Informal Worker Empowerment (I-WE)

Eight in ten people in Sub-Saharan Africa are employed in the informal sector and lack access to social protection programs, available only through formal employment. Incomes are unpredictable for people in the informal sector making them susceptible to unprecedented events such as the COVID-19 pandemic. To help build a resilient informal sector, we are proposing a microfinance scheme that promotes savings and creates economic empowerment by: (1) establishing a board of community leaders to verify participant's identity and integrity, (2) developing a mobile app and setting up centers to facilitate transactions, (3) requiring members to put down a percentage of the loan to establish ownership, and (4) reinvesting the savings in financial products and community infrastructure. The scheme will use blockchain technology to provide digital identity, verify eligibility, and conduct credit worthiness. Our solution will create economically resilient communities that can absorb the shocks of displacement or economic/health crisis.

The majority of Sub-Saharan Africans are employed by the informal sector and do not have access to social insurance programs such as unemployment benefits (UN Economic Commission for Africa 2015); Accordingly, these informal sector workers, about 90 percent of them women, are vulnerable to economic shocks such as the COVID-19 crisis.

Our proposed solution removes systemic barriers to social protection programs for informal sector workers by creating a program that enables them to borrow, save, and invest in financial products as well as community infrastructure. Also, the savings account will function as insurance, allowing access at a time of economic shock or health crisis. Our solution will also address a lack of digital identity by using blockchain technology to conduct eligibility and verification of participants. While our proposal includes a mobile app for processing payments, it also incorporates local centers to facilitate in-person transactions and address internet access and literacy/numeracy challenges. Moreover, our solution promotes sustainability through reinvesting part of the savings in investment products and community infrastructure such as solar electrification. Ultimately, this program leverages local expertise, provides social protection and creates job opportunities for local youth in payment transaction centers.

This program serves informal sector workers in rural African communities with limited access to social protection services, in particular employed women and girls in Sub-Saharan Africa, 89% of the informal sector. Also, there are many community economic development activities resulting from our project that will benefit the broader population that currently lacks access to social protection services and infrastructure. The program would provide informal sector workers' access to financial resources, create a digital platform for transactions, and foster economic development.

Our model lends money to informal sector workers who are seeking to expand or scale their business, requiring only that they contribute to a savings account. This access to capital and reliable institutions for savings would help informal workers grow their businesses while also creating a buffer to economic shocks and building a safety net for their future. Because some of their savings would be invested in renewable energy projects in their communities, the benefits of our model extend to community members who seek electricity access for various community needs, including business operations.

Introduction of this program would provide historically underinvested communities with an opportunity to enter the global market and create a sustainable economy; removing numeracy and literacy barriers.