The making of an
inclusive economy

How technology and data can help communities prosper in the digital age
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In the Kamuli District of eastern Uganda, where Henry Mugwiisa teaches high school, it’s not uncommon for families to keep their kids out of school. But it’s not because they don’t value education for their children. Some simply struggle to pay for it.

Many people in this rural community eke out livings as smallholder farmers. Earnings can be unpredictable; when the harvest is poor, there’s little money—certainly not enough to pay school-related fees. So children end up staying home or “they miss school to look for jobs or money,” Mugwiisa said. The requirement that school fees be paid in a lump sum adds to the burden. The nearest bank is more than 18 miles from the village, so parents and administrators must take precious time traveling there if they need large amounts of cash.

Now, however, a simple mobile product called Kupaa is helping families in Mugwiisa’s community keep their kids in school. A collaborative effort launched in 2018 by Mastercard, UNICEF and Uganda’s Ministry of Education, Kupaa uses digital payments to help solve a host of challenges. Parents can now pay school fees securely from their phones and, perhaps most importantly, pay them in installments. That means students no longer are kept from school because their families can’t afford to pay the total fees upfront. In just one year, more than 200,000 students have taken advantage of the program.

Students stand outside the New Grace School in Iganga, Uganda, one of the first schools to implement Kupaa.

“Kupaa has bridged the gap between parents and schools,” Mugwiisa said. “It has helped to solve the problem of absenteeism.”

Mugwiisa’s story is just one example of the profound impact digitization can have on communities around the world. Economies are changing, fueled by the rapid pace of technological advancement, and disruptive forces are creating new possibilities for economic inclusion. More than ever, people like Mugwiisa are getting access to the tools and information they need to succeed in the digital age—frequently through solutions co-created by governments, non-profit organizations and the private sector working together.

An economy transformed

Technological progress—ranging from new modes of transportation to digitization of services—has spurred unprecedented shifts in the global economy. But the prosperity and opportunity driven by these advancements haven’t been broadly realized, explained Shamina Singh, president of the Mastercard Center for Inclusive Growth, the company's philanthropic hub.

“You have a significant segment of the world's population that is still disconnected from the networks that power the modern economy,” she said. “These are the networks that enable young people to get an education and workers to access the opportunities they need to thrive and flourish. It’s everything from roads and electricity to the internet and formal financial services.”

To be sure, individuals in low-income communities face a raft of challenges. Although fewer people today live in extreme poverty, nearly half the world’s population still struggles to meet basic needs, subsisting on less than $5.50 a day. An estimated 1.7 billion people around the world have no linkage to the financial system.

Yet as digital connectivity becomes ubiquitous in the developing world, private sector actors have an opportunity to make their innovative capabilities have a lasting impact.

Nearly
half
the world’s population
lives on
less than
$5.50/day

“We need to ensure that the digital economy doesn’t happen to people, but for people.

Shamina Singh,
President of the Mastercard Center for Inclusive Growth

“In very low-income communities, digital technology is starting to be woven into everyday life, from rural farms to medical clinics, schools to businesses,” said Mike Froman, vice chairman and president of strategic growth at Mastercard. “The adoption, usage and proper management of such technology can bring transformative change that improves lives and livelihoods.”

Kupaa is just one in a diverse range of people-centric innovations that are digitizing everyday transactions in developing economies. Jaza Duka, a digital lending platform, helps shopkeepers buy more inventory, sell more goods and grow their businesses. Similarly, the Mastercard Farmers Network connects farmers to a mobile marketplace where they can find buyers for their crops and manage payments. Yet another digital tool helps parents and health providers keep track of immunization records.

Many of these applications are now available on a single platform—called Community Pass—which allows individuals to more efficiently access several essential services under one shared infrastructure. For example, the farmer seeking to access a mobile marketplace might also be a mother who needs to get her daughter vaccinated.

“We need to ensure that the digital economy doesn’t happen to people, but for people,” Singh said. “To make sure we’re creating the programs, the possibilities and the technology in a way that puts people at the center of the equation, so that they’re more in control of what’s coming.”

The American dream
in the digital age

Although financial exclusion is often considered a developing-world problem, the U.S. also faces its fair share of inclusion challenges. Despite a long stretch of economic growth and low unemployment, the number of economically insecure Americans is rising. Nearly one-third of the country lives at or below 200 percent of the federal poverty line—about $50,000 yearly for a family of four—and that figure has grown by 25 million since 2000. Roughly 25% of households remain outside the financial mainstream.

The problem is particularly acute in urban communities, many of which struggle to keep up with the pace of technological change. As cities become more digital, some residents risk being left behind without access to everything from government services to the internet, further exacerbating the inequality of both wealth and information availability.

Take New Orleans. Nearly 66% of low-income people have no home internet access. “Many of our low-income residents have lived under the idea that technology advancements are not accessible to them,” said New Orleans Mayor LaToya Cantrell. “There is a cost to a city when you have inequity. We have to ensure that all advancements and improvements for the city are inclusive.”

1 in 3
Americans is
economically
insecure

New Orleans recently joined City Possible, an initiative led by Mastercard that connects public sector reach with private sector innovations to co-create solutions for a whole host of community needs—from transportation to smart economic development.

Cantrell says such partnerships are vital for making the economy of New Orleans more inclusive. “Aligning with private sector innovations can help our city achieve equity goals to ensure that all people can access city services, cutting-edge technology and economic opportunity,” she said.

The initiative reflects a new approach to public-private partnerships that goes well beyond the standard tactics of corporate social responsibility. Singh and Froman characterize Mastercard’s theory of change as “doing well by doing good.” It’s a recognition that gearing a company’s core competencies and assets—everything from people to products to data resources—to address systemic issues will create more sustainable impact and ultimately translate to good business.

“We've got to evolve our notion of public-private partnerships so that it's not just about philanthropy, but about how to use the skills and expertise of the private sector,” Froman said. “Applying our products and expertise to creating digital ecosystems to address social challenges is, ultimately, good for our business because it leads to healthier societies, greater stability and more inclusive growth—and the only truly sustainable growth over time is inclusive growth.”

In New Orleans, public-private collaboration is helping local leaders deliver smart community development.

The initiative reflects a new approach to public-private partnerships that goes well beyond the standard tactics of corporate social responsibility. Singh and Froman characterize Mastercard’s theory of change as “doing well by doing good.” It’s a recognition that gearing a company’s core competencies and assets—everything from people to products to data resources—to address systemic issues will create more sustainable impact and ultimately translate to good business.

“We've got to evolve our notion of public-private partnerships so that it's not just about philanthropy, but about how to use the skills and expertise of the private sector,” Froman said. “Applying our products and expertise to creating digital ecosystems to address social challenges is, ultimately, good for our business because it leads to healthier societies, greater stability and more inclusive growth—and the only truly sustainable growth over time is inclusive growth.”

Mastercard is reimagining what growth means for everyone in today's digital economy.Click here to learn more.