June 25, 2019 — International Finance Corporation (IFC), a member of the World Bank Group, organized an event today to establish the business case for digital wage payments using mobile financial services in the readymade garment (RMG) sector and launched a series of resources to enable garment factories to transition from cash to mobile-based wage payments for their workers.
Specialized tools will allow mobile financial services providers to expand the range of digital payments for garment workers and ensure that the RMG sector can take the initiative forward. It is part of IFC’s and Bangladesh Bank’s joint initiative to financially include women through MFS adoption.
There is a stark gender gap in access to financial services in Bangladesh, where only 36 percent of women have a formal bank account, compared to 65 percent of men. Given the economic significance of the readymade garment sector, which is dominated by female workers, digitizing wage payments through MFS can have a significant impact on women’s financial inclusion. When garments workers open MFS accounts to receive their salaries, they can avail a broad range of financial services. However, about 90 percent of factories pay their workers in cash, which is a missed opportunity for both the financial and RMG sectors.
“IFC is proud to engage with the private sector and leverage our international expertise in improving women’s access to financial services. This engagement demonstrates how our approach can benefit all stakeholders in the garment sector’s ecosystem,” said Nuzhat Anwar, Senior Country Officer, IFC.
Through IFC’s initiative, over 70,000 female workers benefitted from digital wage payments to their mobile financial services accounts between 2016 and 2018, and they can now use their accounts to send money, build savings and make payments securely.
“Bangladesh Bank has worked tirelessly to ensure that the financial sector expands inclusively to reach underserved segments, such as women. IFC has been a long-standing partner in supporting us to achieve this goal, and the efforts to financially empower female garment workers is commendable,” said Masuma Sultana, Deputy General Manager of Bangladesh Bank.
At today’s event, leaders of the RMG sector and international retail brands participated in a panel discussion to highlight the lessons learned from existing wage digitization efforts and how they can contribute to improving the transparency and efficiency of the broader apparel value chain. Speaking on how the industry association has taken a leadership role in digitizing wage payments through an upcoming government-developed e-wallet, Dr Rubana Huq, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), remarked: ‘We are working with alacrity and engaging with all the stakeholders in the industry to move forward on this agenda and advance the national interest.’
IFC has been supporting Bangladesh Bank’s efforts to develop a range of services, such as SME finance, long-term finance, infrastructure finance, sustainability and risk management, and financial integrity. The collaboration with the central bank has been expanded to include other areas that can have a transformative impact on the financial sector, such as digital financial services. The partnership project is supported by the World Bank Group’s Umbrella Facility for Gender Equality.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit www.ifc.org
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