A Gender Perspective on the use of Artificial Intelligence in Africa’s FinTech Industry: Case studies from South Africa, Kenya, Nigeria and Ghana

In many African countries, the COVID-19 pandemic exacerbated the already high levels of poverty and inequity and exposed systematic and structural vulnerabilities in social, political and economic systems, with low-income and marginalised households and individuals experiencing amplified cascading negative impacts.

Social, gender, and economic inequities are now more pronounced than ever. There is clear evidence that women had lower capacity to mitigate the COVID-19 pandemic related socio-economic shocks and are more likely to experience disproportionately higher welfare losses than men, as existing pre-pandemic gender inequalities where women earn less, save less, hold less secure jobs, have less access to social protections, make up the majority of single-parent households, are burdened with unpaid care and domestic work, and are more likely to be employed in the informal industry.

Simultaneously, the global COVID-19 pandemic mitigation measures amplified the importance of digitalisation of socioeconomic activity, including the use of digital financial services (DFS) to facilitate social distancing anti-contagion (lockdown) measures, facilitate social protection channels, and buffer rising uncertainty.

Even prior to COVID-19, there was increased hype regarding the transformational potential of new technologies in the financial sector, with hopes of significantly increasing access to financial services, to accelerate and enhance financial inclusion. In many low- and middle-income countries (LMICs), DFS have been lauded as a powerful medium to ensure basic financial services are available to build post-pandemic economic resilience and mitigate the triple health, economic and social crisis, brought on by the novel coronavirus, particularly for those developing countries with large informal sectors, a common characteristic in many African countries.

While there is potential to leverage DFS as a tool to build future resilience from the economic and social impacts of the ongoing COVID-19 pandemic and to support a more inclusive recovery, there are also risks involved as the impacts of the Pandemic could accelerate pre-existing risks of digital financial exclusion for women, such as access to basic digital resources (mobile phone, Internet), cultural or social norms, and digital and financial literacy. DFS could also give rise to new risks and exclusions as Artificial Intelligence (AI) and other frontier technologies are deployed to enhance FinTech solutions.

The use of AI based systems complements the time-sensitive and data intensive nature in FinTech Ecosystems (FEs) (Figure 1) that have disrupted many financial services landscapes in sub-Saharan Africa (SSA).

Figure 1: FinTech Ecosystem (FE). Source: Li & Shin, 2018

However, as evidenced in many wealthier economies with more AI maturity, technology is not neutral, the use of AI in particular is inherently prone to biases and magnifies pervasive gender, racial discrimination, and economic marginalisation that exist in the ecosystems where it is deployed. With the exception of China, there is limited evidence on scaling the impact of AI in developing economies, very little is known about the potential effects of new technologies such as AI in Africa, many existing studies are mainly focused on wealthier economies in the global North.
Furthermore, beyond being complex adaptive systems that use computational models to influence socioeconomic activity, FEs have distinct interrelated supply-side and demand-side dynamics that perpetuate gender disparity.

As a result pertinent issues, such as data bias and other risks associated with AI systems are not adequately captured in a manner that highlights how badly designed AI could exacerbate discrimination and exclusion in the context of many African countries, particularly when analysing the gendered impacts of deploying AI in Africa

Using a feminist economics, innovation economics, and endogenous technological change approach, four exploratory African country case studies (Ghana, Kenya, Nigeria, and South Africa) reveal the interaction between , financial inclusion, gender, and AI systems. The paper highlights different and similar country experiences associated with driving AI based solutions for financial inclusion and how these solutions impact gender equity outcomes.

The study findings were presented at the 23rd @International Telecommunications Society (ITS) 23rd Biennial Conference: Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world.

The ITS is an association of professionals in the information, communications and technology sectors. It provides a forum for academic, private sector, and government communities to meet to identify new problems and issues, share research results, and form new relationships and approaches to address outstanding issues.

The aim of the 23rd Biennial Conference was to examine the impact of new technologies on regulation, existing business models as well as how these may change in the years to come given the rapid technologically driven changes ushered into people’s professional and personal lives as a result of the pandemic.

Three key findings of the paper reveal:

(i) Uneven social mobility, archaic education systems, and the leaky science, technology, engineering, and mathematics (STEM) pipeline hinder women’s participation in STEM-related workplaces and overall digital entrepreneurship. The use of AI in these ecosystems will most likely create new and/or exacerbate existing inequities.

(ii) The dominance of tech-bro culture in the African FinTech ecosystem exacerbates inequality of opportunity and limits women’s access to networks (social capital) and market opportunities. This obstructs not just women’s participation in the FinTech industry, but ultimately also restricts the innovation of financial products aimed at women’s digital financial inclusion.

(iii) Evidence suggests when more women are involved in politics, decision-making, and public sector leadership positions, women’s rights, priorities, needs, and interests are less likely to be ignored. The lack of women in policy, regulation, and overall decision-making in the FinTech ecosystem hinders progress on gender-responsive policy interventions that can promote more gender equity and mitigate gender-related harms associated with AI.

The research for this conference paper was conducted under the auspices of the AI4D project generously supported by the IDRC and SIDA.

The conference paper can downloaded here, the presentation slides here.