In the Global South, the Digital Revolution is not just about the tech: it’s about the politics

November 13, 2019

     By Duncan Green     

Elizabeth Stuart is Executive Director of the Pathways for Prosperity Commission, which released its final report, The Digital Roadmap, today.

Digital technology is sometimes portrayed as a painless shortcut to development, a technical fix to reduce poverty. The Pathways Commission disagrees: getting the small p politics right is a crucial part of successful digitisation.

Our commissioners know a thing or two about the realpolitik of reform: among them are a government minister in Indonesia; a former central bank governor in Tanzania; a former chief economist of a development agency; plus a smattering of people who’ve built their business from the ground up in Africa and Asia. An extremely politically savvy bunch with a lot to say on how to make change happen.

There are of course manifold technical inputs needed for digital take-off to happen. Digital ID and payment systems are essentials – and will need to be interoperable. Domestic start-ups will need access to finance. This could be in the form of guarantees or insurance to de-risk venture investments. Governments will need to take practical steps to improve the supply of bankable projects in local digital industries. In our report we set out our best thinking on how all these can be implemented.

But, significantly, a large number of their recommendations are political in nature.

The first is that countries need to forge a national compact. Embracing digital transformation will be disruptive, and will create both winners and losers (although if the distributional implications of the reform are properly understood and navigated from the outset, it should be possible to either make it up to the losers, or better still, to turn them into winners too). It’s a kind of economy-wide version of an engagement plan that has allowed controversial fossil fuel subsidy reform to work in various countries, which, had it been in place elsewhere, could have forestalled this kind of reaction in Ecuador.

For governments, the digital compact gives assurance that other actors will support the plan, and it creates a mandate for action.This requires a willingness to allocate significant resources that can survive across elections or transitions of power. Forward momentum will be easier to maintain with the knowledge that stakeholders across the economy and society not only endorse the plan, but are ready and willing to contribute.

The government side of a compact can’t be driven by a technical ICT agency alone, but will need to be powered by national leaders or a cross-ministerial agency. This could mean placing responsibility for digital transformation with a senior cabinet minister, or, as Mexico and Peru have done, creating special cross-sector coordination groups of ministers and bureaucrats.

The compact can also be a tool to organise action – not least for donors, who instead of piling in with competing priorities and piecemeal interventions on digital technologies, can buy into and support the outcomes agreed in the process, not unlike the old Poverty Reduction Strategy Papers process.

Another key recommendation is also a political economy point: digital governance, needed for two reasons. First and more broadly, if digitalisation is going to drive inclusive growth, old forms of regulation will not be fit for purpose and new ways of regulating, such as risk-weighted rules –  like the EU electronic identification regulation (eIDAS), which establishes different levels of assurance (low, substantial, and high), according to the degree of confidence in a given ID scheme – will be needed. Of all the issues the Commission has looked at in its two-year journey, governance of digital technologies is the issue with the biggest gaps. Too many countries are implementing either the Chinese model – Nigeria and Tanzania are both implementing cybersecurity laws that mirror those of Beijing – or US laissez-faire. Neither of these may be optimal for a resource-constrained African country, in the first case because it closes off opportunities to be part of the bigger global economy and raises human rights concerns, and in the latter because it doesn’t provide the safeguards that business and citizens need.

More specifically, inclusion requires regulation. The digital divide is not defined by infrastructure: 80% of people in developing countries live under a cellular internet signal; yet only 30% have ever used the internet. Just building infrastructure will not make internet access affordable to someone in extreme poverty.

Instead, increasing take-up will require new business models to serve the poorest. Governments should use their regulatory levers, such as the allocation of broadcast spectrum licenses, to encourage network operators to pursue greater inclusion.

Fundamentally, the Pathways Commission’s concluding report focuses on the nature of change. The technological revolution is not simply about technology or ‘digital policy’ in isolation: this transition involves building a new deal for inclusive growth in the digital age.Development will come from deploying technologies in a conducive environment, alongside profitable business models, and with the necessary protections in place. Not every country has an environment in which firms, individuals and service providers can take full advantage of new digital technologies.

Creating this environment will primarily be a case of getting analogue matters of politics right – then the digital can follow.

November 13, 2019
Duncan Green