Tech for an Inclusive Recovery

By Tarek Sultan
CEO, Agility

There are plenty of flashing lights warning us of the possibility of a sharp economic slowdown in 2023.

We know that COVID-19 has reversed years of progress in global development. It has widened gaps in education, health, income and access to opportunity. It brought on the steepest economic decline since World War II and, by World Bank estimates, pushed 97 million people into extreme poverty.

Today, the global economy is slowing amid a flood of risks: depleted national budgets, war in Ukraine, high inflation, traumatized labor markets, tightening credit, disruptive climate events, a COVID-challenged China, and unprecedented supply chain instability.

As we look ahead, we face three key questions:

1. How can we limit, repair and reverse the damage done by the pandemic and its aftermath?
2. How can we create a system that’s more open, transparent and fair for the poor, developing countries, women, and small businesses?
3. How do we ensure shared prosperity as we speed our transition to a low-carbon future?

It seems obvious, right? We should work to make sure the next phase of global growth includes geographies, businesses and people who’ve traditionally been left out. “The idea of inclusive growth has emerged as a central theme animating discussions on recovery and growth in the post-COVID world,” the World Bank says.

Not everyone agrees. Growth-first advocates view inclusion as a dangerous diversion that could sidetrack economic revival. They want us to focus on growth because they see any recovery as a rising tide that lifts all boats.

That’s a hard sell to those demanding inclusion. They warn that we could see a massive economic divergence between rich and poor, haves and have-nots. And they note that even before the pandemic, we were witnessing the highest levels of income and wealth inequality on record.

“This inequality has disproportionately affected communities of color, women, those less physically abled, and certain geographies,” McKinsey says.

Growth or inclusion is a false choice. Insufficient economic inclusion is — in itself — “a threat to prosperity,” as McKinsey says.

The consulting firm cites research showing that economies grow faster, more vigorously and for longer periods of time when the fruits of that growth are shared and distributed more equally across the population. Up to 40% of the GDP growth in the U.S. economy from 1960 to 2010 can be attributed to the increased participation of women and people of color in the labor force, McKinsey says.

At the same time, you can’t have inclusion and sustainability without growth as the foundation. So where will it come from?

There are four areas where technology can clearly be a powerful force for both inclusion and growth.

1. For small businesses.

Small businesses provide 70% of jobs worldwide and contribute 50% of GDP in developing countries, according to the International Labor Organization.

In the supply chain industry, a host of inexpensive new digital tools are bringing efficiency to smaller shippers and carriers. Among them:

• AI-driven load matching (Frete, Flock Freight) – that allow shippers to pool goods on trucks and bypass freight hubs
• Digital payments for carriers and other stakeholders (Relay Payments, FreightPay)
• Credit, working capital and payments platforms (PayCargo)
• Customs and security digitization products (MDM)
• Online logistics platforms that combine a lot of these features (Shipa)

All of these tools improve cash flow and streamline financial operations by digitizing payments, reconciliations and discrepancies between shippers and carriers, dramatically reducing Accounts Receivable/Accounts Payable errors and processing time.

Digital tools also make sustainability viable for smaller businesses and startups, allowing them to take climate action and build more resilient businesses.

• Free or inexpensive measurement tools
• Resources such as playbooks, and matchmaking platforms that link them with potential partners and vendors (SME Climate Hub, SME360X)
• Supply chain mapping tools that help small businesses do due diligence, customs compliance, environmental and social sustainability tracking, in addition to operations and business continuity planning (Sourcemap)

2. For women.

How can we do more to draw on the talents of women in the workforce, particularly in emerging markets countries, where they are most underrepresented?

One way is by making it safer, faster and more affordable to get to work. That’s what Swvl is doing in Egypt, Pakistan and other emerging markets countries with tech-oriented transportation.

3. For the unconnected poor.

Thirty-seven percent of the world’s population – about 2.9 billion people – has never used the Internet, the International Telecommunications Union says. Most live in developing countries. Nearly all are poor.

Poverty, illiteracy, and lack of connectivity and electricity contribute to this alarming digital divide. In Afghanistan, Yemen, Niger, Mozambique and the poorest countries, nearly 75% of people have never connected. That means remote learning was out of the question during the pandemic – and a major threat to a whole a generation of school children. Connectivity is the only way to address the dangerous “learning loss” that we experienced during COVID.

4. For those whose jobs are at risk from automation & digitization.

So-called frontier technologies are here. Many take advantage of digitalization and connectivity: artificial intelligence (AI), the Internet of Things, big data, blockchain, 5G, 3D printing, robotics, drones, gene editing, nanotechnology and solar photovoltaic.

While they offer incredible promise and productivity gains, these technologies will eliminate jobs. And without massive, targeted, well-resourced upskilling and retraining programs, the adoption of next-generation technologies could profoundly deepen inequality by shutting large numbers of people out of meaningful employment.

The World Bank’s Gallina Vincelette identifies four pillars for inclusive growth. They are life-long learning, removal of barriers to firm entry, trade that fosters competition, and a faster green transition.

Technology can supercharge all four, while bringing down costs, improving productivity and creating good new jobs.

IBM CFO Jim Kavanagh calls technology “the only true deflationary” force in a global economy where companies are struggling to cope with inflation driven by higher human capital costs – salaries, recruiting, retention, churn, overall cost of talent acquisition – plus higher materials costs, fuels costs, transportation costs, borrowing costs, currency volatility costs and other factors.

Growth and inclusion aren’t in conflict. They’re the essential ingredients of a better world.