Improving working conditions in informal sector economies: Exploring the application of value chain finance strategies-microinsurance and microleasing

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The Value Initiative, a global urban value chain action-research program (a joint project of the SEEP Network and the Bill & Melinda Gates Foundation) addresses the issue of improving working conditions in informal sector economies by answering one of its core action research question: How can you apply market development and private sector development principles to address working conditions challenges faced by the urban poor? This paper demonstrates how financial products, or interventions (here, micro-leasing and microinsurance), can improve value chain productivity, lead to improvement in physical and social working conditions, and complement economic interventions. The paper focuses on two different case study interventions: The Value Initiative Project in Indonesia which reduced the impact of poor physical working conditions for urban tofu and tempeh workers through micro-leasing, and then Value Initiative in India, which introduced microinsurance to improve social working conditions for urban jewelry artisans. Both cases offer lessons in linking private-sector financial services that are often intended to increase productivity in a value chain context, but have also resulted in a significant reduction of occupational hazards and an increase in the overall well being of workers employed in the informal sector.

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Sonali Chowdhary

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The Seep Network and Bill & Melinda GAtes Foundation, Technical note

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