Does Digital Technology Help Create More Inclusive Opportunities?
Authored by Enock Wangila — Partnerships Analyst, Youth Impact Labs
Digital technology has been growing rapidly over the last couple of years. With the COVID-19 pandemic, the wave of digital adoption and transformation will accelerate, growing by leaps and bounds as people and businesses look towards building resilience.
Women, youth, and people living with disabilities have limited access to economic opportunities. Global youth unemployment stands at 13.6% with stark differences across regions well evidence by North Africa, where youth unemployment stands at 30%, and, Sub-Saharan Africa where the rate is 8.7%[1]. Fewer women are in the workforce as evidence by the labor participation rate. In 2019, the female labor force participation rate was just at 47%, compared to male labor force participation at 74%[2].
A world with equal opportunities for all is better than one where inequalities persist. Can digital technology create more inclusive opportunities for work for women, youth, people living with disabilities, and other disadvantaged groups? To fully answer this question, it is important to examine the barriers to inclusive work opportunities and what role digital technology is playing in addressing these barriers.
How Digital Technology is Addressing Some Barriers to Inclusive Work Opportunities
One of the biggest challenges for businesses, especially early-stage businesses, is access to capital. The high cost of credit has resulted in the failure of businesses and even hindered some from kicking off. However, with digital technologies enabling e-commerce and powering the sharing economy and gig work, the startup costs for entrepreneurs have generally been lowered. Vendors on e-commerce platforms can start selling with no shopfront or warehouse. Gig work platforms are lowering the startup cost by allowing platform workers to layer their work on the trust that the platforms have built and their brand value.
Digital technologies have also been resulting in an increase in the amount of credit available to businesses through the emergence of non-traditional credit scoring models that are non-collateralized. Digital businesses can today access financing without collateral and progressively grow their credit line. The impact of these new lending models is well illustrated in China where MyBank, a leading private commercial bank, has served over 20 million customers largely by providing non-collateralized funding that is powered by complex algorithms[3].
Participation in the labor force requires skills. Traditionally, learning pathways have been largely modeled around a physical class setup. Those who have been unable to meet the cost of education or the requisite educational requirements have often been excluded from the opportunity to learn and eventually apply their skills for improved livelihoods. Digital technology has changed this by providing an opportunity for diverse learning channels including remote, self-paced, and on-demand learning. Increasingly, people are now better placed to upskill themselves and take up new work opportunities in new emerging sectors - a large hurdle to achieve at scale without digital technology.
Digital technology has created additional employment paths for informal sector workers. Through these technologies, some of the challenges on access to tools and equipment have been solved through innovative financing models. The availability of transactional data on employee earnings has allowed digital work platforms to leverage the data resource in extending non-collateralized loans to workers to meet the cost of equipment. Subsequently, workers would cede a portion of their future earnings towards loan repayment, providing a win-win scenario for platforms and platform workers through improved work output and earnings.
Examples of Digital Technology Interventions for Inclusion by Mercy Corps’ Youth Impact Labs Portfolio
Mercy Corps’ Youth Impact Labs believes that digital technology can create inclusive work opportunities. The program’s portfolio partners have demonstrated that digital technology can lower or completely eliminate barriers to participation in work opportunities in the digital economy. These are some of the examples of their interventions towards inclusion.
Lynk is a technology company connecting blue-collar workers to work opportunities. The company has provided starter packs to gig workers on their platforms made accessible through a financing model in order to reduce the cost of entry for new workers as they start accessing new opportunities within the digital economy. Lynk has also standardized the pricing of services to level the playing field for all workers and developed digital training for its workers to upskill themselves.
Sky Garden is an e-commerce platform primarily built to support SMEs. The company has provided tailored marketing support to sellers based out of the capital city to build their traction and set them up for success on its platforms. Additionally, Sky garden has a seller education program whereby every single feature on the platform has a tutorial on how best to use that tool in order to grow revenue.
Sharqi Shop is an online platform that helps Syrian and Jordanian refugee artisans and small businesses to sell their products online. The company was founded to address the constraints faced by small businesses in shipping and receiving payments outside Jordan. Through Sharqi shop, informal businesses in Jordan are now in a position to ship all over the world and seamlessly receive payments.
Agro Supply is an input supplier with an innovative savings product designed to support smallholder farmers save to meet the cost of inputs. Through a model underpinned by digital technology and leveraging farmer agents and the country mobile money network, smallholder farmers gradually save for inputs and track their savings through a USSD application for broader reach.
The Need to Close the Digital Divide
While digital technology holds the promise of building an inclusive world, it can be inherently exclusive unless the barriers to the digital divide are addressed. While the digital divide is a challenge across the world, it is a bigger challenge in Africa. This divide is witnessed largely across 3 fronts: Access to digital devices across rural and urban areas and across gender. Access to the digital economy, which is primarily through mobile phones, is still low with just less than half of the population having mobile phones[4]. In terms of gender, Sub-Saharan Africa has the second widest gender gap in the world in terms of mobile ownership (13%) with an even wider gap on mobile internet use (37%), placing women at a significant disadvantage in participation in the digital economy[5]. Similarly, the digital divide is wider in rural areas. For instance, in Kenya, the number of people in rural areas with access to the internet is half that of urban areas.
Digital technology can create more inclusive work opportunities across a diverse set of traditionally excluded groups. However, with the widening digital divide, it will require concerted efforts from all stakeholders for us to witness the full value of digital technologies in creating more inclusive work opportunities for all.
[4] https://www.gsma.com/mobileeconomy/wp- content/uploads/2020/09/GSMA_MobileEconomy2020_SSA_Eng.pdf
