Why ICT?
The positive developmental impact of access to Information and Communication Technology (ICT) services is well recognized, and research indicates that there is a positive relationship between growth rate of real GDP per capita and ICT use. Connecting villages, towns, cities and suburbs to the rest of the planet through high-speed broadband stimulates entrepreneurship and growth and removes the element of distance, offering everyone a chance to secure their own economic freedom. ICT access contributes to innovation and makes countries and regions competitive. It improves the way in which governments can interact with citizens and offers people an easy, low-cost entry point into the economy. It can also help to bring innovation into education, health and to the economy more generally.
The value of infrastructure like roads, transport, electricity, water and sanitation is well understood, but ICT infrastructure is sometimes underrated. The World Bank has calculated that a 10% increase in fixed broadband penetration in developing countries results in a 1.35% increase in GDP growth while a more recent study found that doubling mobile data usage leads to a 0.5% increase in GDP growth. ICT’s are recognized as crucial to achieving the UN Sustainable Development Goals.
The point of cross over between ICT and financial services is particularly interesting. The results of a recent study of the long-run impact that mobile money (M-PESA) has had on the economic lives of Kenyans provides strong evidence for digital financial services as an effective tool for poverty reduction, and broad-based economic growth:
“More basic financial services such as the ability to safely store, send, and transact money—taken for granted in most advanced economies, and which in the form of mobile money have reached millions of Kenyans at unprecedented speed over the past decade—appear to have the potential to directly boost economic well-being. We (the authors) have shown that access to mobile money has lifted as many as 194,000 households– 2% of the Kenyan population– out of poverty, and has been effective in improving the economic lives of poor women and of members of female-headed households. Our evidence, and earlier work, suggests that these impacts derive from a more efficient allocation of labor, savings, and risk…. (H)aving a private, low-cost means of managing financial resources is also necessary and can itself meaningfully reduce poverty rates among vulnerable groups. For women, the route out of poverty might not be more capital, but rather financial inclusion at a more basic level, which enhances their ability to manage those financial resources that are already accessible. Thus, although mobile phone use correlates well with economic development, mobile money causes it.”
See “The long-run poverty and gender impacts of mobile money”, Tavneet Suri, William Jack, Science 09 Dec 2016: Vol. 354, Issue 6317, pp. 1288-1292
