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From No. 3, Vol. XLVIII, ¡°The Digital Dividend¡±, 2011

Over the past decade, there has been a remarkable growth in the use of information and communication technologies (ICTs) across the world. Writing in 1999, Geoffrey Kirkman¹ commented that half of the world's population had never made a telephone call. By 2011 this has changed dramatically, with mobile cellular networks covering over 90 per cent of the world's population, and there is the expectation that more than half of the world's population will be using mobile phones by 2015. Despite the persistence of widespread poverty, the use of mobile telephony in African countries in the last few years has grown more rapidly than in any other region in the world. There are now an estimated 500 million mobile phone subscribers across the continent compared to 246 million in 2008. By late 2010, Africa exceeded Western Europe in terms of the number of mobile connections. Further, although Africa lags in terms of other forms of ICT usage with an estimated 100 million Internet users, between 2000 and 2011 the growth of Internet usage exceeded 2,000 per cent, which is more than five times that for the rest of the world.

The phenomenal increase in ICT access has been accompanied by a burgeoning literature on the contribution of ICTs to economic growth, development, and poverty reduction. At the most optimistic, ICTs have been described as the means whereby developing countries can leapfrog over development stages and technology barriers to achieve both economic growth and broad-based development. Other views are less sanguine about attributing direct benefits to ICT and raise concerns that a one-dimensional push for their greater use may increase the dependency of poorer countries, as well as the divide between urban and rural areas, the rich and the poor, and between generations. Thus, while there may well be a link between ICT and poverty reduction, the mechanisms through which the connection takes place are not fully understood. In fact, whatever dimension of welfare change is being considered, the direction of its causal link to ICT is contentious. Problems of reverse causality and spurious correlation that apply to the relationship between any investment in infrastructure and increasing output are of equal relevance to the analysis of the ICT/poverty nexus.

Even prior to the current era of widespread mobile telephony and Internet usage, a causal relationship between telecommunications infrastructure and economic output was identified using data from the 21 Organisation for Economic Co-operation and Development (OECD) countries. This relationship has also been found for mobile telephony and data from 113 countries over a 20-year period, which showed that a 1 per cent increase in the telecommunications penetration rate leads to a 0.03 per cent increase in gross domestic product (GDP) (Torero and von Braun, 2006).² This positive correlation between ICT and economic growth extends to the developing world through direct expenditure on ICT infrastructure and services, as well as through its economic multipliers. Mobile network suppliers are estimated to have invested more than 90 billion dollars in Africa, and in some countries they are now the most profitable enterprises as well as significant generators of employment. Telecommunication revenue and expenditures presently contribute an average of 7 per cent of the GDP in many African economies, while investment in communications has reached about 5 per cent of the total investment spending on the continent. The expansion of ICT globally has also had upstream impacts through their components and manufacture. Gold, tantalum, tin, and tungsten are used in the manufacture of mobile phones and other ICT devices, while cobalt is an important component used in the batteries to power them. Zambia and the Democratic Republic of Congo supply the raw material used for more than half of the world's lithium-ion rechargeable batteries.

ICT can also have broader developmental impact and are powerful tools for empowerment and income generation, as well as for increasing access to education and other social services. Mobile telephones have been found to assist businesses in the informal economy by helping them attract additional business, and a well-known example of mobile phone usage among fishers in the state of Kerala, India, has shown the benefits to both producers and consumers through improved information and better functioning markets (Jensen, 2007).³ Other studies go further to point out that the role of ICTs is not limited to promoting growth, but also includes non-income dimensions of development, such as empowerment and security including opportunities for e-governance and improved accountability.

However, a positive impact of ICT on poverty reduction is by no means guaranteed. In their review, Torero and von Braun (2006) show that access to ICT depends on income, education, and resources, and that the so-called digital divide is part of a much broader development divide. They argue that socio-economic development contributes to a greater use of ICTs rather than the reverse. ICT literacy is also important in determining ICT access and usage. This goes beyond formal schooling to encompass the cognitive tasks involved in framing questions, solving problems, and applying knowledge (Warschauer, 2004).⁴ The expansion of ICT can also have direct negative outcomes. Expenditure on ICT has also been shown to be the cause of intra-household conflict, to foster male control over resources, and to direct household resources away from food and other essentials. Indeed, human rights concerns have been raised over the possible use of conflict minerals in the manufacture of ICT devices as well as the use of child labour. As with any technology, ICT must be placed within the local context of capabilities and needs, and requires a sound political economy along with the political will to prioritize development problems.

The information deficiencies concerning the impact of ICT on poverty reduction have raised concerns among policymakers who are being repeatedly urged to invest a substantial part of the national budget in ICT infrastructure on the basis of an incomplete evidence base. In this situation, it is tempting to question whether investments in ICT represent a worthwhile option for poor communities. A common mistake made by many existing studies is the collection of data at a level that is too general and neglecting the micro-level data required for the interpretation of macro-level trends. Since changes in the well-being of individuals and households are not necessarily directly linked to changes in economic output at the national level, it is important to go beyond national level growth and development and analyze the role and impact of ICT on poverty reduction at the micro-level. Responding to this need to better understand the ICT/poverty nexus at the micro-level, Poverty, ICT in Urban and Rural East Africa (PICTURE-Africa) has been a four year research project funded by the International Development Research Centre and undertaken by a consortium of researchers in Eastern and South Africa. Using a unique information base comprising of panel data collected from households in Kenya, Rwanda, Tanzania, and Uganda in 2007, and again in 2010, PICTURE-Africa is informative about inequalities in ICT access in East Africa, as well as the obstacles that hindered better and more equitable access. The odds of gaining ICT access was shown to more than double relative to improvements in income, and an additional year of education was shown to increase the odds of having ICT access by around 30 per cent. On the other hand, rural residence and being female was found to significantly reduce the chances of having ICT access by approximately 50 per cent. These relationships did not change significantly across the two waves of the study, suggesting some intransigence in terms of who benefits from ICT access. Households and individuals without ICT were found to be persistently poorer in terms of their financial, physical, and human capital. An analysis of the causal link between ICT and poverty reduction indicates that there is a small but positive ICT benefit to the poorest group and the availability of mobile phones, in particular, is a potentially valuable tool to improve the livelihood of the very poor over the medium term (6-10 years).

The rapid growth in mobile phone usage in developing countries reflects convergence in at least this aspect of development. The evidence provided by studies such as PICTURE-Africa suggests that the economic benefits of this growth may be accumulating more rapidly among the poor. If this is so, this means that access to ICT may be not only beneficial for poverty reduction, but actually pro-poor in terms of how these benefits are shared. Nonetheless, it must be recognized that ICT offer only an opportunity and is not a panacea. Rather than being an unqualified benefit to those who are poor, it seems probable that the impact of ICT will be determined by the context in which these technologies are deployed, the preparedness of the users, and the opportunities that exist for their application. Access to information through ICT is thus a question not only of connectivity, but also of capability to use the new tools and relevant content provided in accessible and useful forms. Better policies and better implementation are required for a global telecommunications sector that facilitates a faster rate of access at a lower cost. This needs to be accompanied by more resources being made available for the development of ICT literacy and better regulation of the enterprises through which ICT access is being delivered.

Notes

1 Kirkman, G. (1999). It's More Than Just Being Connected. A Discussion of Some Issues of Information Technology and International Development. Development ECommerce Workshop. The Media Laboratory at the Massachusetts Institute of Technology. Cambridge, Massachusetts.

2 Torero, M. and von Braun, J. (2006). Information and Communication Technologies for Development and Poverty Reduction: The Potential of Telecommunications. Washington, Johns Hopkins University Press and IFPRI.

3 Jensen, R. (2007). "The Digital Provide: Information (Technology), market performance, and welfare in the South Indian fisheries sector." The Quarterly Journal of Economics 121(3): 879-924.

4 Warschauer, M. (2004). Technology and social inclusion: Rethinking the digital divide. Massachusetts, The MIT Press.