Gateway House Making digitalization a public good

Excellencies and friends: Good morning, and greetings from Mumbai, India’s business capital, and from Gateway House, a foreign policy think tank started by two women. In the midst of the cruel second wave of the pandemic, I see rays of hope, offered by technology and digital solutions.

The pandemic is making clear two things: Digitalization will power the developing world out of an economic crisis and the digitalization of the Medium, Small and Micro (MSME) sector[1] is a necessary ingredient for it.

Four reasons for this good news is that the pandemic has accelerated economic reforms in many developing countries[2]; social distancing has accelerated the adoption of Digitalization by governments, companies, consumers, educational institutions and NGOs[3] [4] [5]; the decreasing cost of technology and prediction[6] makes it accessible and possible; and platforms are the new institutions – now easier to build and participate in.

At the cusp of this new era, how can we ensure equity and a level playing field in Digitalization?

There are some challenges. Digitalization is still fundamentally different in developed and developing countries.

First, there’s a difference between “access” and “usage” of technology. The developed world issue is ‘usage’ i.e. consumer privacy, security, data protection, productivity. The developing world needs “access” – digital availability, affordability and usage of infrastructure.

Second, there’s a “hard” and “soft” infrastructure gap – “Hard” includes devices, electricity, telecom, servers, data centres; “Soft” includes digital platforms, content, legal and policy measures across value-chains. The developing world lacks both.

Third, the world is tied down to three approaches: proprietary digital platforms owned by a few private players; a government mandated system; and a broad regulation for consumers disconnected from their needs[7] [8].

A universalist approach is necessary to reconcile these worlds. One way is by making digitalization a ‘public good’ – available, affordable, accessible, auditable, scalable, with privacy embedded in its design. The UN Secretary General laid this out in his substantive Road Map for Digital Cooperation[9].

A ready and demonstrated model of digital public goods is available in India, in the form of IndiaStack – a set of open, modular, interoperable protocols, building blocks that allow “governments, businesses, startups and developers to utilise a unique digital infrastructure to solve India’s hard problems.”[10] It’s like the public highways which governments finance and build – on which private and public vehicles can drive, commerce can thrive and people can prosper.

The base of this is a biometric identity, connected to bank accounts through which citizens receive services and subsidies, from pensions to remittances, licences to food rations. The identity stores the digital records –but consent of sharing data lies with the individual. It’s been tested during the pandemic across India’s vast, diverse population, and at continental scale – with food rations for migrant workers[11], vaccines taken and digital certificates provided[12][13] .

Efforts are also underway globally, to adopt all or part of this model. The Philippines,[14] Morocco, Ethiopia, are working with MOSIP, or the Modular Open-Source Identity Platform, a not-for-profit foundation offering the open-source code.[15] [16] The UN High Level Panel for Digital Cooperation endorsed MOSIP in its June 2020 report.[17]

Once the pandemic ends, the focus will be on getting people back to work, and this is where digital public goods are critical, especially to revive the MSMEs. In developing countries, they are plagued by low digitalization and poor access to low-cost and easily available credit. In the absence of data, the costs of reaching these MSMEs, underwriting, monitoring and repayment risks of small-sized loans, make it difficult for lenders to provide credit.

India is democratizing credit flows to MSMEs while simultaneously driving digitalization within them – this is Microfinance 4.0! Building blocks such as the Open Credit Enablement Network (OCEN), bring together private participants like app-based companies, credit-scoring, mutual funds, insurance, telcos, which can innovate across the entire lending value chain.

A word about sustainability. Massive digitalization requires mountains of silicon chips, magnets and batteries, which need rare earths and lithium, all difficult to mine. Data centres are responsible for 1% of global energy consumption[18]. Chip-making is water-intensive, and the chemicals are polluting. The need of the hour is yes, more digitalization, but also innovation for a smart, non-polluting chip.

Till that comes, we hope democratic digitalization will create new tiger economies, across continents – in the Indo-Pacific, Africa, South America, the Caribbean. It’s more possible now than ever before.

Thank you.

Click here to watch the speech. Watch the full event here.

Manjeet Kripalani is Executive Director and co-founder, Gateway House.

This speech was delivered at the High Level Thematic Debate on Digital Cooperation and Connectivity, organised by UN Office of the Secretary General’s Special Envoy on Technology, United Nations General Assembly, New York, on 27 April, 2021.

For interview requests with the author, or for permission to republish, please contact outreach@gatewayhouse.in.

References:

[1]https://sdgs.un.org/sites/default/files/2020-07/Policy_Brief_MSMEs_and_SDGs.pdf

[2]https://www.ft.com/content/8ba328f7-f002-439e-a19b-c0839b649dde

[3]https://unctad.org/news/how-covid-19-triggered-digital-and-e-commerce-turning-point

[4]https://offers.worldpayglobal.com/rs/850-JOA- https://www.cigionline.org/articles/post-covid-19-digital-bretton-woods856/images/1149143%20GPR%20DIGITAL%20ALL%20PAGES%20SINGLES%20RGB%20FNL9.pdf

[5]https://www.worldbank.org/en/topic/governance/brief/govtech-putting-people-first

[6]https://www.predictionmachines.ai/

[7]https://www.gatewayhouse.in/globalisations-digital-challenges/

[8]https://www.cigionline.org/articles/post-covid-19-digital-bretton-woods

[9]https://undocs.org/A/74/821 pg. 6

[10]https://www.indiastack.org/about/