Digital technologies spreading, but not the benefits – World Bank report

Digital technologies have spread rapidly in much of the world but the broader benefits from these technologies (or Digital Dividends) have lagged behind, not reaching a significant majority of the population.

According to World Bank’s ‘World Development Report 2016’ released recently states that digital technologies have boosted growth, expanded opportunities, and improved service delivery but their aggregate impact “has fallen short and is unevenly distributed.”

“For digital technologies to benefit everyone everywhere requires closing the remaining digital divide, especially in internet access. But greater digital adoption will not be enough. To get the most out of the digital revolution, countries also need to work on the “analogue complements”—by strengthening regulations that ensure competition among businesses, by adapting workers’ skills to the demands of the new economy, and by ensuring that institutions are accountable,” it states.

Digital technologies – the internet, mobile phones, and all the other tools to collect, store, analyze, and share information digitally – have spread quickly. So quickly that more households in developing countries now own a mobile phone than have access to electricity or clean water, and nearly 70 percent of the bottom fifth of the population in developing countries own a mobile phone. The number of internet users has more than tripled in a decade—from 1 billion in 2005 to an estimated 3.2 billion at the end of 2015.

“This means that businesses, people, and governments are more connected than ever before. The digital revolution has brought immediate private benefits – easier communication and information, greater convenience, free digital products, and new forms of leisure. It has also created a profound sense of social connectedness and global community,” the 359-page report states.

But it however goes on to question whether the massive investments in ICTs have generated faster growth, more jobs and better services and if countries reaping sizable digital dividends.

The report also highlights several technologies and innovations from specific countries that have led to huge transformations, examples being Safaricom’s M-Pesa mobile money transfer solution, India’s Aadhaar digital identification system China’s Alibaba business-to-business e-commerce site which has reduced coordination costs and enhanced efficiency.

“Digital technologies are spreading rapidly, but digital dividends – the broader benefits of faster growth, more job and better services – are not. If more than 40 per cent of adults in East Africa pay their utlity bills using a mobile phone, why can’t others aroud the world do the same? If 8 million entreprenuers in China – one-third of them women – can use an e-commerce platform  to export goods to 120 countries, why can’t enterpreneurs elsewhere achive the same global reach? And if India can provide unique digital identification to 1 billion people in 5 years, and theby reduce corruption by billions of dollars, why can’t other countries replicate its success?” it poses.

The report two main reasons holding back countries from realising the transformational benefits of digital technologies. One, according to the report, is that nearly 60 per cent of the world’s population is still offilne and can’t participate in the digital economyin any meaningful way. The second record is that the benefits of digital technologies can be offset by growing risks, adding that whereas startups can disrupt incumbents, this is impposible when vested interests and regulatory uncertainty obstruct competition and the entry of new firms.

The report further adds that while the digital revolution has forged ahead, its ‘analogue complements’ – the regulations that promote entry and competition, the skills that enable workers to access and then leverage the new economy, and the institutions that are accountable to citizens – have not kept pace, leading to less than significant impact of benefits.

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