The rapid pace of digitization over the past year only exacerbated the yawning gap between the digital ‘haves’ and the ‘have nots’. Companies with strong digital capabilities have thrived. Markets with resilient digital infrastructure bounced back faster. Employees with digital-ready jobs were better protected.
Those without digital capabilities or capacity, on the other hand, fell further behind in many respects. Companies unable to digitize lost market share. Families without basic internet services saw access to critical services like education and healthcare severely restricted. Buying food or other necessities became challenging and opportunities for employment became increasingly scarce.
Was this the beginning of an inexorable slide into global digital inequity? Or has the experience catalyzed the world into action? Might this be the point where technology truly transcends borders and drives global development and harmonization?
The COVID catalyst
Governments and development agencies certainly see the experience as an urgent call to action.
“The shock of COVID-19 forced a level of digitization that would not have happened otherwise in this short timeframe. Now policymakers and investors are asking how they can leverage that progress to build back better,” said Boutheina Guermazi, Director of Digital Development at the World Bank. “COVID-19 clearly showed us that closing the digital divide is a matter of urgency; we must avoid creating a new class of ‘digital-poor’ citizens.”
In some markets and sectors, the immediate response to the impacts of COVID-19 helped reduce the digital divide in cities and nations. “Take education for example. As many school goers and college students shifted to the digital world, a number of governments eventually recognized the need for accelerated investment in digital,” noted Robert Costello, Global Head of Digital Infrastructure at KPMG International. “By doing things like providing grants for online platforms or laptop equipment, and by investing in the acceleration of better quality digital infrastructure, we are starting to see significant improvements in digital education in many countries and territories.”
Other markets, however, continue to struggle to attract the investment and capabilities required to unlock the economic and social dividends that digital promises. According to World Bank data, a 10 percent increase in broadband penetration in Africa could increase GDP per capita by around 2.5 percent. Further research on 12 African countries also shows that those with access to high speed internet are almost 14 percent more likely to be employed than those without.1
“Digital can help create massive efficiency and can be a huge catalyst for innovation which, in turn, creates opportunities for countries to increase their resilience and pace of development,” added Guermazi. “We see the transformational impact of digital at the government level, at the company level and at the individual level.”
Is there an app for that?
The jury is still out on whether new technologies can help overcome the gap; nobody really knows exactly how new technologies will evolve or what new innovations, applications and solutions they will lead to. The bigger concern, however, is that rapid technological advancement in certain markets and segments will only widen the gap.
“5G technology will be as transformative as railways and canals were during previous industrial revolutions. Those who understand how to harness the power of that infrastructure will start to leap ahead. Those who are left out – or those that simply fall behind – will undoubtedly find themselves increasingly disadvantaged,” added Costello. “However, 5G is nascent and requires significant investment and collaboration to work. This means partnerships across sectors, with asset owners, between public and private sectors and even amongst competitors.”
The shift towards data and analytics-based technologies like AI and Machine Learning could also create disparities between nations, companies and individuals. Technologies like facial recognition have been known to be biased against those already disadvantaged (largely due to a lack of robust data sets about them). Those without digital footprints are becoming increasingly invisible to data-driven organizations.
Data affordability is also creating complexities that will likely only worsen as the value of data increases. According to the Alliance for Affordable Internet, the price for 1GB of mobile broadband must cost less than 2 percent of average monthly incomes for internet to be affordable.2 Yet Guermazi suggests that the cost of sufficient data access and the price of entry level smartphone devices remains unaffordable for low income groups in most developing countries.
“The data issue is often a demand and supply problem. If prices were lower, usage would rise dramatically which, in turn, would help drive the business case for more investment and wider access,” noted Guermazi. “That loop between demand and access is important but often misunderstood.”
Innovation and collaboration required
With many signs suggesting that the digital divide is starting to widen, governments and development banks are trying to assess what it will take to bring urgent action to the underlying issues.
Investment is clearly a challenge. Prior to the pandemic, the World Bank estimated that it would cost around US$100 billion to extend 4G-quality internet access to 90 percent of Africa’s population.3 The Alliance for Affordable Internet estimates it will take more than US$400 billion to connect the whole world.4
“There are many aspects of digital enablement where the private sector is already very active. The key is in governments making sure they enable private sector investments where possible, and then use public financing in areas where the private sector is not willing to go,” added Guermazi. “With the right collaboration and innovation between public and private sectors, I do believe this scale of investment is possible.”
Guermazi points to a recently-approved World Bank project in Niger where the Bank is financing a reverse auction whereby private sector service providers and tower companies are bidding the minimum level of subsidy required to bring mobile broadband services to more than 2,000 rural communities.
Putting together the ecosystem
It will take more than just new telecoms kit and investment to close the digital divide. As Guermazi notes, it requires a broad ecosystem of capabilities and enablers in order to improve meaningful access to digital.
The World Bank project in Niger, for example, goes well beyond simply financing an auction. “About 1.25 million people – most of whom are farmers – will benefit from the work that we are doing on digital infrastructure, but also in digital and financial literacy, improved access to digital financial services and other data-driven solutions for farmers,” she noted.
“The physical infrastructure is often just as important as the human capital – making sure people know how to use it and have the skills and capabilities to create relevant content in a safe digital environment,” added Guermazi. “Even if you have new pipes offering full capacity, it’s really not meaningful if it’s not being used or it’s not adding value.”
Towards a brighter future
Ultimately, both Guermazi and Costello are optimistic about the power of technology to help bridge the digital divide and drive continued globalization.
“There will certainly be a lot of disruption – economies will need to pivot; people will need to retrain; entire sectors will be transformed. And if you are not at the leading edge of that disruption, you are likely to get left behind rather quickly,” argued Costello. “But I do believe the access gap can be bridged and, as the gap narrows, technology can become an even more positive force for development and economic advancement around the world.”
Guermazi agrees on the value of technology. “Technology is an amplifier. It is an equalizer. It knows no boundaries. For many markets, it offers the opportunity to leapfrog traditional development. But it will not happen unless we are deliberate about addressing the risks of exclusion,” Guermazi noted. “I’m an optimist, but I also know it is going to take a lot of hard work.”
1 Hjort and Poulsen, American Economy Review
3 Connecting Africa Through Broadband, World Bank Broadband Commission for Sustainable Development, October 2019
4 Connecting humanity, International Telecommunications Union and A4AI, August 2020