- Development & Aid
- Economy & Trade
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Wednesday, July 30, 2014
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- In many respects, the diffusion of information and communication technologies (ICTs) continues to be a great development success story. Over the past four years we have witnessed dramatic growth in the use of various ICT applications, notably mobile phones. Developing-country populations now account for more than half of all Internet users. Improved connectivity has also enabled more firms to gain access to critical information, finance and knowledge -all key factors for enhancing competitiveness.
But nevertheless, huge gaps remain in many areas, both between and within countries. The greatest divide is today found in broadband access. For example, Australia, a country with only 21 million inhabitants, has more broadband subscribers than the entire African continent of more than 900 million. The broadband divide is further aggravated by the fact that existing networks in many poor economies often provide lower speeds at higher costs than elsewhere.
Within countries, business use of ICTs varies a great deal as well. As shown in UNCTAD’s recent Information Economy Report 2009, large companies are more likely to use ICTs than small and micro-enterprises. This has important implications, given that the great majority of enterprises in developing countries are small. There is also a significant divide between companies in rural and urban areas especially with regard to the use of computers and the Internet. Mobile telephony, by contrast, has become more widespread in relatively remote locations.
In emerging and developed economies, improved broadband connectivity has transformed the way services are produced and traded both nationally and internationally. According to the same UNCTAD report, market estimates suggest that the value of “off-shoring of services” worldwide between 2004 and 2008 tripled from $30 billion to $90 billion -and this may well be a low estimate. A large part of this business is conducted in developing countries.
While Asian developing countries, led by India and the Philippines, still dominate exports of such services, it is encouraging to see that many new locations are emerging on the radar screen. In Africa, Tunisia, Egypt, Morocco, Mauritius and South Africa are now becoming front-runners.
A critical area that will improve connectivity between Africa and the rest of the global economy is the increased use of international fibre-optic cables. Sub-Saharan Africa has been largely excluded from the network of such cables, but it is encouraging that a number of initiatives are finally coming to fruition, such as the SEACOM cable, linking the east coast of Africa with Europe and India, and the East African Marine System (TEAMS) cable. These improvements in international connectivity will help more African industries.
In spite of the current economic crisis, it appears that the trend towards the off-shoring of services has not been overly affected. Although exports of ICT goods have fallen dramatically, trade in services has been more resilient. In fact, UNCTAD expects that the crisis will lead to a further, perhaps rapid, expansion of services off-shoring -with new opportunities for developing countries. But it takes more than infrastructure to succeed in this area. Having the right skills mix and an environment conducive to international trade in services are other key requirements.
Last but not least, a few words about the importance of poverty eradication. The increased use of ICTs, especially by business, can help fight poverty. Micro enterprises and small and medium enterprises (SMEs), many of which are in the informal sector in developing countries, appear to be the most affected by the adoption of mobile telephony. In the agriculture and fisheries sectors in many developing regions, cellphones are now used to sell and purchase goods and services and negotiate prices. In many countries they are used extensively for voice communication and SMS, and increasingly also for such applications as “mobile commerce” and “mobile banking”. In Kenya, South Africa, Tanzania and Zambia, for example, mobile phones enable person-to-person payments, transfers and pre-paid purchases without a bank account.
Governments in developing countries should therefore give more attention to ICT uptake and use by micro-enterprises and SMEs, which lag behind much larger firms. Despite increases in connectivity, various bottlenecks still prevent entrepreneurs and small firms from using ICTs efficiently, and in remote rural areas connectivity still remains poor. ICT use is often limited by technical and economic factors, such as slow connection speed and high usage costs, and by social factors including low literacy levels and a lack of local content.
It is important to explore how technological innovations and government policy can help ameliorate these problems. How can the spread of ICTs reach the poor? Anecdotal evidence shows that new applications of ICTs are helping to reduce poverty, but systematic research remains patchy. International organizations, governments, the private sector and civil society must learn from available evidence of both successes and failures. (END/COPYRIGHT IPS)
(*) Supachai Panitchpakdi is the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).