In Egypt, a digital makeover for payroll is transforming saving habits for garment workers

For five years, RISE — short for Reimagining Industry to Support Equality — and the Mastercard Center for Inclusive Growth have partnered with Egypt’s Center for Development Services to digitize payroll in the garment industry, which employs 2.5 million people in Egypt, about 40% of them women. The initiative also aims to build financial knowledge, enabling them to save more and, for women workers who often have limited control over their salaries, to feel more empowered when it comes to financial decision-making.

Basma, who works in a denim factory in Port Said, now uses her debit card to pay for her groceries and her banking app to check her balance, and she has learned to create a monthly budget and manage her expenses better. “I am not working for just receiving my salary to feed my kids and educate them,” she says. “I need to work and save money to reach my goals.”

Female garment factory workers like Basma, above, have benefitted from the move to digital wages, including feeling more empowered to make financial decisions, according to a new report. (Photo courtesy of RISE)

A new report from RISE and the Center shows how this one-two punch of digital access and financial education holds promise for financial inclusion and greater resilience in Egypt, where only 26% of adults have a bank account. Far from workers simply cashing out their paycheck, the report found a 19-percentage-point increase in workers, both men and women, using mobile money accounts, including retail and bill payments, remittances and topping up airtime on their phones. Women, who received gender-intentional training from peer educators as part of the initiative, showed a 10-percentage-point increase in savings for both expected expenses and emergencies.

“When we provide women with digital resources and training, we enhance their financial stability for the long haul,” says RISE Executive Director Christine Svarer. “This not only benefits the communities in which they live but also fortifies the supply chains that support us all.”

The report also revealed a shift in attitudes around financial decision-making, with an 11-percentage-point increase in workers making spending decisions with their family, and a 30-percentage-point increase in workers strongly disagreeing that most household decisions should be made by men — in fact, the jump was higher for men than it was for women.

Digitizing wages also resulted in significant payroll and production savings for the manufacturers, including a 53% reduction in the administrative cost for transporting, counting and distributing payroll, and a savings of 15 minutes in production time because workers used to have to stand in line for their cash payout.

The report outlines five insights to scale such initiatives and grow financial inclusion:

01
Saving and budgeting is more important than ever. The cost-of-living crisis in Egypt and uncertainty around food prices mean that managing spending and saving is vital to stretching wages further. It is important that initiatives support workers in managing expenses and avoiding getting into debt. 

02
Positive customer experience builds trust.Workers’ trust in financial products and services is eroded if fees are not clearly explained to them, and factories will change payroll providers if they receive a lot of complaints from workers. For example, workers don’t all have email addresses, so they might be charged for paper statements that they didn’t request.

03
Digitizing wages doesn’t (immediately) resolve the need for cash.It is important that workers gain confidence, knowing they can access their cash when they need it. With the right support, workers will begin to use more digital payments over time.

04
If the technology is right, workers will use it. The take-up of InstaPay by both male and female workers shows that with the right knowledge and skills, workers will start to use digital financial services that are user-friendly and relevant to them.

05
It is vital to consider the needs of women. Gender norms mean women are less likely to have experience of financial services or digital technology and will need more support to build the confidence to use them. It’s also important to consider women’s life stages. If women’s financial needs and barriers are not considered, gender financial inclusion gaps may widen.

“Digital earnings are empowering workers, particularly women, to save, strategize and build a stronger financial future,” says Payal Dayal, executive vice president for global programs at the Center for Inclusive Growth. “The benefits of digital payroll across the ecosystem are great, and through innovative partnerships like this one, so is the opportunity to grow this impact.”