Business News of Monday, 28 May 2018
Source: Li Peng
Rapid advancements in information communications technologies (ICT) over the past 20 years has substantially altered the ways in which people live, work, play and interact with one another.
The World Bank’s World Development Report shows that ICT has a positive effect on a country’s economy, with a 10% increase in broadband penetration being associated with a 1.4% increase in gross domestic product (GDP) growth in emerging markets.
Driving growth and job creation
Digitisation also has the greatest employment effect. According to the World Bank statistics, every 10% increase in broadband penetration will lead to 2% to 3% increase of employment rate. In 2016, China’s digital economy created 2.8 million jobs, accounting for 21% of the total new jobs. Japan 2015 White Paper on Information and Communications indicates; if small businesses can fully adopt ICT technologies such as cloud services, they will be able to create about 200,000 jobs.
Similarly, research shows a 90% correlation can be seen between investments in ICT and a country’s’ success in meeting several key United Nations Sustainable Development Goals. The African Union Agenda 2063 has acknowledged the importance of Digital Inclusivity for African countries to bring the continent on par with the rest of the world as an information society.
However, there are still some challenges in availability, accessibility and affordability including geographic challenges of reaching small, remote communities, poverty and lack of basic knowledge and skills. Statistics from GSMA shows that approximately 53 percent of the world’s population is still unconnected, and 80 percent of the unconnected population is located in Asia-Pacific and in Africa. On average, 69 percent of the African population does not have access to the internet, with many of those unconnected living in rural areas.
Multiple approach to beat challenges
Challenges always come with opportunities. To solve these challenges, we need to take a cross-sector approach and we need to think differently about how to address the business model challenge. To tackle this issue, some of the solutions available include:
First of all, it is important to have a master plan to direct investment and attract the best talent. For instance, Germany’s Industry 4.0 and the Made in China 2025 initiatives have been designed to make the manufacturing industries in these countries intelligent by using ICT. Under the Smart Community strategy of the Malaysian government, the digital economy has grown to make up 17% of total GDP within just 3 years, which makes it one of the world’s highest-ranking countries in this regard. In this information age, development of ICT should be prioritized on a par with other forms of infrastructure and basic services crucial to society such as electricity, water, roads and bridges.
Second, we need new innovations that enable lower cost but similar performance solutions that can shorten the time needed to recover investment costs and hence provide the private sector with an incentive to invest. For example, given the significant investment costs and inability of the revenues to cover both the set-up and operation costs, telecom operators do not have an incentive to invest in building rural networks. Innovative technologies can help make it viable for operators to invest in rural areas.
Third, it is necessary to provide policies that can lower the barriers of digital transformation. For example, Thailand provides subsidies to encourage ICT infrastructure construction in rural areas; Italy encourages carriers and electric companies to work together in laying out optical fiber; Saudi Arabia allows carriers to mount sites on streetlamps and regulations in Germany requiring the installation of fiber-optic cables in all new houses and roads. Allocating more resources and providing supportive policies including streamlining approvals, usage of Universal Service Funds, reducing taxation, and using ICT to deliver public services more efficiently, effectively and equitably will allow for more sustainable and inclusive development.
Fourth, we need innovative business models that can generate more benefits for users and to provide users with the skills to use and benefit from smartphones. This will enable telecom operators to generate more revenue. Mobile money is one of the best examples. With the right skills and content, users can also access educational content, learn how to improve yields on their farms, and get better prices for their cattle or crops. This will directly enable them to increase their incomes and both drive and enable greater spend on communications, hence improve the investment rationale.
Embracing these solutions requires cross-sector partnerships and new thinking. These can directly translate into higher availability, accessibility and affordability of ICT services. This will lead to a future where everyone can is able to access the Internet to unleash their own potential to create value and create economic and social gains for themselves and to exercise and enjoy their rights to a better quality of life, dignity and equality.