The benefits and risks of digitalization in development

Digital Dividends underlines the promises and challenges of development and digitalization. Digital technologies have spread rapidly around most of the world. Digital dividends – the broader developmental benefits gained from using these technologies – have lagged behind.
— The World Bank’s World Development Report 2016

 

If we want digital technologies to benefit everyone everywhere we need to close the remaining digital divide, especially when it comes to internet access. However, greater digital adoption will not be enough. To get the most out of the digital revolution, countries also need to work on the “analog complements” by strengthening regulations to ensure competition among businesses, by adapting workers’ skills to the demands of the new economy, and by ensuring that institutions are accountable (Digital Dividends 2016).

 

Professor Jeffrey D. Sachs, Director of The Earth Institute, has written: “ICT is the most powerful new tool we have for solving the world’s major challenges – ending poverty and hunger, ensuring universal access to basic services and making the transition to a low-carbon economy. /—/ Yet technology by itself is never a solution. It must be properly deployed – directed towards social purposes – and extended to the poor and to remote regions that markets alone will not serve, at least not in a timely way. Put simply, technology must be combined with a will towards the common good” (ICT and SDGs, Sachs et al. 2016).

 

Endless possibilities

Farmers could increase their earnings by 10 to 20% if they had access to market information. Malaria could be detected using a mobile phone, and data analytics could help stop the spread of the Ebola virus. People in Tanzania could register the birth of a child by SMS instead of walking two days to the nearest village. You could do an eye test on someone living 100 miles away, attend a church service via your iPad and use apps to invest in cows. Blood tests could be delivered by drones and Ugandan farmers could achieve higher productivity thanks to commercial and technical advice delivered to their smartphones. The list goes on.

 

However, there is also a dark side to all these benefits. Certain countries in Africa still struggle with proper power networks – but electricity is a must for all the talk on connectivity. Half a billion people live in areas with no mobile signal (World Bank Group, 2016). The offline population is disproportionately rural, poor, illiterate, elderly and female (McKinsey & Company, 2014).

 

Automatization will change the job market and hit women harder – it is predicted that men will gain one job for every three jobs lost to technology, while women are expected to gain one job for every five or more jobs lost (Amerashinge 2016). There is a gender gap in terms of women’s access to digital tools. Globally, women are on average 14% less likely to own a mobile phone than men (GSMA 2015). Poor urban women are about 50% less likely to have access to the internet than men in the same age group with similar levels of education (World Wide Web Foundation 2015). Even if the connectivity is there, the question of affordability remains. In India, for example, the high cost of data service puts internet out of reach for roughly 78% of the population (Pew Research Center 2016). There are shortcomings in both local education – how tech savvy the people are – and local content. The majority of the internet is in English (Chinese being a runner-up), which means that globally, there are huge discrepancies in people’s access to information and in their ability to engage. And last, but not least, there are very prevalent issues regarding data protection, control over information and cyber security.

 

What could be lessons learned from Estonia’s digital success?

In 2017, Estonia was among the top ten European Union member states according to the Digital Economy and Society Index, which tracks the evolution of digital competitiveness. The digital story of Estonia could at least to some extent be repeated in any less developed country.

 

The journey started with Estonia’s decision to be free of legacy technology. The Economist retells the story: when Finland decided to upgrade to digital phone connections, it offered its 1970s analogue telephone exchange system to Estonia free of charge. Estonia declined the proposal and built a digital system of its own.

 

Old-school thinking on the government level has to be abandoned. Estonia’s digital drive has been carefully nurtured by local politicians and public servants who strongly believe in the advantages of technological solutions. This has resulted in an efficient approach – tax declarations take less than 10 minutes to file, by law, the state may not ask for a piece of information more than once, and all government databases must be compatible (this system is known as the X-road). All in all, the Estonian state offers 600 e-services to its citizens and 2,400 to businesses. If the government and its institutions are not on board, digitalization becomes rather difficult.

 

Other factors crucial to pushing the digital leap? Be small and relatively poor and have a population that eagerly believes in technology. Scarce funds help to be innovative. Instead of developing new and expensive databases, Estonia created the X-road: the flexible backbone of Estonian e-solutions that ensures secure communication between small databases.

 

How is this short history of digital Estonia relevant in the context of development? As Urmas Paet, Member of the European Parliament, has noted – digitalization is here to stay. It is not going away. The best everybody can do is to step in, ride with the tide and work towards harnessing digital dividends while making sure no one is left behind, somewhere on the other side of the digital divide.

 

How can digital dividends be harvested?

Digitalization is impossible without an infrastructure – electricity and access to broadband or mobile networks are necessary to reap the benefits of digital technologies. The Alliance for Affordable Internet points out that in 2017, half of the global population is online. The other half of the world’s citizens, billions of people lack access to the internet and most likely will be left even more behind (2017 Affordability Report).

 

“ICT & SDGs”, a report on how ICT can accelerate action towards achieving sustainable development goals (SDGs), points out that many of the challenges of sustainable development – health, education, infrastructure and environmental sustainability – require a deep commitment by the policy-makers and the public sector. At the moment, technologies are evolving so fast that legislation is not able to keep up.

 

The World Development Report 2016 states that sound regulations and accountable institutions are key determining factors to bring digital dividends to developing countries. Strategic policy note D4D (Digital for Development) for the Belgian development cooperation calls everyone to be aware of the possible tension between governance and innovation as the latter can be highly disruptive and may involve transgression from existing norms and interests.

 

The main examples of policy-making to shape the digitalization in development cooperation across EU institutions over the past years are:

1. European Council conclusions on mainstreaming digital solutions and technologies in the EU development policy
2. The Commission Staff Working Document Digital4Development, a framework for mainstreaming digital technologies and services into the EU development policy
3. The European Consensus on Development, where digitalization is seen to bring a lot of opportunities for development

From the side of EU member states, however, digitalization in development has not taken off in policy-making. One notable exception is Belgium, who has put in place strategic policy note D4D for the Belgian development cooperation. This strategy for digital development sees digitalization not as a goal in itself but as a strong enabler and accelerator that can help achieve SDGs.

 

When it comes to legislation, civil society has an important role to play. European Council conclusions on mainstreaming digital solutions and technologies in development voice concern over the persistent digital divides and the unequal distribution of ICT benefits. Civil society must be one of the watchdogs safeguarding that the policies and projects that are shaped and implemented do not leave anyone behind, and deliver digital dividends for many, not only for the few. At the same time, the question is how can civil society harness digitalization to deliver better outcomes in their own work. It is important to remember that as one of the stakeholders in global sustainable development, civil society organizations have the need and the commitment to keep up with the pace of digitalization to be able to shape and use it properly.

 

As guidance for developing digital services, principles for digital development can help development practitioners integrate best practices into technology-enabled programs. The nine principles are:

1. Design with the user
2. Understand the existing ecosystem
3. Design for scale
4. Build for sustainability
5. Be data-driven
6. Use open standards, open data, open source, and open innovation
7. Reuse and improve
8. Address privacy and security issues
9. Be collaborative

The social benefits of e-solutions, services and applications are shadowed by potential human rights abuses. A plethora of relevant questions about net neutrality, data protection, privacy, disruptive social change and cyber security often go unanswered. To tackle these issues, all stakeholders need to step in. Developing countries need to work on strengthening their governance to be able to implement digital solutions for the benefit of all people. European policy-makers need to deliver legislative networks safeguarding human rights, monitoring, accountability and transparency. The private sector, which is indispensable for digitalization, must strengthen their corporate social responsibility game and abide by the laws, even in developing countries. Civil society organizations need to adapt to digitalization and work on making it beneficial for global sustainable development.

 

These issues form the basis for the conference Digitalizing Development held on 12 September in Tallinn, Estonia. The event will offer stakeholders the chance to discuss the future of development cooperation, our stance on digitalization and the paths we want to take. The conference tackles the challenges brought about by new technologies and the potential risks. And of course, we will imagine the way forward together.

 

LINKS AND ADDITIONAL READING:

• World Development Raport 2016: Digital Dividends. World Bank. Link here.
• How Information and Communication Technology Can Accelerate Action on the Sustainable Development Goals. ICT & SDGs Final Report. Link here.
• Can The Internet Reboot Africa? – The Guardian. Link here.
• Offline And Falling Behind: Barriers To Internet Adoption. McKinsey&Company 2014. Link here.
• Amerashinge, Samantha, “Women’s Jobs At Risk From Tech Disruption”. – The World Bank Jobs And Development Blog. Link here.
• Women And Mobile: A Global Opportunity. A Study On Mobile Phone Gender Gap On Low And Middle-Income Countries. GSMA. Link here.
• Women’s Rights Online: Translating Rights Into Empowerment. Global Report 2015. World Wide Web Foundation. Link here.
• Smartphone Ownership And INternet Usage Continues To Climb In Emerging Economies. Pew Research Center 2016. Link here.
• 2017 Affordability Report. ALliance For Affordable Internet. Link here.
• Council conclusions on mainstreaming digital solutions and technologies in EU development policy. Link here.
• Commission Staff Working Document SWD(2017)157 – Digital4Development: mainstreaming digital technologies and services into EU Development Policy. Link here.
• European Consensus for Development. Link here.