can learn from Bangladesh’s women-focused digital wages

Africa’s biggest economy can take lessons from other developing economies such as Bangladesh whose wage digitisation model is putting millions of unbanked women into the financial net, thereby increasing the country’s financial inclusion rate.

According to the latest Global Findex report by the World Bank, the percentage of Bangladeshi women with bank accounts rose to 43.5 in 2021 from 35.8 percent in 2017, while for men; it declined to 62.9 percent from 64.6 percent.

The percentage of Nigerian women with bank accounts also rose to 35 percent in 2021 from 27.3 percent but it is lower than the 56 percent of Nigerian men who have bank accounts.

“As a program officer at the Gates Foundation, I work with partners such as HERProject to encourage financial inclusion in Bangladesh, where wage digitization has made impressive strides towards bringing women under the formal financial umbrella,” Snigdha Ali, program officer, financial services for the poor, Bill & Melinda Gates Foundation said in a recent article.

She said women’s digital account ownership in Bangladesh increased by seven over the past four years, cutting one of the world’s largest financial gender gaps by a third.

“One big reason for this gain is a push for digital wages in Bangladesh’s Ready-Made Garment (RMG) industry, leading to exponential growth in such payments after the government’s COVID-19 response drew on the nation’s vibrant ecosystem of mobile money companies to better reach workers who did not yet have bank accounts,” she added.

Before the COVID-19 pandemic in 2020, the Government of Bangladesh and private-sector leaders pledged to work together to introduce digital wage payments in the RMG industry. But the pandemic fast tracked the pledge as the lockdown measures to curb the spread of the COVID-19 virus closed factories, leaving millions of workers without jobs, money, or food.

“To ease this crisis, the government offered low-interest loans so garment manufacturers could pay their workers for three months while factories were closed, with one key stipulation,” Ali said.

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A recent report by HERProject, a multi-stakeholder collaborative initiative, said Bangladesh has recognized the importance of digitizing wage payments in the garment sector, its largest export industry, and has the opportunity to become a leader in transparent and innovative labour practices.

“More than half of Bangladesh’s four million garment workers are women. And because they are mostly young, less able to access education, and unbanked, the economic potential of this pool of 2.3 million workers has not traditionally been recognized by Financial Service Providers and the government,” it said.

It said digital wage payments have begun to change this, and impact data shows that women workers are active and integral to the economy. “Of the 85,123 women who participated in the HERproject Digital Wages Program across 64 factories, one in two opened a mobile money account and one in five started saving regularly.”

The report added that the women conducted an average of eight transactions a month, including sending person-to-person remittances and buying airtime for their phones.

Since the launch of the Digital Bangladesh Vision 2021 in 2008, the government has made significant strides toward a digital economy by implementing a large number of projects relating to digital technologies.

Bangladesh has achieved remarkable progress towards the Digital Bangladesh vision, said Ruth Goodwin-Groen, managing director at the Better Than Cash Alliance.

“Digital transactions have grown from five percent to 20 percent in five years, an impressive four-fold increase. The country has also withstood the impact of the pandemic by digitally delivering social safety payments, wages, and stimulus packages to citizens and industries,” she said.

Anir Chowdhury, policy advisor at Aspire to Innovate (a2i) program added that there are many areas where we have already witnessed remarkable adoption of digital payments.

“As digital payments ecosystem grows in scale and complexity, its dependence on infrastructure increases commensurately.

“We are leaving no stone unturned to ensure that we build a reliable and inclusive digital infrastructure that will serve as the foundation on which digital payments and services can be built,” he said.

Last year, the government released another National Digital Payments Roadmap (2022-2025). It identifies 22 solutions to build a safe, interoperable, and inclusive digital payments ecosystem over the next three years in priority sectors of RMG, retail, agriculture, health, and education.

“There has been a sea-change in digitization in Bangladesh. Smartphone connectivity is now universal. In this context, our new national digital payments roadmap gives clear steps until 2025,” said Muhammad Mannan, Bangladesh’s Minister of Planning.

This is significant because we want to achieve the commitments made under the Sustainable Development Goals. We want our women to play a role in the digital economy at par with men,” he said.

A 2022 report by Better Than Cash Alliance and a2i projected that digital payments could boost Bangladesh’s annual GDP by 1.7 percent.

It said, “This means adding $6.2 billion annually to the economy. Of this, 53 percent will come from digitizing just 30 percent of micro-merchant transactions in the retail sector; 45 percent from digitizing credit disbursements in the agricultural sector; and the remaining from scaling digital wages in the informal RMG industry.”

For other countries looking to adopt the wage digitisation model, the HERProject recommends that the various governments should incentivise all factories to switch to digital payments (using incentives such as tax breaks) and consider developing legislation to implement wage digitization.

“Recognize and reward factories that have provided digital financial capability training for women workers. Reform national identification processes so that workers are not required to return to their home village to access paperwork.”

And support women workers to register online as part of training and via existing Union Digital Centers and specialized digital centers located near factories.