The challenges facing the world’s most vulnerable people seem to keep mounting. Our uneven global recovery from the pandemic is worsening inequality and widening divides. For the first time in decades, poverty and hunger are on the rise. And as the war in Ukraine shuts down ten percent of our global wheat supply, hunger is projected to dramatically worsen.
Thankfully, after two years of responding to the evolving obstacles created by COVID-19, we have opened doors to powerful solutions.
At the base of the economic pyramid, more people and small businesses than ever are using digital payments, often for the first time in their lives. This presents a once-in-a-lifetime moment to build on these rails and introduce a broader array of tools that can deepen their resilience and create new opportunities. If we do that, we can ensure that accelerating digitization truly builds a better world than we had before.
This is exactly what we’re working to do at Accion. We are driving the digital transformation of frontline financial service providers, who have already weathered storms caused by the pandemic, to provide a lifeline of support to struggling small businesses and families. With new digital tools, these providers can give the personalized support that people need to adopt digital tools themselves—and apply them to improve their financial outlook. And newly digitized providers can collect and analyze data to better understand their clients’ needs.
We’re also working to find, fund, and grow innovative fintech startups that are leveraging new technologies and methods like satellite imaging, data analytics, and contextualized finance to reach and empower more people. These nimble, inventive companies have the potential to make a real difference against the development challenges facing our world today.
For example, innovations in agritech can mitigate the rise in hunger we’re seeing today. Accion Venture Lab portfolio company Pula has provided more than 4.5 million traditionally excluded farmers in Africa and Asia with agricultural insurance and data-driven insights to help them sustainably increase crop yields. Apollo Agriculture, based in Kenya, also takes a tech-based approach to help farmers maximize their output and profits through mobile money accounts, financing, optimized advice, farming products, and insurance.
Going digital is powerful, but not perfect
While the digital horizon is expanding, many still lack access. Financial service providers, ecommerce companies, and others on the front lines of the digital economy should focus on reaching and including groups with limited tools and skills, like cash-reliant businesses, women, and those in rural areas.
But access is only part of the solution. While more people are using digital tools, it’s not guaranteed they are using them effectively. Research by the Center for Financial Inclusion shows that many small businesses have been slow to go digital, or they are trying out digital tools only to stop using them. Companies can apply a tech-touch balance to support those who are using digital tools for the first time.
We must also think beyond access when expanding the reach of financial services to underserved groups. Financial service providers should build products that are specifically geared to improve clients’ financial health, as well as their understanding and awareness of their own financial situation. This is a win-win for both providers and clients.
In Latin America, with support from MetLife Foundation, we partnered with fintechs and financial service providers to develop new digital financial products specifically geared to improve clients’ financial literacy and health. One client in Chile used a new digital revolving credit line to successfully grow and strengthen her wholesale avocado distribution businesses.
During this time of recovery, we can build new opportunities for everyone, but only if we focus on uplifting and empowering the people who are being left out today.