Information and communications technology (ICT) field has been a forerunner and a vital enhancement in tackling the needs and issues of low-income individuals in developing countries. This has not been the case as the sudden realization and appreciation of the role of ICT in driving global growth and trade has occurred recently more so in the past two decades.
Historical Background of ICT
Two decades in the ICT sector can almost feel like a lifetime of change due to the rapid advancements in technology that have been made in the recent past.
Case in point in the 1980’s there was a “universal goal” to be achieved but was not exactly attained by the technology of the day i.e. Legacy machines offering PTTs short for Post, Telephone and Telegraph services. Back then the PTTs were mainly landline based and owned and managed by the state. Because of this the services were in most countries very expensive and service rendition had deteriorated.
Because of the expensive nature and poor state of the services other underlying subliminal issues that as a result were zero data network capability and limited to no technological innovation space. Basically the rule of thumb then was to seek rent payouts from infrastructure rollout by the state. This hindered any effort to spur new technology that is both competitive and cost effective.
Fast forward to two decades later, tech innovation has grown in leaps and bounds totally masking the problems of yesteryears and currently has spread its footing to hardware, software, telephony, support services offered by corporate giants to startups to freelance individuals and open source development community.
Today, advancement has been leveraged on sharing of information where the impact is improved productivity due to shared access. For now and future references leading up to technological innovation, collaboration will play a key role in driving the rapid development agenda.
Role of ICT in Today’s Economic Growth & Development
Without a doubt ICT has become embedded in every sector of the economy around the world. The reasons for this predicament are:
- Cost reduction to increase productivity
- Improving efficiency, transparency and accuracy through connectivity
- Widening of geographical scope of potential markets
- Provision of access to unavailable goods and services and increase market choice
- Dissemination of knowledge and skills of every kind
At a macro-economic level the above reasons contribute largely to growth of GDP for a country. In developing countries ICTs offer tremendous potential to eliminate a host of critical obstacles to economic growth as below:
- Geographic isolation- ICTs minimize distance and time, overcoming geographic isolation and providing an alternative for expensive travel and lost work time.
- Lack of competition and high prices for consumers- faced with few options in the marketplace, the poor often pay more to service their needs. Broad, real time access to market information through telephony and internet effectively increases competition allowing customers to maximize incomes and reduce prices over time.
- Lack of information and low prices for producers- Internet and mobile phones can give farmers, fishermen and other local producers access to market information for multiple competing marketplaces enabling them get best prices for their goods.
- Legal exclusion- mobile phone technology has impacted the way people make payments in modern day hence basic utility bills such as electricity and water can be paid remotely via phone also this technology is being used to document and serve as a proxy for legal status.
- Political voice- mobile phones, social media and text messaging are tools for knowledge acquisition and political empowerment.
ICT Business Case for New and Emerging Markets
A lot of people around the world live below the poverty line estimated to be somewhere over 4 billion. They are a peril and opportunity to the advancement of ICT based corporates in that as a peril they pose the threat of progress and stability since poor people have despaired and this causes hopelessness the risk itself which affects the entire ICT sector by extension due to issues such as crime. On the flip side the gap for ICT companies to assist the people offers them economic value to reap from the opportunity.
From previous discussions we’ve outlined that ICT increases efficiency which improves productivity, access to goods and services and among other benefits. With the right coupling of this potential and resources such as power, connectivity, support systems, proper policy frameworks and functional markets, then demand for ICT will definitely rise.
Based on these arguments, then the two new and expanding segments that can benefit from the above ICT facilitation are the low income earners and Small and Medium Sized Enterprises (SMEs).
Low Income Earners
According to household surveys across 110 countries and expenditure surveys in 36 countries estimate that over 4 billion people worldwide are living below the poverty line. However their collective purchasing power is capped at $5 trillion.
As such the market for the 4 billion people is fast expanding in the ICT space. There are three overarching trends suggesting that ICT expenditure among low income earners is bound to grow. First, technological capacity and capability growth are expanding minimizing the cost of ICT. Second, ICTs have become cheaper and more powerful and hence uptake by low income earners will improve based on the productivity tools. Lastly, as the economic opportunity grows the wider network of micro entrepreneurs will move them to the formal economy this will create a space for growth in salaried employees driving the demand for hardware, software and services.
Small and Medium Sized Entrepreneurs
SMEs are the cornerstone of every economy whether in the developed or developing world. There exists a direct relationship between SMEs and the overall performance of an economy in that it can be noted that for developed economies SMEs contribute to 60% of the employment and 50% of the GDP while in developing nations its 30% and 17% respectively.
SMEs are already increasing their interest in investing in ICT. Therefore with progressive business environment reform in many countries allowing more SMEs to enter the formal sector, the potential market among them will increase.