IFC presents business case for wage digitisation in Bangladesh’s apparel sector

International Finance Corporation or IFC, a member of the World Bank Group, has organised an event in Dhaka to establish the business case for digital wage payments using mobile financial services in the readymade garment sector.

It also launched a series of resources to enable garment factories to transition from cash to mobile-based wage payments for their workers at the event at a city hotel on Tuesday.

Specialised tools will allow mobile financial services or MFS providers to expand the range of digital payments for garment workers and ensure that the RMG sector can take the initiative forward, IFC said in a statement.

It is part of a joint initiative of IFC and Bangladesh Bank to financially include women through MFS adoption.

Given the economic significance of the readymade garment sector, which is dominated by female workers, digitising wage payments through MFS can have a significant impact on women’s financial inclusion, IFC said.

When garments workers open MFS accounts to receive their salaries, they can avail a broad range of financial services, it noted.

However, about 90 percent of factories pay their workers in cash, which is a missed opportunity for both the financial and RMG sectors, the statement added. 

“This engagement demonstrates how our approach can benefit all stakeholders in the garment sector’s ecosystem,” it quoted Nuzhat Anwar, Senior Country Officer, IFC, as saying.

Through IFC’s initiative, over 70,000 female workers benefitted from digital wage payments to their mobile financial services accounts between 2016 and 2018, according to the statement.

They can now use their accounts to send money, build savings and make payments securely, IFC said.

“Bangladesh Bank has worked tirelessly to ensure that the financial sector expands inclusively to reach underserved segments, such as women,” Masuma Sultana, Deputy General Manager of Bangladesh Bank, said.

“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,” Rubana Huq, President of RMG entrepreneurs’ body BGMEA, said.

She was speaking on how the industry association has taken a leadership role in digitising wage payments through an upcoming government-developed e-wallet, according to the statement.