Bridging the digital divide between developing and developed nations

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Dr. Muhammad Al Jasser, President and Group Chairman, Islamic Development Bank

• The COVID-19 pandemic sped up the transition to a digital economy, yet the developing world still lags behind the developed world when it comes to access.
• Reaching critical milestones in the developing world involves realigning strategies to better serve the needs of developing nations.
• The digitalisation of various developmental sectors will help develop the digital economies of developing countries and lead to enhanced digital inclusion and a reduction of the digital divide.

The COVID-19 pandemic accelerated the transition to a digital economy, which holds the key to future growth and opportunities. It 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 Fourth Industrial Revolution technologies, such as 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, mobilise 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.

Discrepancies continue in global internet access

The rapidly increasing figures for internet access clearly reflect digitalisation’s significance. In 2010, for example, nearly 72% of North America’s average population had internet access. In contrast, during the same year, the countries in Sub-Saharan Africa with internet access 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 access, followed by 38% in South Asian countries. Meanwhile, internet access in the MENA region significantly jumped to over 77%.

The key to solving socioeconomic and related access problems is to achieve sustainable development and economic growth in the real economy. The development of science and technology is crucial to ensure labour productivity and economic growth. The beginning of the 21st century was marked by a further amplification of the digitalisation and virtualisation 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 globalisation, digitisation 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, digitalisation plays a critical role in post-COVID-19 supply-chain processes.

It is evident that the benefits of a digital economy are many. Most importantly, it prevents the shadow economy and helps bring transparency. Although, the digitalisation of all sectors of the economy will not be easy. With the digital divide, however, the effectiveness of overall digitalisation will be low.

What can be done to address the digital divide?

According to the International Telecommunication Union (ITU), over 2.9 billion people worldwide still do not have internet access. The ITU estimates that $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. Governments, for instance, need to pave the way for the private sector by reducing licensing costs for IT and 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 information and computing technologies (ICT) services’ efficiency.

As a development institution serving 57 member states and Muslim communities in non-member countries, the Islamic Development Bank (IsDB) has supported 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 $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 funded ECOWAS fibre-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. Adding the technology dimension is dramatically improving the outcome of such interventions, however, there is still more to do.

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Introducing the IsDB Digital Inclusion Technical Working Group

To achieve critical milestones in the development world, we have to strategise 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 between 2023 and 2025 in a consultative and collaborative manner with the ultimate stakeholders. The objective is to ensure that IsDB better serves the needs of its 57 member states and helps reduce the digital divide.

The digitalisation and mainstreaming of ICT services into various developmental sectors will help develop the digital economies of developing and least-developed countries. Ultimately, this should lead to enhanced digital inclusion and a reduction of the digital divide in favour of developing nations. In doing so, however, we must pay specific attention to ‘skills upgrading’ and ‘digital literacy’ because people are the pioneers of any transformation effort.