Information Communications Technology for Development

Hello! Thank you so much for your interest in IC4D 2009, and for all your interesting questions. Let’s get started right away.

ICT provides economic opportunities to both urban and rural populations. One common contribution is that it increases productivity and makes the market work more efficiently, although the magnitude of the impact on economic growth is likely to be different. The fact that virtually all new mobile customers in the coming years will be in developing countries, and more specifically in rural areas, means that the ICT platform is reaching population with low levels of income and literacy.

As a result, ICT is becoming the largest distribution platform of providing public and private services to millions of people in rural and poor areas. Market information, financial services, education and health services had largely been unavailable in those areas in the past due to lack of connectivity of any kind. Now the wireless platform is promoting NEW economic and social opportunities at all levels for the poor population.

Our research (see chapter 4 in our IC4D06 report), covering 20,000 firms from 26 sectors in 56 developing countries, shows that businesses that use ICT (phone, PC and email) more intensively are more productive, grow faster, invest more, and are more profitable. This study includes many small and medium enterprises (SMEs).

Besides the limitations of existing telecom infrastructure in developing countries, the principal constraints in adopting and using ICT applications, especially for small businesses, include lack of capacity to assess returns and costs of using ICT, and a shortage of and inability to retain ICT-skilled labor. In some countries, business associations assist with needs assessment for businesses to invest in ICT (note that not all of them would benefit from using ICT), advise them on technology choice, and provide common business applications (e.g. HR, accounting) at low cost to small businesses. Some governments offer support of training and skills development.

In terms of ICT connectivity, the World Bank Group has promoted ICT access in developing countries through (1) advising on sector and institutional reforms to encourage competition and private sector participation; and (2) innovative financing mechanisms such as incubators, and public-private partnerships (PPPs) for extending rural access.

Low-income countries which have implemented deep sector reforms supported by the Bank Group generated some US$16 billion in investment between 1997 and 2006. Some US$20 million in output-based aid in Nepal, Nicaragua, Nigeria and Uganda provided access to 3,356 remote localities, serving over 7.8 million people.

In addition, IFC, the private arm of the Bank Group, has also been financing US$1.5 billion and mobilizing another US$330 million for 84 ICT projects to date in 32 low-income countries (mainly for the extension of mobile and data networks).

Yes, Africa still has the lowest telephone and Internet user penetration (about 25 percent and 5 percent compared to the world average of over 70 percent and 20 percent respectively) and highest costs (e.g. price basket for Internet per month is over $40 compared to the world average of $20). The costs are big bottlenecks for ICT uptake, given the low income levels in the region.

The World Bank has been working closely with about 30 countries in Sub-Saharan Africa to strengthen regulatory frameworks, build regulatory capacities, and address rural access. Reforms implemented since 2000 have unleashed competitive forces in the sector, particularly in the mobile market. The result has been unprecedented increase in investment: total telecom investment in the region between 2000 and 2007 reached $20 billion. Africa is the fastest growing region in the global cellular market: the number of mobile subscribers increased from 2 million in 2000 to over 150 million in 2007.

From 2005, public-private partnerships for regional connectivity have been recognized as a powerful vehicle to push down the cost of international bandwidth and increase the affordability of high-speed internet. Examples of such partnerships are the on-going IFC-supported Eastern Africa Submarine System (EASSy) and the Bank’s Regional Communications Infrastructure Program (RCIP).

Together, EASSy and RCIP have triggered a race for connectivity in Eastern and Southern Africa with prices set to decrease five-fold or more. Part of the approach is being replicated for Central and Western Africa. Other ways to push prices down are to lower taxes and termination fees. Any incremental efforts to lower prices would have a tremendous impact on affordability and hence access.

For more information, visit RCIP's website.

Yes, it is a challenge to have high-speed Internet at affordable prices in most African countries at this stage. Connectivity gaps at international, regional, national and rural levels make it difficult to reap the full benefits of a highly functional and effective ICT sector. They also prevent the region from capitalizing on innovative applications to improve service delivery in both the public and private sectors.

As I said in my answer to Matt, the World Bank Group has been working closely with over 30 countries in Sub-Saharan Africa to improve ICT connectivity. At the same time, we have also launched projects and programs that develop e-government applications and IT-enabled service industry.

To take Ghana as a specific example, the country is on the cusp of a breakthrough in improving internet connectivity. The establishment of a National Communications Backbone Company Limited to develop a robust national fiber infrastructure, and the approval of cable landing rights for at least two companies to compete with the SAT-3 cable, should soon provide most Ghanaians with more affordable and reliable high speed internet connectivity.

Separately, the World Bank launched a US$40 million project called e-Ghana in 2006, which aims to provide support for improving Ghana’s competitiveness in the IT/IT-enabled services industries, including Business Process Outsourcing (BPO), as well as support for enhancing public service delivery through e-government. Activities under this project include setting up a high-speed, government-wide communications network connecting key ministries, departments and agencies; establishing a shared portal infrastructure for key agencies; and developing electronic applications for the priority revenue-generating agencies in the country.

Having the right trade environment can facilitate the development of ICT. Likewise, ICT can foster, enable and facilitate trade. The relationship between trade and ICT can be viewed from three angles: trade in ICT (e.g., international telephone calls), trade in services to which ICT is a critical input (e.g., outsourcing data entry or computer programming services), and ICT as a general facilitator of other types of trade (e.g. a farmer using text messaging to check export prices). These three angles are collectively referred to as “ICT-related service trade.”

In 2007, the World Bank conducted a series of studies and capacity building on ICT-related service trade for Eastern and Southern African countries (Trade in Information and Communication Services: Opportunities for East and Southern Africa, available on our website’s publications’ page). The study found that some of the critical elements necessary for successful ICT trade (“ICT-competitiveness”) are not sufficient. These elements include network infrastructure; an enabling policy, legal and regulatory framework environment; the education and training required to have a labor force with necessary ICT skills; use of ICT applications by businesses and government; and consumer awareness.

The Bank is following up on this analytical work with projects in Ghana, Kenya, Nigeria and Rwanda to facilitate trade in ICT business, particularly in business process outsourcing (BPO). These projects include, among other things, support to industry associations, development of IT Parks, partnerships with the industry to take up training of manpower, and support to investment promotion activities. More countries are likely to be added based on readiness of interested countries and effectiveness of these earlier programs.

ICT planning and implementation should be closely linked to a country’s overall economic development and poverty reduction strategy. Prioritizing among various (often competing) demands is never an easy task, nor is it one-model-fits-all. Having said that, we would like to encourage a comprehensive assessment of key pillars of the ICT sector to avoid projects or programs that promote e-government without proper infrastructure in place, expand broadband without developing applications and content, or that develop IT industries without a pool of skilled labor.

Most of the World Bank ICT programs in the 30 plus countries in Sub-Saharan Africa include targeted capacity building programs for both public and private sector. In a number of countries including Ghana and Nigeria, we're working with government to develop incubation programs which are aimed at honing young entrepreneurial skills particularly in software development and other innovative applications. We are also working with the industry to design training programs in software development and foundational business process outsourcing skills that are aligned to industry requirements.

The impact on economic growth of high-speed internet connectivity, and of ICT more generally, is aggregated through its impact on individuals, businesses, government and communities. We should remember that it always takes these economic agents some time to figure out how to best use the ICT that is available to them. In most cases, individuals, firms, and communities would have to make investments in "complementary capital" (e.g. worker training and skills, organizational or even institutional adjustments) to reap the full benefits of ICT. The effect might be amplified by the flexibility and willingness of the users of ICT to transform their work habits, update their skills and adopt the technology in economic activities.

Whether this great potential to contribute to growth is realized will also depend on whether governments understand the opportunity and ensure that supportive conditions (e.g. providing high-capacity connectivity) are in place through regulatory and policy reforms as well as strategic investments and public-private partnerships. Realizing the benefits of the Internet requires development of new content, services, and applications.

Many ICT ministries and regulators as well as international organizations requested a copy of our report. Most are interested in our findings about the high economic impact of broadband: For every 10 percentage points increase in broadband penetration, there is an incremental increase in economic growth of 1.3 percentage points. Some also showed interest in the huge potential of the mobile/wireless platform (e.g. delivery of public and private services) and the IT and IT-enabled industries (e.g. job creation, promoting exports) for developing countries.

We will have the next issue of IC4D report in 2011 or 2012. We would like to drill deeper on (a) broadband policies and sustainable public-private partnership models; and (b) mobile applications for sectoral development (e.g. m-banking, education, health, agriculture/market information, social networking, etc), in terms of the regulatory guidance as well as practical operational guide involving government, telecom operators, application developers and mobile users.

According to our recent cross-country study (covering 120 developing and developed countries over the period of 1980 to 2006), the growth benefit that telecommunications provides for developing countries was of higher magnitude than that for developed economies for every telecommunications service (see the figure below). This is probably because telecommunications services help improve the functioning of the markets, reduce transaction costs and increase productivity through better management in both the public and private sectors. These issues were more acute in developing economies than in developed ones. Therefore, developing countries gain more by resolving some of them through better access to telecommunications.

This is not to say that the risk of "digital divide" does not exist. Especially as we move from simple voice and text messaging to more complex services and applications, the potential to benefit from ICT depends on factors (as I mentioned in my response to Malak) where developed countries have comparative advantages. But ICT offers leapfrogging possibilities and new opportunities at all levels. So let's work together to maximize its development impact, especially in low-income countries.

Graph: Growth Effects of Telecommunications

Well, that's all the time we have today. Thank you so much for your great questions, and for your interest in the Bank's work in ICT. If you haven't already, please visit the IC4D website.