Covid-19 and the digital divide: how can emerging economies boost their ICT infrastructure?

ICT

Economic News

18 Feb 2021
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– Digital transformation is limited by inadequate ICT infrastructure

– Citizens without connectivity stand to be left behind

– Emerging economies must act to close the infrastructure gap

– Public and private actors can collaborate to boost access

While the coronavirus pandemic has rapidly accelerated digital transformation around the world, many emerging economies are still afflicted by inadequate ICT infrastructure, limiting their capacity to fully capitalise on the opportunities that are emerging from the disruption. This provides scope for public and private actors to collaborate in closing the infrastructure gap. 

For several decades, high-quality ICT infrastructure has been considered key to enhancing economic growth.

In emerging economies, according to the World Economic Forum, each additional 10% of internet penetration can give rise to a 1.2% increase in per-capita GDP growth.

The coronavirus pandemic has made internet access an essential condition of continued growth. Around the world, digital solutions have become fundamental to safeguarding supply chains, maintaining public services, and ensuring continuity in business and education. 

In short, ICT infrastructure has become critical to the functioning of an economy, alongside water, electricity and food supply networks. Moreover, alongside vaccines, reliable connectivity is an essential element of the Covid-19 recovery process.

A growing digital divide

While universal connectivity is a key element both of the Covid-19 recovery and of broader global development projects – among them the UN’s Sustainable Development Goals – it is still far from being realised.

Overall global internet user penetration stands at 53.6%, according to the UN’s International Telecommunication Union. In the developed world, this figure is 87%, but it drops to just 47% in developing countries.

Meanwhile, many low-income communities – in both rural and urban areas – lack reliable, affordable internet access.

The significant disparities in terms internet penetration – both between richer and poorer countries, and between different regions within a given country – constitute a critical barrier to mitigating the challenges of Covid-19.

Moreover, as the coronavirus pandemic accelerates the digital revolution, there are fears that the gap between digital “haves” and “have-nots” will widen.

For example, as more devices and systems come to depend on connectivity, communities without internet access will be further excluded.

Similarly, those children who were able to study or attend classes online during lockdowns will be better placed when schools reopen. Indeed, to tackle this issue, Kenyan authorities announced that all students will simply restart the academic year from scratch.

E-commerce – a sector that has seen astronomical growth worldwide as a result of the pandemic – is also beyond the reach of those who do not have internet access; such people must make essential purchases in traditional ways, increasing their risk of exposure to the virus. Likewise, they cannot access e-payment methods and must use cash, which is potentially a vector of the virus.

Lastly, while large businesses have access to well-established digital solutions that have enabled them to sustain operations during the pandemic – among them video conferencing and cloud storage – some small and medium-sized enterprises (SMEs) in developing economies lack access to such technologies, particularly if they cannot count on adequate network coverage.

Even where there is coverage, other barriers may exist. These include affordability – it may be prohibitively expensive to access the internet – and so-called digital illiteracy – simply, a lack of familiarity with digital methods that can deter people from using them.

Closing the gap

As OBG has extensively documented, governments and private companies in emerging economies around the world have responded to the pandemic by implementing broad-based and innovative digital solutions.

From boosting bandwidth to allowing students to browse educational sites free of charge, such solutions went a long way to mitigating the worst impacts of lockdowns.

Meanwhile, governments have employed policies to improve the resilience of digital infrastructure, with research agency Omdia’s Telecoms Regulation Covid-19 Tracker identifying over 250 regulatory responses to the pandemic. But the pandemic has highlighted that much more remains to be done to ensure that all citizens can access digital solutions.

One approach that has borne fruit in various quarters has been to concentrate on liberalising the market for building and operating networks, and eliminating any monopolies or regulatory bottlenecks that are stymieing the expansion of connectivity.

Governments may also require other types of infrastructure projects (such as roads or pipelines) to include fibre-optic links. Likewise, access to essential hardware such as radio masts can be shared, while intermodal competition (between cable and wireless companies, for instance) can drive growth.

It is also important for regional networks to be allowed to grow across borders.

Such measures both expand connectivity and generate opportunities for private sector firms to collaborate, driving innovation and lowering costs for the end-user: a deregulated telecoms industry enables digital services to flourish.

Alongside this, policies must be put in place to adapt the education system to encourage digital skill training, and in general to teach people about the potential benefits of digital methods.

Trailblazers

There are numerous examples of emerging economies that have successfully implemented programmes to expand internet access.

In Colombia, for example, the Vive Digital plan involved the creation of 900 free public access internet centres in rural villages. Similarly, in China the Villages Connected programme has led to the installation of broadband internet access – whether fixed, mobile or satellite – in nearly 70,000 villages across the country.

Meanwhile, in an indication of what private sector organisations can achieve in this regard, since 2018, South-east Asian super app Grab has been working with Samsung to bring connectivity to under-served regions, for example by offering microfinancing to allow drivers to purchase mobile devices.

Grab has also partnered with Microsoft to offer accessible digital skills training programmes.

Elsewhere, Microsoft’s W-GDP Microsoft Women’s Digital Inclusion Partnership, launched at the end of last year, aims to significantly increase the number of women with internet access around the world. The programme will invest in ICT infrastructure in rural areas in Colombia, Ghana, Guatemala, India and Kenya.

According to a recent statement from the UN Broadband Commission for Sustainable Development, “universal broadband access is the vital catalyst needed to drive global economic recovery”. Initiatives such as these will contribute to closing the digital infrastructure gap and ensuring that emerging markets can use internet access both to power their recoveries from Covid-19 and enhance economic growth going forward.

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