Small businesses and AI: Accelerating innovation and inclusion

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Highly confident, women entrepreneurs still face systemic barriers

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How data and AI can drive change: 4 ways forward

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Unlocking the power of small businesses to drive climate-smart inclusive growth

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In response, the Center for Inclusive Growth and our partners have accelerated development of a suite of tools that support action to address wealth and opportunity gaps. With<a href="https://www.thenewlocalism.com/newsletter/building-back-better-requires-smart-spending-and-transformative-investments/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;billions of federal dollars</a>&nbsp;flowing to cities and states to “build back better,” local and regional leaders have an opportunity to target investments for more effective and equitable outcomes. From broadband access to workforce development, policymakers will need the right tools and data to inform decisions.Four tools that can help:<ul><li>Bridge the digital divide in your state.&nbsp;This<a href="https://sites.tufts.edu/digitalplanet/us-digital-divide/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;interactive</a>&nbsp;tool and a set of policy recommendations from IDEA 2030 at Tufts University can help federal, state and local policymakers address different facets of the digital divide.</li><li>Find and hire diverse tech talent.&nbsp;The rise of remote work shifted the geography of tech talent in the U.S. This IDEA 2030 analysis helps companies see where&nbsp;<a href="https://sites.tufts.edu/digitalplanet/the-shifting-geography-of-talent/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">diverse STEM talent pools</a>&nbsp;exist across 60 U.S. metro areas.</li><li>Support career advancement.&nbsp;New research from the Brookings Workforce of the Future initiative<a href="https://www.brookings.edu/research/moving-up-promoting-workers-upward-mobility-in-a-time-of-change/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;</a>on occupational transitions&nbsp;<a href="https://www.brookings.edu/research/moving-up-promoting-workers-upward-mobility-in-a-time-of-change/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">identifies pathways</a>&nbsp;for low-wage worker job mobility.</li><li>Build a case for inclusive economic development.&nbsp;The&nbsp;<a href="https://inclusivegrowthscore.com/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Inclusive Growth Score</a>&nbsp;offers a clear, simple view of social and economic indicators at the neighborhood level, enabling planners and investors to uncover and prioritize opportunities for investment.</li></ul>

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Gina Raimondo

US SECRETARY OF COMMERCE

The pandemic puts reaching the last mile to the test in developing economiesCOVID-19 struck a blow to the world’s progress<a href="https://www.un.org/development/desa/dspd/wp-content/uploads/sites/22/2021/05/KHARAS_paper1.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;in fighting poverty</a>—with a handful of countries feeling the most severe impacts. Restoring global progress toward ending poverty will increasingly depend on more precise targeting of aid in combination with better mobilization of resources. As some of the Center’s grantees have shown, investments in digital infrastructure and data science can help ensure aid reaches those that need it most.

[NEED PHOTO CAPTION]: Healthcare workers cross a river as they transport COVID-19 vaccines to rural villages in the Philippines. The country launched a three-day national vaccination holiday on November 29 with the goal of vaccinating at least nine million additional people. (Photo credit: Ezra Acayan/Getty Images)Unsurprisingly, affordable and equitable access to COVID-19 vaccines remains a top priority. Limited vaccine supplies, uneven access to healthcare systems, the absence of formal identification and the costs of delivering aid to remote regions are just<a href="https://interactivecontent.mastercard.com/mastercard-us/mastercard-signals-healthcare/p/4" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;a few of the challenges</a>&nbsp;to overcome.Three resources to reach the last mile:<ul><li>Target aid with the help of data science.&nbsp;In Togo,<a href="https://medium.com/center-for-effective-global-action/how-precision-aid-and-machine-learning-based-targeting-can-complement-existing-social-protection-de3bc3211fd2" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;GiveDirectly</a>&nbsp;and the Center for Effective Global Action (CEGA) used satellite imagery, cellphone data and machine learning to accelerate targeted pandemic aid to the most vulnerable residents. This is a model other countries can adopt to rapidly expand the safety net for those frequently underserved in times of crisis.</li><li>Learn what works for reaching the “hard-to-reach.”&nbsp;<a href="https://interactivecontent.mastercard.com/mastercard-us/mastercard-signals-healthcare/p/4" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Rural Tanzania</a>&nbsp;is getting vital medicine thanks to improved geocoding that makes delivery routes more efficient. This is just one of more than 30<a href="https://reachalliance.org/case-studies/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;case studies</a>&nbsp;from the University of Toronto’s&nbsp;<a href="https://reachalliance.org/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Reach Alliance</a>&nbsp;at the Munk School that demonstrate effective strategies for reaching excluded populations.</li><li>Support vaccine equity.&nbsp;<a href="https://www.gavi.org/covax-facility" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Gavi, the Vaccine Alliance</a>&nbsp;is spearheading global efforts to accelerate equitable access to COVID-19 tests, treatments and vaccines regardless of income.</li></ul>

Ngozi Okonjo-Iweala

DIRECTOR GENERAL, WORLD TRADE ORGANIZATION

The shift to digital for small businesses can expand opportunitiesGlobally, lockdowns drove&nbsp;digital transformation for&nbsp;companies large and small as consumers clicked to buy, bank and eat. While many businesses&nbsp;<a href="https://www.mastercard.com/news/ap/en/newsroom/press-releases/en/2021/october/mastercard-economics-institute-new-small-business-formation-in-apac-grew-35-year-over-year/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">shifted to online sales</a>, the smallest businesses struggled to pivot towards digitalization. Many restaurants in New York City’s Chinatown, for example, were slow to switch to digital, <a href="https://www.mastercardcenter.org/insights/asian-american-communities-hit-earlier-and-harder-by-covid-19" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">impeding sales</a>, our analysis found.

[NEED CAPTION]:A young entrepreneur in Cameroon presents his products at a fair featuring businesses who have benefited from the government‘s "Triennial Youth Plan" 2016. The plan aims to support 1.5 million young people entering the fields of agriculture,&nbsp;industry, handicraft, digital economy and innovation. (Photo by Kepseu/Xinhua via Getty Images)The Center is working with our grantees to ensure micro and small businesses can&nbsp;<a href="https://www.mastercardcenter.org/content/dam/public/mc-cig/uploads/Empowering-Small-Businesses.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">more fully benefit from digitalization</a>. The challenges go beyond access and connectivity and include lagging digital skills, lack of confidence and the costs of cybersecurity, according to a recent&nbsp;<a href="https://www.ilo.org/empent/units/boosting-employment-through-small-enterprise-development/WCMS_808632/lang--en/index.htm" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">ILO report</a>.Three ways to enable the shift to digital:<ul><li>Collaborate to empower small businesses.&nbsp;<a href="https://www.mastercard.com/news/press/2021/september/mastercard-launches-strive-a-global-small-business-initiative-to-accelerate-economic-recovery/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Strive Community</a>&nbsp;is connecting digital platforms, super apps and fintechs with nonprofit and development-focused organizations to help small businesses&nbsp;bring digital&nbsp;technologies into their operations. Innovative public-private partnerships like the&nbsp;<a href="https://www.mastercard.com/news/ap/en-in/newsroom/press-releases/en-in/2021/october/hdfc-bank-mastercard-usaid-and-dfc-launch-100-million-credit-facility-for-micro-small-and-medium-enterprises-msmes-in-india/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">$100 million credit facility</a>&nbsp;recently launched in India by HDFC Bank, Mastercard and the U.S. International Development Finance Corporation can help women-run and other underserved small businesses access the capital they need to make the shift to digital.</li><li>Lay the foundation for inclusive digital marketplaces.&nbsp;A new set of principles from the World Economic Forum’s<a href="https://www.weforum.org/agenda/2021/08/financial-inclusion-new-principles/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;Edison Alliance</a>&nbsp;offers foundational guidance for building high-quality, safe and efficient financial services infrastructure that powers an inclusive digital economy.</li><li>Use behavioral science to improve financial resilience.&nbsp;<a href="https://advanced-hindsight.com/commoncents-lab/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Common Cents Lab</a>&nbsp;is testing new data-driven behavioral science to improve the financial well-being of gig platform workers and entrepreneurs in Latin America. Insights from the program will inform how tech platforms can integrate interventions that motivate positive financial behaviors and improve savings rates.</li></ul>

Michael Miebach

CEO, MASTERCARD

An inclusive financial system is critical infrastructureThe pandemic underscored the importance of inclusive financial service providers in meeting the financial needs of low- and moderate-income communities.

[NEED CAPTION]:The pandemic spurred the growth of tech start-ups like "El-Gam’eya" in Egypt (pictured above) which are reaching unbanked populations by digitizing traditional, informal systems of money-pooling for saving and borrowing. (Photo credit: KHALED DESOUKI/AFP via Getty Images)In developing countries, microfinance institutions’ (MFIs’)&nbsp;<a href="https://blogs.adb.org/blog/many-thought-pandemic-would-imperil-microfinance-it-did-opposite" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">quick pivot</a>&nbsp;to new forms of support during COVID-19 saved thousands of microbusinesses and positioned MFIs to be even more effective going forward. In the U.S., corporate donors and impact investors made commitments to support community development financial institutions (CDFIs) to help businesses owned by people of color survive and thrive.However, MFIs, CDFIs and other inclusive financial service providers often face a variety of operational hurdles in scaling financial services. The Center’s grantees are generating new insights, frameworks and best practices to drive collective action that meets the needs of underserved segments, including women and people of color.Three resources to build an inclusive financial system:<ul><li>Advance a national financial inclusion strategy. A<a href="https://www.aspeninstitute.org/programs/financial-security-program/inclusive-financial-systems/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;national financial inclusion strategy</a>&nbsp;can bring stakeholders together to ensure that everyone can effectively use the financial system to their benefit. This<a href="https://www.aspeninstitute.org/publications/building-inclusive-financial-systems/#:~:text=The%20Aspen%20Institute%20Financial%20Security,enforcing%20strong%20regulatory%20regimes%3B%20and" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;Aspen Institute paper</a>&nbsp;can help policymakers develop a roadmap for action, based on lessons learned from other countries.&nbsp;</li><li>Look to best practices for digital transformation. Accion’s<a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;digital transformation guide</a>&nbsp;captures best practices from inclusive financial service providers working to better serve small businesses and families with digital financial services.</li><li>Scale lending to entrepreneurs of color. This&nbsp;<a href="https://www.aspeninstitute.org/publications/scaling-lending-to-entrepreneurs-of-color-part-i-core-operational-challenges/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">brief</a>&nbsp;from Aspen’s Business Ownership Initiative details the challenges CDFIs face in scaling the supply of affordable, responsible microloans for small business owners.</li></ul>

Chris Coons

U.S. SENATOR (DE)

The challenges facing people, planet and prosperity are increasingly interconnectedThe need to create growth that is both inclusive and sustainable has never been greater, as we highlighted at the 2021&nbsp;<a href="https://youtu.be/jJ_ca9KJV7Y?list=PLIfOLx3HAATfArOgwYqirC1tXGD6OVYvW" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Global Inclusive Growth Summit</a>.Climate change is estimated to push<a href="https://www.tabledebates.org/research-library/world-bank-report-states-climate-change-could-push-100-million-people-back-poverty" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;100 million people</a>&nbsp;into poverty in just nine years, according to the World Bank, and could cost the global economy&nbsp;<a href="https://www.swissre.com/institute/research/topics-and-risk-dialogues/climate-and-natural-catastrophe-risk/expertise-publication-economics-of-climate-change.html" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">$23 trillion</a>&nbsp;by 2050, according to Swiss Re. The November 2021 United Nations Climate Change Conference,&nbsp;<a href="https://www.wri.org/insights/top-takeaways-un-world-leaders-summit-cop26" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">COP26</a>, put the climate crisis at the top of the public agenda. World leaders struck many important agreements, including a pledge to&nbsp;<a href="https://www.bbc.com/news/science-environment-59088498" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">end deforestation by 2030</a>. However, these promises must turn into action to move the needle forward.

In Turkey, COVID-19 and extreme drought conditions, exacerbated by climate change, hurt the annual harvest of roses (pictured above), with production down approximately 30 percent. While local shops have seen a decline in demand, many producers of rose-related products saw an increase in online sales during the pandemic. (Photo credit by Chris McGrath/Getty Images)Increasingly, consumers are driving change by shifting their choices of products and services. In&nbsp;<a href="https://www.mastercard.com/news/research-reports/2021/consumer-attitudes-environment/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">a recent survey</a>,&nbsp;85 percent of respondents said they were willing to take personal action to combat environmental and sustainability challenges in 2021. In response, more companies are beginning to embrace&nbsp;<a href="https://bschool.pepperdine.edu/blog/posts/conscious-consumerism.htm" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">consumer-conscious business models</a>.Mastercard is mobilizing against climate change&nbsp;<a href="https://www.mastercard.com/global/en/vision/corp-responsibility/sustainability.html" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">directly through our business</a>, as well as by committing to&nbsp;<a href="https://www.mastercard.com/news/press/2021/november/advancing-the-future-of-sustainable-commerce/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">net-zero emissions by 2040</a>&nbsp;and supporting our suppliers’ decarbonization efforts.Four actions to advance sustainable business:<ul><li>Empower consumers to make sustainable choices.&nbsp;Mastercard’s new<a href="https://www.mastercard.com/news/europe/en/newsroom/press-releases/en/2021/september/mastercard-launches-global-sustainability-innovation-lab/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">&nbsp;Global Sustainability Innovation Lab</a>,&nbsp;and its partnership with Swedish fintech Doconomy to launch a&nbsp;<a href="https://www.mastercard.com/news/press/2021/january/mastercard-pledges-net-zero-emissions-innovates-for-collective-climate-action/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Carbon Calculator</a>, are helping consumers better understand the environmental impact of their purchases.</li><li>Cut carbon emissions.&nbsp;As more companies strive for net-zero, the importance of managing emissions across the value chain will&nbsp;<a href="https://exponentialroadmap.org/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">grow exponentially.</a></li><li>Adopt a regenerative mindset.&nbsp;Sustainability leaders increasingly recognize the interdependence of ecosystems and are adopting&nbsp;<a href="https://sustainablebrands.com/read/leadership/a-compass-for-just-and-regenerative-business-5-principles-of-the-leadership-we-need" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">regenerative business models</a>&nbsp;that work&nbsp;to&nbsp;fundamentally repair, renew and heal systems on which we all depend.</li><li>Finance a sustainable future.&nbsp;Sustainability bonds are on course to&nbsp;top $1 trillion this year. Proceeds from Mastercard’s&nbsp;<a href="https://www.mastercard.com/news/press/2021/march/mastercard-issues-600-million-sustainability-bond/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">$600 million sustainability bond</a>, the company’s first, will support efforts to cut carbon emissions, help customers make smart environmental choices and foster inclusive growth. In addition, the growing interest in&nbsp;<a href="https://www.centerforfinancialinclusion.org/research/financial-services-to-mitigate-and-adapt-to-climate-risks" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">green inclusive finance</a>&nbsp;reveals an opportunity to connect financial inclusion with the need to help vulnerable communities prepare for and withstand climate change.</li></ul>

Alan Jope

CEO, UNILEVER

These tools and insights are just a start in ensuring an equitable recovery and healthier new year. 2022 will no doubt bring both new challenges along with new innovations and advances.The Center for Inclusive Growth will continue to advance new insights, tools and workable solutions to advance inclusive digital economies, financial security, small business resilience and environmental sustainability.&nbsp;&nbsp;In the meantime, we encourage you to delve into our&nbsp;<a href="https://built4all.org/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Built for All</a>&nbsp;framework, which offers broad actions leaders can take toward building more inclusive economies, and visit our&nbsp;<a href="https://www.mastercardcenter.org/knowledge-library#header" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">new insights library&nbsp;</a>to access the latest research from our partners and grantees on these topics and more.

From a growing digital divide to vaccine equity, we highlight the economic and societal challenges that defined 2021 and point toward insights and resources from our partner network that can help advance shared prosperity around the world.

In the US, a two-track recovery exacerbates the jobs divide
The economic rebound in the wake of the pandemic has been a tale of two recoveries. In the U.S., low-wage earners, especially Black and Hispanic workers, have been <a href="https://tracktherecovery.org/" target="_blank">hit hardest</a> by pandemic-related job losses. Now, they’re the<a href="https://www.cnbc.com/2021/08/16/jobs-still-down-22-percent-for-low-wage-workers-theyre-up-for-everyone-else.html"> </a><a href="https://www.cnbc.com/2021/08/16/jobs-still-down-22-percent-for-low-wage-workers-theyre-up-for-everyone-else.html" target="_blank">last to recover</a>. Millions have not returned to work, some because of COVID-19 fears, others because they cannot find child care. Still others want to retrain for a better job. On the higher end of the wage scale, jobs go begging for qualified candidates. All this points to a need to invest in job training and mapping career pathways.

Renewal and rebuilding: Achieving a more inclusive and sustainable recovery