When countries talk of developing or pulling themselves out of economic stagnation the focus is generally on building infrastructure like airports, railroads, seaports and highways. It is easy to see why– these are visible symbols that are politically valuable and their creation stimulates jobs resulting in both long term and short-term economic gains. Every developed country has gone through this infrastructure creation phase at some point in the past. As we look into the future, it is vital to ask whether this secret sauce can still work its magic “as is” or should it be enhanced.
Digital infrastructure is rarely spoken about with the same excitement that accompanies its more popular cousins. But looking at the benefits that Information and Communication Technologies (ICT) have delivered to people it is perhaps the single most potent tool to power the world to a better tomorrow. The marginal impact of ICT is particularly greater on the world’s poor – a simple text can inform a farmer about the right price for his crop, telemedicine ensures that medical help for is only a call or click away and MOOCs make a world wide web of knowledge available to any person with a connected device . This optimism finds resonance in the 2015 Gates Foundation letter that declares that “the lives of people in poor countries will improve faster in the next 15 years than at any other time in history.” 3 of the 4 areas identified in the letter have an ICT angle to it.
The march towards a digitally developed world is hampered by a massive inequality in access to ICT. Data from the World Bank indicates that the least developed countries are lagging behind by at least 2 decades. At the start of the millennium, every group – except the OECD countries – was below the world average. In just over a decade, Latin America, East Asia, Middle East and North Africa have made impressive strides. This trend is also reinforced by a recent study by the Fletcher School at Tufts University (the author is associated with the school but wasn’t involved in the study) that published a Digital Evolution Index mapping the digital journeys of different nations. Not surprisingly, there are 2 East Asian countries in the top 3 and many Latin American nations in the “break out” league.
Digital development depends on of 5 key mutually reinforcing factors – Cost, Content, Connectivity, Consumers and Institutions.
Cost: How much does it cost to go online and consume content? The cost component should factor device cost and recurring data access costs. Both have to be sufficiently attractive in terms of pricing, financing and payment options to bring the next billion online.
Content: This involves creating the right content in the right format in the right language. Consumer tastes vary significantly – for example, Indian consumers are known for their love for ABCDE – Astrology, Bollywood, Cricket, Devotion and Education; football is likely more popular in Africa and shopping deals in China.
Connectivity: The adequacy of digital infrastructure – current and planned- is a critical component of any digital push. Contrary to popular perception, it isn’t a disadvantage if nations missed the digital bus in the 1990s and 2000s. Sophistication in legacy infrastructure isn’t a prerequisite to succeed in the digital future. Many consumers who took to the internet in the past 3-4 years bypassed the PC and Laptop era and went directly to mobile devices. Likewise, nations that haven’t made a mark on the digital map can leapfrog directly to the wireless age. Recently telecom majors announced plans for 5G services in East Asia. Like iPhones, newer iterations of technology make the older versions more affordable. This is good news for the nations that currently have a tiny digital base.
Consumers: ICT adoption is natural among the youth. Countries that lag behind the curve are also the ones with some of the world’s youngest populations. For the other sections of the population aspects like convenience, cost savings and efficiency are factors that help them make the transition from offline to online. The level of digital engagement depends on other factors like strength of the network effect and complementary infrastructure (e.g. logistics network and credit/debit card usage usage for e-commerce transactions). Entrepreneurs in emerging nations have found a way around poor credit/debit card usage rates by offering cash on delivery and offline payment options. Perhaps, advancement in drone technology may help overcome challenges associated with inadequate logistics network.
Institutions: In a promising field like ICT the roles of the regulator and policy maker are critical. Institutional impartiality and predictability apart, the need to adapt as the industry evolves is a key trait. If in the initial stages efforts focus on attracting investment and fostering competition, the later stages involve consumer protection and maintaining a level playing field. Even advanced nations have failed here leading to duopoly and poor service levels. A scarce public resource like telecommunication spectrum is a key input to the industry. In allocating this institutions should demonstrate the capability and maturity to strike the right balance between revenue generation and digital inclusion
There are several things that public and private institutions can do for each of these factors. For starters, public initiatives like distribution of free/low cost laptops and tablet computers to students can significantly widen the user base. With the commoditization of major components and free operating system, device costs are heading south. Offering financial incentives to businesses investing in manufacturing low cost mobile devices will enable device penetration beyond the student community and generate local jobs.
On the content side, the big players who stand to gain from increased internet usage have made no secret of their desires to partner with like minded stakeholders to expand ICT access. The Facebook-led Internet.org is a great example of an interdisciplinary effort to reduce barriers that 66% of the world’s population faces in getting online. This brings with it a set of secondary challenges to the digital surge. For historical, political and/or ideological reasons many of the less developed and developing nations are suspicious of western ideas and influences. Initiatives to expand information access at the grassroots are of particular concern in societies that aren’t fully aligned with western notions of democracy and freedom. With businesses based in the global north dominating the ICT space, digital advocates face political, cultural and societal hurdles. This calls for multi-layered engagements with public, private and non-governmental organizations to agree on a bespoke strategy that all parties are comfortable with. This could be a local clone of a global service (China model), a conditional right to operate the standard global service or anything in between. As Facebook and Twitter have discovered in China, this doesn’t always guarantee success but that doesn’t mean consultations aren’t important, for an approach that lacks consultations is designed for failure.
Finally, a clear articulation of digital bias by governments will act as a catalyzing force that will bring all the elements together. Digital bias involves a stated policy of preferring digital avenues to non-digital ones in the access and delivery of public services. In addition to cutting down transaction costs and improving transparency, this will send a powerful signal about the government’s long-term commitment to a digital future. Simultaneously, it will spawn new age entrepreneurs and allow reinvestment of the cost savings to further stimulate the economy. Now, which politician will not want that?