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Article Article September 13th, 2016

Unlocking the digital door for developing countries

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Some 4 billion people – more than 55% of the world’s population – remain offline

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Governments need a long-term economic plan for massive infrastructure investment

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Fostering awareness of the internet’s value and helping people go online are top priorities

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For those of us in developed countries, the hum of 4G technology is ever present as we go about our daily lives. Whether at work or home, in transit or stationary, the tap of a tablet or smartphone releases us into a world of untold digital possibilities. Unfortunately, such a scenario remains out of reach for far too many: some 4 billion people - more than 55% of the world's population - remain offline.

A variety of reasons are to blame. Some live in hard-to-reach areas without the necessary digital infrastructure, while others don't see the benefits of getting connected, often because of limited relevant digital content. Illiteracy and inequality add further complexities to the problem. Of course, much effort has gone into ensuring that more people can get online, and significant progress has certainly been made. But there are no easy answers or quick fixes. Much more needs to be done - so how can governments help?

From the ground up

Infrastructure is a big hurdle for many countries, especially those that are impoverished or that have large rural or remote populations. With massive investment required, governments need to have a long-term plan for the economy, as well as a transparent regulatory framework and a tax system that encourage investment. This is because regulatory policy, in particular, has a big impact on infrastructure investment with respect to mobile-spectrum scarcity and fixed-line networks.

The substantial investment that is needed to power this digital journey means cooperation between parties in the public and the private sectors (and sometimes between countries) is a prerequisite. This pooling of financial resources is crucial for achieving global connectivity, especially for the most fundamental infrastructure. When there is no clear business case for investing in remote areas, a more flexible and experimental approach to offering and regulating services - such as granting regulatory approval of innovative technology - may be needed to help release financial incentives for the private sector. Universal service funds, for example, are an attempt to do this, but - so far at least - have proved ineffective.

But it's not just about the nuts and bolts of new infrastructure. After all, what would be the point of constructing new systems and networks if no-one can afford to get online? It's a pertinent question. With almost 13% of the world's population living below the international poverty line and many more living on a few dollars a day, the affordability of devices and Internet services will be a critical consideration. The UN has set an affordability target of 5% of monthly GNI per capita but many developing countries fail to achieve this target. The Alliance for Affordable Internet found that not one of the 51 countries they studied met the 5% affordability target for those living in poverty.

Governments, while wary of disrupting a market economy, can nonetheless have a direct impact on costs through their policies on areas such as taxation and spectrum allocation. The downward trend in smartphone prices, particularly in emerging markets, is welcome - there are now approaching a billion mobile subscriptions in Africa alone - but rethinking taxation can help accelerate this even further. Kenya's story shows the potential. Prior to 2009, its government imposed Value Added Tax (VAT) and other levies on mobile phones. These charges made up 21% of the total cost of mobile ownership - several percentage points higher than the global average. The government exempted mobile phones from VAT for two years beginning in June 2009 and, as a result, handset sales doubled in the next two years and penetration jumped by 20 percentage points to 70%.

Skill up to power up

So, how can we encourage greater adoption and use of the internet? Research has shown that fostering awareness of the internet's value, encouraging its cultural acceptance, and helping people acquire the skills to go online are top priorities.  Governments, private sector organisations and civil society should work together to promote basic skills-building. In the United States, for example, the Schools and Libraries Program, which is administered under the Federal Communications Commission, provides discounts to help schools and libraries obtain telecommunications equipment and internet access.

Digital ecosystems that produce local content and apps are also vital for building digital literacy, attracting local users and serving local needs. The World Bank estimates that 80% of online content is available in one of only ten languages: English, Chinese, Spanish, Japanese, Arabic, Portuguese, German, French, Russian and Korean. However, only about 3 billion people (out of the global population of 7.4 billion) speak one of these as their first language.

Leading by example

One of the most powerful steps that governments can take is to digitise to the fullest extent possible their interactions with citizens and the provision of government services. There is no doubt that good progress has been made in recent years, and there is certainly no shortage of innovative ways that policymakers have sought to tap into the rich digital seam.

For example, Denmark has mandated digital communications between the government and all citizens and businesses. Australia, South Korea, Singapore and the United States, among other nations, are all experimenting with ways to streamline and simplify access to government websites. French users, meanwhile, can access some 30 services with a single user name and password, and Kenyan citizens can visit one-stop-shops - Huduma Centres - to fulfill their digital needs.

However, the prevalence of these examples should not disguise the very real barriers and high costs that prevent more people from getting online. Policymakers, the private sector and civil society need to come together anew to address the problem, because doing nothing is not an option. Governments now need to weigh the short-term benefits from taxes and spectrum licences versus the potentially greater benefits from increased internet access - GDP growth, jobs of the future and better social outcomes such as health and education. A greater public impact is difficult to imagine…


Written by:

Hans Kuipers
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