The past few years have been a roller coaster ride for small business owners like Diana Vargas Valencia. Two years ago, she was largely unconnected to the digital economy, operating in the remote Colombian Amazon and selling cosmetic goods made from locally-grown plants. The pandemic nearly shut her doors for good. But today, thanks to the work of Accion and our partner CÍVICO, Diana is finding new customers through digital channels, and building a more resilient future.
We’ve seen this story play out countless times across the world. The pandemic threatened the survival of low-income individuals, families, and small businesses — especially women and those in emerging markets. But they quickly adapted, and thanks to new digital tools, they’re seizing the opportunities of the digital economy.
But the future is still very uncertain. For the first time in our lifetimes, global poverty and hunger are on the rise. New challenges created by war, social unrest, and rising prices only add to the uncertainty.
At the same time, we’re entering a world of opportunity as digitization accelerates. More people than ever are using digital tools, and this presents a once-in-a-lifetime opportunity to rebuild a more inclusive world than we had before the pandemic.
Advancing an inclusive digital revolution
With your support, Accion is working to seize this opportunity, and ensure that digitization includes and uplifts the world’s most vulnerable people.
Digitally transforming small businesses
Small businesses create seven out of ten jobs in emerging markets, but most are still using cash, which keeps them invisible to the formal financial system. To survive and thrive in the modern economy, they need to go digital.
For the past four years, with the support of Mastercard, we’ve been working to digitally transform frontline financial service providers (FSPs) and the small businesses who depend on them. Partnering with nine FSPs and 50 fintechs across the globe, we’ve reached more than 11.5 million people, with more than 4.4 million small businesses using digital tools on a regular basis. Just last week, we shared insights from this work with industry leaders at the Digital Transformation Forum in London.
We have seen how expanding access to digital tools can build the financial health of small businesses. Across five countries, nearly 80 percent of our digital product users reported an improved ability to repay loans on time or access credit, among other financial challenges. Women also account for more than 70 percent of our users, and women-owned small businesses reported significant improvements in their financial health, with more than 70 percent attributing this improvement to using digital products.
Driving fintech innovation
Technology is revolutionizing the way we serve low-income communities, and fintech startups are on the front lines of this revolution. Their innovative solutions are addressing global development challenges, ranging from gender disparities to the worsening climate crisis.
Accion Venture Lab has now invested in more than 60 fintech startups that are finding new ways to expand the reach, quality, and usefulness of financial services. One of our newest investments, AquaExchange, enables seafood farmers in India to monitor their farms in real time, buy inputs, receive technical support, and access credit. These solutions can create a more sustainable, resilient food supply, as climate change forces farmers and fishermen to find new sources of income.
Earlier this month, after a two-year hiatus, we convened fintech leaders and industry stakeholders for the Fintech for Inclusion Global Summit in the Hague. Hosted by Accion Venture Lab and FMO, this was an invaluable opportunity to connect with and learn from innovators who are harnessing the power of digital technology to create a financially inclusive world.
Unlocking opportunity in challenging markets.
Over the past decade, more than a billion people have gained access to the formal financial system for the first time. But 1.8 billion people are still left out — and these populations will be even harder to reach. They are women, smallholder farmers, refugees, and people living in rural areas: communities that need customized support to start making the most of financial services.
Against this backdrop, Accion is working to unlock economic opportunities in some of the world’s most challenging markets. For example, in Central America’s Northern Triangle (Honduras, Guatemala, and El Salvador) a combination of crime, poverty, and social unrest is driving mass migration out of the region. Accion responded to a call to action from U.S. Vice President Kamala Harris, and this year we committed to delivering new financial services to one million people across the Northern Triangle, with a focus on connecting women to the digital economy.
As we emerge from the pandemic, I’m thankful to see a more inclusive economy taking shape, supported by the work of Accion and our partners. We work to ensure digital innovation enables the most vulnerable people to build resilience amid severe economic headwinds.
None of our work is possible without the support of donors who share our vision of an economy that works for everyone — no matter their location, gender, income, or familiarity with digital tools. On behalf of Accion, our partners, and the clients we serve, I thank you for your support in turning our vision into reality.