Unlocking dividends for the four billion digital have-nots

4 February 2016

Yesterday saw the UK launch of the World Development Report 2016 on Internet for Development, Digital Dividends, hosted by IDS and Nesta.

Panelists at the event agreed that the Report contains important, compelling and well-substantiated messages – in Nick Dyer’s memorable phrase, this is a flowering plant that will pollinate and grow, and not a Catherine Wheel that will fizz loudly and peter out. It is honest about the opportunities and limitations of digital development – clear and critical, as Chair of the event Geoff Mulgan put it - and it provides tools for people who want to take heed of the messages and adapt their thinking, policies and practices.

The core message of the report is two-fold. First of all, as the report authors note, this is not a report about technology but about the impact of technology on development. And hearteningly, digital technologies can in fact bring about transformational benefits. This happens predominately through reducing transaction costs, specifically, costs for searching for and acquiring information, bargaining and making decisions, and monitoring and enforcing transactions. We can see the impact of this cost lowering in many areas of development: expanding access to financial and information services for poor people, lowering costs of production for businesses and enhancing service delivery for governments.

However, the picture is far from rosy. Although digital technologies have spread quickly, their benefits are unevenly shared – business productivity has not grown as much as might be expected, inequality is rising within many countries, and key governance indicators are getting worse, not better. As the report notes, ‘these trends are worrying not because they are caused by the rapid spread of technologies, but because they have persisted in spite of them.’

What underpins the digital divide?

The two reasons cited for this unevenness are firstly that there is still a large digital divide with four billion people still not connected to the internet, two billion without a mobile phone. The digital have-nots cannot benefit from digital technologies in any meaningful way.

Secondly, digital technologies come with inherent challenges around elite capture and control, hollowing out job markets through automation, and the emergence of many digital monopolies that will eventually dampen innovation and consumer benefits. Anne Jellema of the World Wide Web Foundation usefully added to this list issues of regulation, tax avoidance, patent protections (apparently half the cost of a smart phone is made up of patents and copyrights), and risks of government control and surveillance.

As a result of these digital risks, the gains from the digital revolution have not been widely shared, and this may continue to be the case without serious efforts and reforms. For example, in the IDS briefing published this week, I have reviewed the potential of digital jobs to addressing African youth unemployment, and found that the current and future contribution of internet-based jobs for the poor and marginalised is much less than might be hoped, and demands a more transformative effort.

Towards digital fair shares?

The key to spreading digital dividends more evenly is to improve the ‘analogue foundations’ of better regulations to allow firms to connect and compete, investment in skills so that technology augments and not replaces jobs, and building more capable and accountable institutions. As Anne put it, in order effective and transparent, wise policies, and smart investments by governments and the private sector.

To the report's credit, it puts these messages over in a way that is highly accessible to those working outside of the digital realm– which should be an object lesson for all those working on ICT4D / Digital, who often struggle to engage with the broader development community.

For all the report’s strengths, and these are considerable, it does face a similar challenge to previous World Development Reports (WDRs), in that economic perspectives tend to dominate. This focus is perhaps inevitable, given the history, origins and objectives of the WDR. It is also important and useful here, because it means the report includes a number of ‘killer fact’s about the economic impact of digital technologies that really hammer home the key messages in a clear, factual and resonant way.

But unlike recent efforts like the WDR 2015 on Mind, Society and Behaviour, the vital importance of the behavioural, social and cultural aspects of development seem to be largely lacking. In particular, I would have liked to have seen clearer reference to these aspects in the analogue complements to digital development, not least because they can be a decisive factor in inclusive digital dividends. See for example the much-cited success of the Kenyan mobile money system MPesa, and its vital  grounding in social norms and networks.

A related issue is that digital and analogue complements do not have a simple linear sequential relationship – instead there is a process of co-evolution, whereby changes in technology place pressure on analogue complements, and improvements to analogue complements create the space for technological acceleration. Again, mobile money is a great example of this.

Another area where I would have liked more was on the issue of politics and power as a key consideration in addressing and strengthening the analogue complements. While there is reference to elite capture, this is talked about largely in the language of poorly functioning markets, and oligopolistic behaviours - a political science perspective on the challenges identified is largely lacking. This is especially important because digital divides – that are spelled out so clearly and well in the report – are so multifaceted. It is not just lack of access to technology that underpins the four billion digital have-nots. The four billion digital have-nots suffer from other kinds of exclusion: where they live, gender, age, class, their ethnicity. These multi-faceted, interconnected and mutually reinforcing inequalities aren’t going to be addressed simply through investing in technology access, raising competition and lowering prices. They will demand political will to address the needs of the poorest, most vulnerable and most marginalised.

As the recent IDS Bulletin found in the specific case of open governance, digital technologies can in fact contribute to inclusion when the policy decision to address these concerns have already been made: technology tends to be successful when it pushes on open doors. When there isn’t the political will for more inclusive approaches, technology generally can’t change this. Addressing digital divides go beyond technological innovation and investment and crucially depends on issues of political will and incentives that underpin the continued plight of poor, marginalised, disempowered citizens.

Towards digital empowement

In short, we won’t be able to address the digital divides through economics alone – we need to pay equal attention the role of power and politics in locking the four billion digital have-nots out of digital dividends. This means taking a broader view: yes we need to think about access and reach, but we also need to think about digital empowerment, especially for the most vulnerable and marginalised. Anne was very clear on this aspects, and highlighted a number of suggestions from the work of the World Wide Web Foundation, including specific measures to address women’s digital access as integral to achieving equality for women, to strengthen digital in education curriculums, and to include digital access as a basic human right.

Nick Dyer made a related point about digital within international development institutions: in order to share the digital dividends more evenly, we needed more investment in the skills base, and this mean having more ‘digital plumbers’ and more ‘digital architects’ – and more ways of getting them to work together in policies and programmes. He was forthright about the current lack of capacity and skills in the sector to understand and know about digital, the imagination to rethink services, and to use technology in creative ways that tap into the needs and opportunities of developing countries.

While WDR 2016 does pay attention to institutional issues, to my mind, it doesn’t go quite far enough in its analysis. As Lin Ostrom argued about development more generally, digital development efforts can and often do fall into the trap of assuming local and national institutions don’t matter, or can be overwritten by those of international organisations or business – typically through the use of the right code, or a better app.

This digital hubris is pervasive, damaging, and it needs to stop. So we need to use the clear message of the WDR to ask much more searching questions of digital initiatives in the future, and to include institutional considerations much more explicitly when designing, planning and implementing digital initiatives.

My closing point builds on a reflection from Nick Dyer of the UK Department for International Development: we simply don’t have the evidence base about digital development, about the both successes and the spectacular failures to recognise and learn from what works and how. This digital evidence gap is something we are well aware of here at IDS, and addressing it is a primary objective of the digital and technology cluster. And it is an area in which the WDR 2016 really does point the way for the sector as a whole. From my perspective, it gives us one of the most detailed and comprehensive evidence-based analysis of the contribution of digital technologies to development efforts we have had to date.

Let’s hope we can follow in its wake, by testing, probing and expanding the lessons, applying what emerges, deepening our understanding, and help to bring about meaningful, inclusive, digital dividends for all.

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