Digital financial services for garment workers in Bangladesh: Research on digital financial capabilities, financial products availability and usage, and social welfare ecosystem

  • October 24, 2023


The ready-made garment (RMG) manufacturing sector is one of the key industries for the economic and social growth of Bangladesh. The COVID-19 pandemic impacted this industry significantly as the demand in major markets fell significantly, many factories closed down, and workers faced difficulties in going to factories to work, and to banks to collect wages or withdraw cash. Early in the pandemic, the Government of Bangladesh supported the RMG industry by providing different stimulus packages and mandated digital wage disbursement, which helped to boost the payment digitization process in the industry. However, after August 2020, when the Government’s support was withdrawn, the use of digital payments in this industry declined by more than 50 percent. This clearly indicates the presence of gaps in the digital payments ecosystem and the absence of a long-term sustainable business model. The COVID-19 pandemic has also highlighted the absence of an effective and efficient social protection mechanism in Bangladesh that is linked to an accurate and updated workers’ database. Many workers, especially those working in the informal sector, were left behind by the country’s social protection systems during the pandemic due to lack of infrastructure and system to access a social safety scheme.

Studies indicate that inadequate infrastructure, insufficient access to affordable internet, minimal digital literacy, insufficient financial capabilities and mistrust between demand and supply sides are some of the major areas of concern. There is also a significant gender gap in smartphone ownership, internet access, and awareness of digital and financial services. While a few large factories have developed initiatives to improve digital and financial literacy, these have not addressed the gender nuances.

The United Nations Capital Development Fund (UNCDF) designed a research project titled ‘Collective Impact on Future of Work in Bangladesh’ to identify the gaps in the digital finance ecosystem and recommend a self-sustaining business model for improved usage of digital financial products and social protection services by the RMG manufacturing sector workers, specifically women workers.

The report highlights the present status of the financial ecosystem of Bangladesh, and the social protection ecosystem with special focus on Ready-Made Garment (RMG) sector workers, especially women. In the course of this research, the team engaged with 10 Mobile Service Providers, 20 Manufacturers, 100 workers through 15 FGDs, and 400 workers through Survey.

The report outlines key lessons and findings with regards to how garment sector workers in Bangladesh stand with regards to digital financial literacy, financial products/services leveraged, as well as the social protection ecosystem that comprises social safety net (SSN) programmes. The report intends to highlights lessons on the current accessibility, and recommendations for approaches that can be leveraged to support enhanced financial independence of garment sector workers, specially women.