Five keys to building TRUST to strengthen customer protection in financial services

Posted on by Saumya Dixit

“Do not trust banks” and “avoiding a bank gives more privacy” were among the top most cited reasons why people choose to not have a bank account, as per the 2021 National Survey of unbanked and underbanked households by Federal Deposit Insurance Corporation.

Customer trust ranks as a priority for financial service providers (FSPs). Consumer protection is pivotal to foster this trust. It is a fundamental pillar of a secure financial system. It is essential for financial entities to streamline their products and services and, in the process, foster customer trust and safeguard their interests.

MSC has taken active steps to safeguard customers by increasing awareness of emerging risks. We collaborate with various stakeholders, such as FSPs, investors, and policymakers, to ensure that their practices prioritize customer well-being. This blog explores the significance of TRUST in financial services and offers FSPs a checklist to strengthen consumer protection.

  • Transparency: The first principle to build customers’ trust is to ensure transparency in the design of financial products and services. FSPs must disclose information on product features, guidelines, fees or subscription charges, terms and conditions, complaint management systems, etc. They can share this information through multiple channels, such as websites, SMS, calls, and printed disclosures, among others. Clear explanations of processes empower customers with a comprehensive grasp of the underlying rules. The provision of sufficient information to customers about FSPs’ operations can bolster their credibility. FSPs should also employ principles of behavioral science to simplify communication through tools. These include nudges, disclaimers, cool-off periods for consent, and prompts. These tools can increase understanding among customers, nudge customers to make informed choices, and provide timely information.  Behavioral insights can also be used to conduct pilots and experiments to assess the effectiveness of various transparency measures. FSPs can help consumers stay informed and increase accountability, user-friendliness, and transparency in their processes.
  • Relevance: Relevance refers to assessing if the products sold are suitable for the target consumer groups. Financial awareness is low in most developing geographies. Hence, it is easy to manipulate large audiences to avail of products and services that are unsuitable for them. For example, customers have fallen victim to mis-selling when they are sold insurance plans instead of loans or savings and endowment plans instead of term insurance. Customers often struggle to understand the intricacies of the product due to agents who intentionally mislead customers and push them to buy unsuitable plans. Similarly, many customers are pushed to buy policies to get bank lockers or loans. FSPs should guarantee regulatory compliance to ensure that products are sold in a clear and transparent manner only to relevant consumers and protect their interests. Agents are often incentivized based on the number of policies they sell as opposed to how well they explain the product features and processes to their clients. This brings us to the theme of designing incentive structures for insurance agents to protect consumer interests and reduce instances of fraud, misinformation, grievances, and complaints against insurance companies. FSPs should also use advanced analytics to analyze product suitability-related complaints registered by the customers. This can be a useful tool in self-evaluation for FSPs to monitor how well their products are mapped to their targeted market and needs. Advanced analytics and analysis of product suitability will also encourage FSPs to design better incentive structures and training programs for insurance agents so that they can ethically market insurance policies to potential customers.
  • User-friendliness: FSPs should ensure that the products and services offered to customers are user-friendly, easy to comprehend and navigate, and accessible through multiple channels, both physical and digital, to cater to a diverse range of users. The user interface’s ease of use and navigation, which encompasses the website, mobile applications, IVRS, and chatbots, is essential. At the same time, training for agents and staff is imperative to always uphold a customer-centric approach. FSPs should use behavioral economics to create and design interfaces that encourage responsible financial behaviors.
  • Security: FSPs should strengthen the security of financial products and services to protect customers’ personal information and assets. They must ensure that the financial products and services adhere to industry standards and regulations to comply with security and privacy assessments. This will include the use of innovative technology for advanced data encryption, fraud detection and prevention, multi-factor authentication, and firewalls, among others. FSPs must monitor and audit their processes and operations regularly. Additionally, they should invest in their staff’s training and capacity building to protect the customers against evolving risks and threats. These best practices will protect consumers against mis-selling and information asymmetry while they buy insurance.
  • Timely service: Quick and timely customer service helps gain customer loyalty and trust. Customers feel more secure when they can rely on prompt support whenever needed. Proactively addressing concerns can mitigate the risk of negative reviews, complaints, or legal actions, which can impact the reputation of FSPs. Positive experiences with timely customer service can lead to favorable word-of-mouth recommendations.FSPs should ensure that customers have access to an intuitive and inclusive grievance resolution system that monitors and analyzes customer complaints, identifies risks and issues, and much more. FSPs can use AI to optimize internal processes, which will ensure customer complaints are efficiently directed to the right personnel for resolution. Effective use of supervisory technologies can help FSPs monitor customer complaints effectively and provide timely resolution.

These five components play a crucial role to build customers’ trust and reinforce their protection. FSPs must ensure adherence to these principles at both the customer-facing front end and the internal systems, personnel, and processes on the back end of financial services.

Here is a checklist that FSPs can use to build trust, instill customer-centricity, and enhance protection at every stage of financial services delivery. These stages include customer onboarding, usage, transactions, and overall financial services management. The checklist directs FSPs to ensure trust and customer focus throughout their front-end and back-end processes and systems. This also covers functions that FSPs outsource to third parties and agents.

 

Top MSC blogs of 2023

Posted on by Saumya Dixit

1. Fishing for change: How a policy initiative in India’s Bihar state shows pathways to women’s economic empowerment and climate change adaptation

Explore the transformative approach that the Government of Bihar has undertaken to boost aquaculture in Bihar, through JEEViKA. This blog delves into how JEEViKA mobilizes women SHG-based fish farmer producer groups (FFPGs) and provides them with access to community ponds and water resources to take up aquaculture as a livelihood activity. This initiative has multiple gains, such as improved income and nutrition, increased access and control of women over community resources, and rejuvenation of water resources to tackle climate change. This initiative brings women to the forefront of a livelihood stream that has traditionally been a male domain.

2. Women in the digital economy

The COVID-19 pandemic carved out a prominent role for digital technologies in enabling economic transactions. However, the gender divide in access to digital technologies hurts women’s ability to participate in the labor force. This blog explores the nature of women’s work and how digitization shapes it. We outline the opportunities and challenges in the digital economy and offer recommendations to ensure a fair digital economy for women.

3. How policy changes could revolutionize how entrepreneurs in Kenya can access finance

This blog examines the Kenyan government’s policy reforms to allow entrepreneurs better access to affordable and convenient credit. It specifically looks at how the government’s financial inclusion fund—the Hustler Fund—promises to improve the financial health of MSME

4. UPI 123Pay: The four-leaf clover for feature phone-based payments in India?

UPI broke all records in August 2023. It observed 10.586 billion transactions that amounted to INR 15 trillion (~USD 189.64 billion). It has become the preferred payment choice for digitally-savvy Indians. However, it cannot reach the feature phone users. Its penetration is limited to urban segments with high usage of smartphones and mobile Internet. India is home to 400 million feature phone users. These users have limited avenues for digital transactions. They largely depend on physical access points for financial transactions. This blog discusses an innovative offline payment solution, UPI 123Pay, and its immense potential to bring digital payment convenience to the underserved segment.

5. Daily diaries: Reimagining how we generate insights to optimize cash-in, cash-out

The blog discusses the Agent Diaries approach, a research method that tracks the financial transactions of different types of CICO agents over time. It highlights the data gaps, challenges, and insights related to the agency business. It also compares the traditional and technology-driven ways of data collection and their cost-effectiveness.

6. Decoding agriculture market linkages for FPOs: Lessons from the field

India’s farmers have had a long history of struggle. For decades, they have battled a multitude of agricultural challenges, such as fragmented landholding, numerous intermediaries, and low value addition. In response, the country has actively promoted farmer producer organizations (FPOs) as a solution. FPOs intend to address these serious issues through the aggregation of demand for high-quality inputs, credit, and technologies and the aggregation of outputs to improve smallholder farmers’ market access. Yet despite these efforts, major processors and output purchasing companies hesitate to engage directly with FPOs. This blog explains the options available for FPOs to trade with institutional buyers and the on-ground issues FPOs must overcome to establish better market linkages.

7. Lessons from the Financial Diaries research with women traders in Kenyan open-air markets and cross-border trades

From our financial diaries research, we present the stories of Janet and Rebecca, two inspiring women entrepreneurs in Kenya. Please read our new blog as they shed light on women’s financial realities in the open-air market and cross-border trade sectors in Kenya.

8. DEBIT: Unpacking women’s choice of financial channels

MSC unpacked women’s choice of channels for financial transactions in India, Bangladesh, Kenya, and Indonesia. The result is a tool – the DEBIT framework. The four pillars of the framework are Diffidence, Education, Bias, Investment, and Trust. Read this blog to learn more about the framework and its application.

9. Decoding India’s Digital Personal Data Protection Act

The Digital Personal Data Protection Act (DPDP) of India was published in the Official Gazette on 11th August 2023, after years of deliberations. This came after the Act passed both Houses of Parliament and received Presidential approval. This blog highlights the key provisions of the DPDP Act. Please note that many significant details about the implementation of the Act will be decided later by rules set by the Central Government.

 

10. Enhancing resilience of smallholder farmers against climate change—can parametric agricultural insurance make a difference?

Parametric insurance solutions can offer smallholder farmers in developing countries an accessible, reliable, and affordable way to protect themselves. A multi-stakeholder approach is needed to make these solutions work for smallholder farmers, supported by catalytic capital for their development and scale-up.

Careful, not customary: How can consent terms be better designed to protect users?

Posted on by Deepesh Singh

Kaushal is a smallholder farmer in India. He recently opened a savings bank account to receive government benefits. A few days later, he noticed a deduction from his bank account for a premium under a life insurance policy he did not recall buying. When he asked a bank official, he learned that during the sign-up process his consent was taken to bundle the insurance policy along with his savings bank account.

Sheila, the owner of a small grocery store in Indonesia, opted for a digital credit scheme to expand her store operations. However, a delay in credit repayment resulted in officials threatening to leak her photograph, location, and other sensitive information. Upon further investigation, Sheila discovered that the company representative who had assisted her in obtaining the credit had sought her consent, during the sign-up process to share her details with third parties in specified or exceptional situations. Nevertheless, the definition of these “exceptional” circumstances remained unclear to Sheila, who “consented” without having complete information.

Sheila and Kaushal’s stories echo experiences worldwide. Many fall prey to data leaks and financial losses because taking consent during the collection of sensitive data is merely customary in its current form.

In a qualitative study that analyzed users’ perceptions of privacy across four Indian states, we found that most users in urban and rural settings alike were uncertain about the service terms and conditions of digital entities. Similarly, research on collecting refugee data shows that refugees and other vulnerable populations rarely know the purpose and use of their data, even as they give individual consent to share it with entities.

Entities typically request consent from users during the registration process for their services they offer. Its purpose is to ensure that users actively grant permission for the collection of their data and are fully aware of how the entity intends to use their personal information. While securing consent is essential to respecting users’ agency over their data, it is often reduced to an obligatory step, passively sought from users through checkboxes. This approach can pose high risks for users, primarily because it lacks a user-centric design. Consent terms are usually verbose and filled with difficult legalese an ordinary person would struggle to understand.

The risk is exacerbated for users who rely on assisted channels for registration. This group includes new users of services or those with less education. In such cases, users are asked upfront by facilitators if they agree to given terms instead of being briefed on the reason for data collection. The facilitator often ticks the check box and accepts the terms and conditions on the end-user’s behalf, and leaves customers in the dark about the terms.

The consent collection process needs reform to retain the end-users’ agency over their personal information. Laws in about 59% of countries cover the use and management of user data by seeking entities, such as the General Data Protection Regulation in the EU and the Data Protection Act in Kenya. Draft legislation exists in other countries, such as the Data Protection and Privacy Bill in India. All these legislations hinge on the premise that users make informed decisions around consent.

Clearly stating the purpose and use of data before seeking consent can enhance credibility of the seeking entities. Equally important is the communication of mechanisms to revoke consent.

Singapore has enabled an easily understandable consent management module for its Singpass app, which citizens use to access most government services and requires using the national biometric ID details to log in. This module explains the use and purpose of data and allows citizens to revoke consent and manage information shared with entities. This mechanism has a strong potential for success with a literate and tech-savvy population. Yet, what about parts of the world that still grapple with the digital divide?

To address this challenge, one effective approach is to invest in context-based tools that facilitate consent decisions for everyone. This is an increasingly common practice in the medical trials that occur with vulnerable communities. For instance, in the Gambia, researchers deployed multimedia tools — such as videos, animation, and audio — in all major spoken languages to take informed consent from the Gambia’s population. The country had a 50% literacy rate when the study was conducted in 2015. The study notes that this approach gives Gambians greater autonomy over their decisions. It also ensures a higher recall value of terms provided by entities and less “perceived” risk.

Some countries like India have attempted to address this issue through tools that can make consent management easier for a linguistically diverse population with varying levels of digital readiness. For example, MEITY’s Bhashini, a program to create models for translating Indian languages, can help communicate consent in language by the public and private sectors. Jugalbandi is another innovative example that uses ChatGPT and Bhashini to help answer queries in more than 25 Indian languages through voice notes on WhatsApp.

People can “chat” with Jugalbandi by sharing a voice recording with their questions and the AI-powered chatbot sends back an audio response along with text and convenient links wherever applicable.

The use of technologies that drive consent through easily understandable multimedia tools can help marginalized communities access more services and make informed decisions. Moreover, it also ensures that a lack of education does not hinder high civic awareness. Ultimately, seeking user’s consent should not be reduced to a customary click. Instead, this should be a transparent and easily understandable process that upholds choice in the information shared and empowers customers to make informed decisions around their personal data.

The blog was first published on the Hertie School website on 23rd October 2023.

From break out to breakthrough: Ways to sustain digital momentum in Indonesia

Posted on by Saumya Dixit

Behind Jakarta’s bustling business district, a small hawker skillfully prepares batagor, a beloved Sundanese delicacy. Customers form a queue and use Quick Response Code Indonesia Standard (QRIS) to conduct cashless transactions and buy the batagor for IDR 15,000 or approximately USD 1. In this unassuming setting, the seller is a pioneer in the digital realm who mirrors Indonesia’s revolution in the digital economy.

Indonesia’s digital economy experienced a remarkable 414% growth from 2017 to 2021, which is projected to grow eightfold from 2017 to 2025. For context, the global digital economy constitutes more than 15% of the world’s GDP and has grown 2.5 times faster than the offline world’s GDP in the past decade.

The Digital Intelligence Index categorized Indonesia and countries, such as India and Kenya, as “Break Out” economies. Despite the challenges of weak infrastructure and institutional capability, these “Break Out” economies are embracing digitalization and technology. They recognize digital technology’s potential to overcome traditional limitations and catch up with developed nations. Digital technology promises to catalyze the transformation of emerging economies, enhance economic productivity, diversify economic sectors, and push these countries into the high-income country bracket. 

However, past technological waves have shown that not all emerging economies can successfully seize these opportunities and translate potential into reality. A primary concern for these “Break Out” economies is to convert rapid digital progress into sustainable and meaningful outcomes for their people.

This blog highlights key forces that propel Indonesia’s digital economy forward, explores its challenges, and suggests ways to foster its sustainable growth.

Pivotal forces that propel Indonesia’s progress in the digital economy

Research for Mastercard Foundation highlights five key forces that significantly help accelerate the digital economy. These factors are the demographic dividend, ongoing urbanization, robust Internet penetration, expanded access to digital payments, and increased influence of super platforms. How a country manages these driving forces will determine whether it will remain a “Break Out” country or successfully break through into a higher economic orbit.

Infographic 1: Driving forces for the digital economy
 

Indonesia’s favorable position across all five forces enhances its potential for a breakthrough in the digital economy. Around 50% of its population is under 30. This demographic dividend drives growth and fosters a dynamic environment ripe for technological innovation and entrepreneurship. Moreover, the ongoing trend of urbanization transforms cities into focal points of growth through increased access to digital technologies and job opportunities. Indonesia has a robust presence in the digital space, with a 66% Internet penetration rate and a 47.08% smartphone penetration rate in 2022.

The COVID-19 pandemic accelerated the adoption of digital payments, as seen from the wide adoption of the QRIS. Small-ticket transactions from local merchants and neighborhood shops characterized this trend. Indonesians also use social media a lot. As of February 2022, Indonesia had around 191.4 million active social media users and ranked third after China and India in the Asia-Pacific region.

Additionally, Indonesia has seen a surge in the emergence of tech “unicorns,” such as Gojek, DANA, and eFishery. These tech platforms contribute to the evolution of a well-connected digital economy. They offer diverse services that exemplify Indonesia’s commitment to innovation and its capacity to foster impactful technological advancements.

Indonesia faces immediate challenges despite being well-placed with these five driving forces

The digital economy offers significant economic opportunities but requires concerted efforts to ensure equitable distribution of gains across the population. The most effective route to increase the country’s prosperity is to improve access to economic opportunities for all population segments. A significant number of quality jobs within the economy is crucial to maintain the digital transformation’s momentum.

The Government of Indonesia has announced its initiative to develop Indonesia’s digital economy blueprint. This initiative focuses on infrastructure, human resources, and the innovation ecosystem. In the infographic below, we have highlighted three crucial points that the government should focus on and add to the digital economy blueprint to ensure the digital economy’s sustainable growth. 

Develop digital public infrastructures (DPI) as a critical enabler of inclusive digital transformation

DPI includes digital systems and solutions that provide services efficiently to citizens and businesses. The three pillars of DPIs are digital identity, data exchange, and payments. DPIs authenticate citizens uniquely, ensure secure and quick information-sharing across systems, and facilitate seamless financial transactions. Moreover, DPIs show optimal effectiveness when they interoperate with other systems.

The Government of Indonesia has worked hard to advance DPI. For example, efforts are underway to improve the ID system. The government has introduced KTP Digital, an app-based identification system, to ease the transition from physical to digital ID cards. This effort intends to enhance access and strengthen the transparency of citizens’ data. The government has also enacted a regulation to enhance data management across government entities, known as Satu Data Indonesia. On the payments front, the implementation of QRIS streamlines digital payments, which fosters financial inclusion.

Policies should seek to integrate different elements of DPI to support the employment sector. An integrated DPI ensures that reliable identity systems and employment data inform targeted efforts to increase labor force participation, especially women’s participation. Indonesia can adapt lessons from the innovative use of DPIs in other emerging economies, such as India, Kenya, and Nigeria. 

Invest in digital education, upskilling, and reskilling programs

Governments should strive for greater inclusion to create a skilled workforce that participates in the digital economy’s growth and benefits from it. The World Bank’s research in Indonesia reveals that higher-skilled workers have gained more from opportunities in the digital economy than their lower-skilled counterparts. Indonesia’s Kartu Prakerja program, which has reached more than 14 million beneficiaries, intends to narrow this gap through accessible upskilling opportunities.

Moreover, sustainable upskilling and reskilling programs must include collaborative public-private initiatives that explicitly seek to empower low-skilled workers in the digital age. This approach ensures that individuals remain relevant and equipped with the skills needed to meet the job market’s evolving demands. MSC’s research explores essential skills in the digital age and addresses why skilling systems are important.

Understand the needs of vulnerable segments, such as women, people with disabilities, and workers in rural areas

Gender disparities persist in the digital economy. Women spend 2.6x more time than men on unpaid care and domestic work, which restricts the time they can spend on paid work or upskill themselves. The pervasive nature of digital work exacerbates this situation as it lacks defined working hours, which drives female workers to work for extended periods. Moreover, women have limited access to digital technologies, which hampers their ability to participate actively in the labor force. 

Access to digital platforms and technologies poses significant hurdles for people with disabilities. These issues limit how well they can engage in the digital economy. The lack of inclusive design in software and hardware can further marginalize individuals with disabilities. This restricts their access to educational resources, job opportunities, and online services. 

The urban-rural gap is also a persistent issue in Indonesia. People outside Java encounter several barriers to employment due to limited infrastructure, lower education levels, and a lack of diverse economic activities. The rural economy relies significantly on seasonal and informal jobs, such as agriculture. Formal employment in rural Indonesia was as low as 26% in 2022. 

The digital economy needs concerted efforts from policymakers, industry players, and local stakeholders to eliminate gender, accessibility, and urban-rural gaps and foster a more inclusive and equitable digital economy.
Indonesia has made remarkable strides in the use of technology for economic growth. However, the path forward needs a collective commitment, which would ensure equitable distribution of benefits, foster a skilled and inclusive workforce, and address the unique challenges marginalized groups face. A comprehensive strategy that combines the strengths of the public and private sectors will help Indonesia sustain its digital momentum and thrive in the digital age.

Challenges and opportunities for Kenyan women from the gig economy in the digital age

Posted on by Techuser

Introduction

Jane, a freelance transcriber from Nairobi, Kenya, said, “I have a small kid and a husband, and I have to take care of them. My husband is also a freelance transcriber.

Jane is among the many gig workers who work in the informal gig economy across Africa. The gig economy and the “platformization” of labor have transformed Africa’s employment landscape. A Mastercard Foundation study revealed that Africa’s gig economy has been growing at an average annual rate of 20% and is expected to reach 80 million gig workers by 2030.

However, evidence from a recent study of 314 online gig workers revealed that the participation of female workers in Kenya’s gig economy remains low at 28%. Other studies on gig workers in Kenya and elsewhere concluded that about 60% of gig workers in these countries were men. The studies also revealed that women were more likely to exit the gig economy. This is mainly attributed to societal norms, working conditions, and occupational barriers, which limit their participation in gig work.

This blog explores the gig economy’s significance for Kenyan women. It explains how the gig economy offers them flexibility and economic empowerment. It also provides concrete interventions and approaches to address the digital skills gap that hinders many women’s participation in this evolving job market.

Can we rewrite this as “So, if both of us transcribe, he has more time to work and concentrate than me.” addressed.

Kenya’s gig economy landscape

Kenya’s gig economy has rapidly expanded due to the emergence of digital work platforms. These platforms have transformed how people work and created alternative economic opportunities. A study by Mercy Corps anticipated the online gig economy to grow at an annual rate of 33% and be valued at USD 345 million in 2023. By the end of 2022, about 1.9 million people were already engaged in online gig work and digitally-enabled jobs, up from 638,000 in 2019, per the MCF-KEPSA report, 2022. The World Bank projects that Kenya’s digital economy is expected to grow to USD 23 billion by 2025 and create thousands of new jobs.

Kenya hosts various gig platforms, which range from Upwork and Fiverr to local players, such as the Ajira Digital program. As per the Kenya Private Sector Alliance (KEPSA) 2020 study, 1.2 million Kenyan adults now engage in gig work, particularly in the tech industry. Platforms, such as Uber, Lyft, Grubhub, DoorDash, and Fiverr, have become essential for gig workers. Hence, the present and future of work in Kenya will involve workers who participate in various gig-work activities with different levels of formality and high flexibility.

Challenges for Kenyan women in the gig economy

As Kenya continues to embrace the gig economy through a flexible and dynamic platform for different job opportunities, women face unique challenges that significantly impact how well they participate in this evolving landscape. We have identified the different challenges Kenyan women face in the gig economy below:

    • Limited access to technology: The GSMA report highlights a 38% gender gap in mobile Internet use. 54% of women who lack mobile devices cite affordability as the primary barrier. Many gig opportunities rely on digital platforms, but a gender-based digital divide persists due to women’s limited access to smartphones, unreliable Internet, and affordability issues. This limits how well they can integrate into online gig platforms and hinders their participation in the digital workforce.
    • Societal norms and cultural barriers: Deep-rooted societal norms and cultural expectations often restrict Kenyan women’s choices of gigs. Traditional gender roles may discourage women’s participation in certain types of work deemed more suitable for men. This limits the diversity of opportunities available to them. MSC’s research in Kenya highlights that women were more involved in traditionally female-oriented jobs, such as hairdressing, beauty services, and housekeeping. Women take up these roles because of their familiarity with the line of work, their risk-averse nature, and societal norms. Men in the gig economy were more involved in jobs, such as delivery, construction, driving, and home repairs.
    • Safety concerns: Women in the gig economy are more concerned about their physical and online safety. Some gig jobs require female workers to meet clients or work in unfamiliar locations, which exposes them to potential risks. Moreover, online platforms may lack adequate mechanisms to address harassment and discrimination, which further compromises female gig workers’ safety. The threat of sexual harassment is high in situations where the gig requires face-to-face interaction.
    • Lack of social protection: Gig workers often lack the traditional employment benefits and social protection enjoyed by formal sector workers. This absence of a safety net is particularly challenging for women who may face additional vulnerabilities. Per the World Bank, women’s labor force participation in Kenya in 2022 was 74%, but women were paid 32% less than men on average. The lack of maternity benefits, healthcare coverage, and pension plans puts women at a disadvantage and impacts their long-term financial security.

The gender gap in digital skills: The lack of digital skills is a major obstacle to Kenya’s economic progress. It hinders businesses’ competitiveness and productivity because businesses lack workers with the necessary tech skills to meet the digital economy’s demands. This gap is particularly pronounced, as only 35% of women use advanced digital services compared to 54% of men.

The government and digital platforms must address the challenges Kenyan women face in the gig economy to ensure an inclusive and equitable future of work. With the gig economy’s growth, policies and initiatives that promote digital inclusion, dismantle gender stereotypes, and establish fair labor practices must be implemented. Kenya can harness the full potential of its 49.7% female workforce if it shapes a technologically advanced, socially just, and inclusive future of work. The challenges women face in the gig economy need to be resolved to unlock the nation’s full economic potential.

Sustainable support for Kenyan women in the gig economy

Sustainable interventions for women in Kenya’s gig economy can focus on several key areas that enhance their digital literacy and access to technology and enable them to navigate online platforms effectively. Targeted skill development programs that cater to the gig industry’s demands can empower women to diversify their opportunities and increase their income. Moreover, the promotion of inclusive policies and fair labor practices can create a more equitable and secure environment for Kenyan women in the gig economy. The following figure details MSC’s recommendations that provide such sustainable interventions.


Figure 1: High-level recommendations that provide sustainable interventions for Kenyan women in the gig economy

Conclusion

Many Kenyan women and girls are not fully engaged in gig work despite the opportunities in the gig economy. As work transitions online, gender-based factors are likely to exclude women and girls from the job market. The government and other stakeholders must promote gender inclusivity through relevant affirmative policies. They must strengthen current labor laws and regulations around social protection, equal employment opportunities, and labor standards for gig workers.

Awareness of women’s experiences on digital labor platforms in multiple sectors of the economy can build evidence of the emerging opportunities to ensure decent working conditions. Policymakers and platform companies should play a central role to provide high-quality work. They must also improve economic security, support unpaid work, increase worker’s control over schedules, ensure their safety, and base policy and practice on worker preferences, which requires collective action.

Please also see MSC’s previous work on women in the gig economy, which offers insights, solutions, and recommendations to promote gender inclusivity in the gig economy.

Digital platform cooperatives: A step closer to equality and inclusion?

Posted on by Techuser

Authored by Jenifer Shapiro and Mohit Dave, Head of Partnerships and Resource Mobilization for the International Cooperative Alliance, in affiliation with the regional office in Asia and Pacific. Mohit is also a fellow at the Platform Cooperative Consortium housed at The New School in New York City. Mohit has shared his personal views and comments, which may not necessarily represent the views of the organizations with which he is affiliated.

The Emergence of Gig Platforms

When ride-hailing giants Uber and Lyft emerged in the United States in the 2010s, they were viewed as a panacea for transportation. Around the same time, other gig platforms, which include those that specialized in food and grocery delivery, caregiving, accommodations, and freelance work, came to market. This disrupted traditional business models and put power in the hands of consumers as they offered competitive prices and on-demand services. Workers also benefitted from flexible schedules and the ability to make a side income. These digital platforms were not unique to just the US and Europe, as the same platforms or others with similar business models, rolled out services in the Global South.

Yet, the initial hopes that platform work would improve the overall livelihoods of unskilled workers in the Global South, and worldwide for that matter, remain unfulfilled. Researchers have witnessed increased worker exploitation, a lack of social protection mechanisms and governing regulations, an increased gender divide, and inconsistent and uncertain wages for those who engage in platform work. What was once deemed an avenue for unskilled workers to climb out of poverty is increasingly viewed as work that exacerbates inequality and exclusion. Many of these outcomes are attributable to the for-profit business models adopted by digital platforms. This model has a winner-takes-all attitude, driven by deep-pocket investors, shareholder growth, and profit optimization, often at the workers’ expense.

A focus on the Worker – Digital Cooperative Platforms

Several efforts have emerged to rectify the negative consequences of platform work on workers’ lives. These include the creation of worker-centric platforms, the emergence of spaces to rate gig platforms against principles of decent work, such as Fairwork, advocacy for better working conditions, and knowledge dissemination on best practices in the area led by organizations, such as the JobTech Alliance.

Such efforts have been helpful. Yet, a burgeoning movement has emerged that addresses the lack of democratic and transparent values inherent in venture-backed commercial digital platforms.

The Platform Cooperative Consortium (PCC) is a leader of this movement. The PCC strongly advocates for the adoption of cooperative principles that include shared ownership and democratic governance, human-centric platform design, transparent and open-source development, and open data. It believes that platforms that adhere to these cooperative principles will give rise to higher quality jobs, lower worker turnover, privacy and transparency, and fair pay, among other positive benefits for those who work for the platforms.

The PCC and its associated digital cooperative movement have gained momentum, partly through its annual conventions. However, the transition from private digital platforms to cooperatives or the launch of cooperative digital platforms has had its challenges. Some pressing challenges are outlined in detail below.

Scalability: The hyperlocal nature of cooperatives often runs counter to the concept of scaling. Many cooperatives are borne out of identities closely tied to local values and their environments. This makes growth, expansion, the accommodation of a wider range of member identities, and applicability in other markets more challenging.

MSC, through its work in India’s Bihar state with the Bihar Rural Livelihoods Promotion Society (BRLPS), also known as JEEViKA, supports farmer producer companies (FPCs)—a form of a cooperative. MSC’s support enhances the FPCs’ governance models, helps them realize better prices, and digitizes their value chains. Through this work, we have recognized the inherent difficulties FPCs face when they attempt to grow, scale, and digitize. Federated platforms have emerged as an alternative to overcome such scaling hurdles. They allow the cooperative to remain small, local, and sustainable. At the same time, it benefits from the strength of joined forces with several platforms.

SEWA Cooperative Federation in India adopted the federated model, which proved useful. Another example of such adoptions is AMUL, the marketing apex organization of the Dairy Cooperatives of Gujarat. Some cooperatives have not adopted a federated model yet scaled successfully, at least on a pan-India level. Such cooperatives include ULCCS, India’s oldest worker cooperative, with roots in Kerala.

Digital platform cooperatives, however, allow a relaxation of the hyper-localness to which their non-digital brethren are tied. Their digital nature naturally lends them to larger markets. This holds if the cooperative members are not limited in terms of access to digital platforms and the skills to use them. Limited access to platforms and a lack of digital literacy have challenged rural women’s cooperative members in Indonesia, who lack information, resources, and digital tools. Typically, they are small-scale and semiformal and often fall behind amid the charge toward digitalization. Therefore, such cooperatives require mentors or ambassadors from the cooperative community to shepherd other members through digitization.

Regulations: The lack of policies and regulations that govern digital platforms in the Global South often leads to the types of worker exploitation highlighted above. However, there appears to be a lot of promise at the municipality or city government level to create an enabling ecosystem for cooperatives in the digital economy. Currently, the International Cooperative Alliance conducts research in Chennai to determine the levers policymakers can use to facilitate environments that help digital platform cooperatives sustain and grow.

Beyond the municipal level, states, such as Kerala in India, have a fertile backdrop for digital cooperatives to thrive. The state’s policies promoting technology adoption, its higher-than-average national literacy rates, and its worker-centric government make it conducive to digital cooperatives. The Auto Savari app, registered under the Ernakulam Jilla Auto Drivers Cooperative Society in Kerala, is a digital cooperative platform that has recently emerged as an alternative to ride-hailing apps, such as Uber. State or national-level laws that allow transnational digital cooperatives to expand beyond their borders are beneficial. Examples of such cooperatives that have benefitted from cross-border expansion include Smart, based in Belgium, which addresses the administrative nuances that freelance workers face, and MyCoolClass, an online teachers’ cooperative domiciled in the UK.

Capital raising: Investors chase returns, so in the case of platform cooperatives whose business models are the antithesis of pure play capitalism, the scope for significant returns over a short time frame does not exist. Additionally, other modes of capital raising, which include business loans and crowdfunding, are difficult for digital platform cooperatives as they struggle to compete with private tech companies that offer big payouts. The shortage of capital hinders digital cooperative platforms from attracting the best talent and technical expertise. This limits further investment into the platform for growth, which makes it hard for cooperative platforms to compete with their privately owned counterpart.

That being said, fundraising is not impossible, as was recently proven in New York City, where a driver-owned Uber alternative crowdfunded approximately USD 1 million. The cooperatives’ member-owners must recognize that attracting capital will take longer. They may have to rely on various capital sources while they target investors who do not fit the mold of traditional venture capitalists such as a combimation of impact investors and crowdfunding.

Digital platform cooperatives present an opportunity for workers to control the direction their businesses take alongside a host of other advantages, many of which spill over to actors in the platform cooperative ecosystem. However, the transition to a digital platform cooperative model has not yet been extensively tested and thus far has presented the hurdles outlined above. With ingenuity, patience, and innovation, such challenges are worth tackling, as they can provide fair working conditions to the millions of workers who rely on digital platforms for their livelihoods.