Bridging the Digital Divide to Accelerate Development
The COVID-19 pandemic has accelerated the transition to a digital economy, which will hold the key to future growth and opportunities. It has also affirmed that digital technologies play a central role in keeping economies and communities resilient, maintaining business continuity, and helping to keep students in education.
Remarkably, the broader adoption of big data and the convergence of the Fourth Industrial Revolution technologies, artificial intelligence, and the Internet of Things have created a hyper-connected global space in which billions of people can work and pursue more dynamic ways of life. Digital platforms have changed the way we consume, produce, work, mobilize finance, and create economic value. In addition, digital assets such as computers, communications equipment, and software have helped firms reduce production costs and enhance efficiency.
The rapidly increasing figures for internet access clearly reflect digitization's significance. For example, in 2010, nearly 72% of North America's average population had internet access. In contrast, during the same year, the countries in Sub-Saharan Africa only stood at 6%, followed by 7% in South Asia and 25% in the MENA region. Fast forward to 2020, over 90% of the average population in North America had internet access, while only 30% of the average population in Sub-Saharan African countries had internet access, followed by 38% in South Asian countries, and the MENA region significantly jumped to over 77%.
The key to solving socioeconomic and related problems is to achieve sustainable development and economic growth of the real economy. The development of science and technology is crucial in ensuring labor productivity and economic growth. The beginning of the 21st century was marked by a further amplification of the digitalization and virtualization of the economy. The share of industrial capital in economically developed countries is declining, while digital and intangible shares are growing.
In the context of globalization, digitization of the national economy plays an essential role in integrating the economies of developed countries. In the new economy, digital networking and communication infrastructure provides a global platform that enables it to develop strategies for enterprises' and organizations' development. It also allows collaboration, economic communication, and the exchange of information. Additionally, digitalization plays a critical role in the post-covid supply chain processes.
It is evident that the benefits of a digital economy are many; most importantly, it will prevent the shadow economy and help bring transparency. But, of course, the digitalization of all sectors of the economy will not be easy. However, with the digital divide, the effectiveness of overall digitalization will be low.
Currently, over 2.9 billion people worldwide still do not have internet access. According to International Telecommunication Union (ITU), an estimated US$28 billion is needed to connect the remaining unconnected to the Internet by 2030. Therefore, answering the big question, "what can be done to reduce the digital divide," requires taking a series of steps to broadly address four key areas: Infrastructure, Affordability, Institution Framework, and Digital Literacy. For instance, governments need to pave the way for the private sector by reducing licensing costs for IT & telecom operators, reducing taxes, and improving investment regulations. Also, research and development in the tech industry will continue to help reduce costs and increase the ICT services' efficiency.
As a development institution serving 57 member states and Muslim communities in non-member countries, the Islamic Development Bank (IsDB) has been supporting digital transformation efforts for years. Since its inception in 1975, the IsDB has supported the ICT sector through standalone ICT projects or complementary components in other sectors such as education, health, and agriculture for various operations. So far, IsDB Group has financed approximately US$ 1 billion in support of the ICT sector.
Recently, IsDB financed submarine cable projects in Bangladesh and Djibouti to connect with the international submarine cable system. IsDB also has funded ECOWAS fiber-optics backbone infrastructure projects in Sierra Leone and The Gambia in West Africa. In most of its interventions in various sectors, such as education and health, the IsDB's approach during the design phase is to ensure including the technology dimension to improve the efficiency of its financing. Currently, adding the technology dimension is dramatically improving the outcome of such interventions; however, there is still more to do.
It goes without saying that to achieve critical milestones in the development world, we have to strategize and realign our strategies accordingly to better serve the needs of developing nations. In this regard, IsDB has recently established the IsDB Digital Inclusion Technical Working Group (IDITWG) to help develop IsDB's Digital Inclusion Strategy 2023-2025 in a consultative and collaborative manner with the ultimate stakeholders. The objective is to ensure that IsDB shall better serve the needs of its 57 member states and help reduce the digital divide.
The digitalization and mainstreaming of ICT services into various developmental sectors will help develop the digital economies of developing and least-developed countries and ultimately lead to enhanced digital inclusion and reduction of the digital divide in favor of developing nations. However, in doing so, we must pay specific attention to "skills upgrading" and "digital literacy" because people are the pioneers of any transformation effort.
Dr. Muhammad Al Jasser
Islamic Development Bank President and Group Chairman