2.1 CREATING AN INCLUSIVE DIGITAL ECONOMY

With mobile internet and increasingly powerful and lower cost computing, every person can theoretically connect to anyone else, obtain and generate knowledge, or engage in commercial or social activity.¹² For organisations of whatever size, likewise, there are fewer technical barriers to global economic interaction at scale. Digital technology can support economic inclusion by breaking down barriers to information, broadening access, and lowering the level of skills needed to participate in the economy.¹³ 

Of course, this does not mean that everyone and everything should be connected or digitised. Nor does it mean that the social and economic consequences of digital technology are necessarily inclusive or beneficial. Digital technology can both provide opportunity and accentuate inequality. 

The challenge for policy makers, and other stakeholders seeking to contribute to progress toward the SDGs, is how to cooperate to leverage technology to create a more inclusive society. As we emphasise in this chapter and our recommendations, we believe digital cooperation must steer how digital technologies are developed and deployed to create meaningful economic opportunities for all. 

Developing an inclusive digital economy will require sustained and coherent effort from many stakeholders across all walks of life. National policy frameworks and international agreements need to find ways to promote financial inclusion, innovation, investment and growth while protecting people and the environment, keeping competition fair and the tax base sustainable. 

Developing an inclusive digital economy will require sustained and coherent effort from many stakeholders across all walks of life. National policy frameworks and international agreements need to find ways to promote financial inclusion, innovation, investment and growth while protecting people and the environment, keeping competition fair and the tax base sustainable.

FINANCIAL INCLUSION: MOBILE MONEY, DIGITAL IDENTIFICATION AND E-COMMERCE 

The ability of digital technologies to empower traditionally marginalised people and drive inclusive economic development is illustrated by financial inclusion.¹⁴ Mobile money, digital identification and e-commerce have given many more people the ability to save and transact securely without needing cash, insure against risks, borrow to grow their businesses and reach new markets. 

According to the World Bank’s Global Findex 2017 report, 69 percent of adults have an account with a financial institution, up by seven percentage points since 2014. That means over half a billion adults gained access to financial tools in three years. But many are still left behind, and there is scope for further rapid progress: a billion people who still have no access to financial services already have a mobile phone. ¹⁵ 

Mobile money – the ability to send, receive and store money using a mobile phone – has brought financial services to people who have long been ignored by traditional banks.¹⁶ It reaches remote regions without physical bank branches. It can also help women access financial services – an important aspect of equality, given that in many countries women are less likely than men to have a bank account. 

New business models enable people who have no physical collateral to demonstrate to lenders that they are creditworthy – for example, by allowing the lenders to see phone location data and online transaction and payment history.¹⁸ Mobile finance matters in wealthy countries, too, where low-income and historically marginalised groups generally both pay higher interest rates and receive a narrower range of financial services.¹⁹ 

Well-known examples of mobile money include Kenya’s M-Pesa and China’s Alipay. Launched in 2007 by Vodafone, M-Pesa received support from diverse stakeholders who all have a role to play in digital cooperation. A private sector innovation with donor funding, it originally addressed microfinance clients in partnership with civil society – then citizens found new uses, including low cost person-to-person transfers.²⁰ Alipay has made millions of small business loans to online merchants, more than half of whom are aged under 30. ²¹ 

What works in one country may not work in another.²² Rather than try to replicate specific successes, digital cooperation should aim to highlight best practices, standards and principles that can create conditions for local innovations to emerge and grow based on local issues, needs and cultural values. India, for example, has added 300 million bank accounts in three years as new business models have been built on the India Stack, a set of government-managed online standards in areas including online payments and digital identity. ²³ 

Across many areas of financial inclusion, fragmented systems and lack of cooperation within and across states make it difficult to fully realise the benefits of digital technology. Common standards for cross-border interoperability of mobile money could unleash much more innovation: discussions to develop them should be a priority for digital cooperation. ²⁴

Digital identification (ID) can support inclusive economic development more broadly. More than a billion people today lack an official way to prove their identity: this means they may not be able to vote, open a bank account, transact online, own land, start a business, connect to utilities or access public services such as health care or education.²⁵ The consulting firm McKinsey & Company studied seven large countries and concluded that digital ID systems could add between 3 and 13% to their gross domestic product.²⁶ 

However, digital ID systems require caution. A digital ID can help unlock new opportunities but can also introduce new risks and challenges. They can be used to undermine human rights – for example, by enabling civil society to be targeted, or selected groups to be excluded from social benefits.²⁷ Data breaches can invade the privacy of millions. To minimise risks, countries should introduce a digital ID system only after a broad national conversation and allow for voluntary enrolment and viable alternatives for those who opt out. They should establish ways to monitor use and redress misuse. Countries could cooperate to share experience and best practices in this regard. 

The World Bank Identification for Development (ID4D) initiative has identified ten Principles of Digital Identification covering inclusion, design and governance “to improve development outcomes while maintaining trust and privacy”.²⁸ This initiative draws on the experiences of countries that have already implemented digital ID systems. Among the most successful is Estonia, where citizens can use their digital ID to access over 2,000 online government services. Building on the positive and cautionary lessons of early adopters, the Modular Open Source Identity Platform (MOSIP) is developing open source code countries can adapt to design their own systems.²⁹ 

Recent years have also seen a dramatic increase in e-commerce, including by individuals and small businesses selling products and services using online platforms. When e-commerce platforms provide technological services to small entrepreneurs, rather than compete with them, they can level the playing field: it is relatively cheap and simple to start a business online, and entrepreneurs can reach markets far beyond their local area. 

Inclusive e-commerce, which promotes participation of small firms in the digital economy, is particularly important for the SDGs as it can create new opportunities for traditionally excluded groups. In China, for example, an estimated 10 million small and medium-sized enterprises (SMEs) sell on the Taobao platform; nearly half of the entrepreneurs on the platform are women, and more than 160,000 are people with disabilities.³⁰ E-commerce can support rural economic inclusion as clusters of villages can develop market niches in certain types of products: in China, an estimated 3,000 “Taobao villages” have annual online sales of more than one million dollars annually.³¹ A growing e-commerce sector also creates demand and employment in related businesses including logistics, software, customised manufacturing and content production. 

E-commerce shows how digital technologies with supportive policies can contribute to inclusive economic development – it has done best in countries where it is relatively easy to set up a business, and where traditionally neglected populations are able to get online.³² As with inclusive mobile finance, as more individuals and small enterprises buy and sell internationally, there is also a need to create more supportive rules for cross-border e-commerce. 

As e-commerce grows, there are also concerns about its relation to local and international markets, as discussed below in Section 2.3. 

HARNESSING DATA AND ‘DIGITAL PUBLIC GOODS’ FOR DEVELOPMENT 

The immense power and value of data in the modern economy can and must be harnessed to meet the SDGs, but this will require new models of collaboration. 

The Panel discussed potential pooling of data in areas such as health, agriculture and the environment to enable scientists and thought leaders to use data and artificial intelligence to better understand issues and find new ways to make progress on the SDGs. Such data commons would require criteria for establishing relevance to the SDGs, standards for interoperability, rules on access and safeguards to ensure privacy and security. 

The immense power and value of data in the modern economy can and must be harnessed to meet the SDGs, but this will require new models of collaboration.

We also need to generate more data relevant to the SDGs. In a world which has seen exponential growth of data in recent years,³³ many people remain invisible. For example, the 2018 UN SDG Report notes that only 73 percent of children under the age of 5 have had their births registered.³⁴ The World Health Organization (WHO) estimated in 2014 that two-thirds of deaths are not registered.³⁵ Only 11 countries in sub-Saharan Africa have data on poverty from surveys conducted after 2015. Most countries do not collect sex-disaggregated data on internet access. ³⁶

Anonymised data – information that is rendered anonymous in such a way that the data subject is not or no longer identifiable – about progress toward the SDGs is generally less sensitive and controversial than the use of personal data of the kind companies such as Facebook, Twitter or Google may collect to drive their business models, or facial and gait data that could be used for surveillance.³⁷ However, personal data can also serve development goals, if handled with proper oversight to ensure its security and privacy. 

For example, individual health data is extremely sensitive – but many people’s health data, taken together, can allow researchers to map disease outbreaks, compare the effectiveness of treatments and improve understanding of conditions. Aggregated data from individual patient cases was crucial to containing the Ebola outbreak in West Africa.³⁸ Private and public sector healthcare providers around the world are now using various forms of electronic medical records. These help individual patients by making it easier to personalise health services, but the public health benefits require these records to be interoperable. 

There is scope to launch collaborative projects to test the interoperability of data, standards and safeguards across the globe. The World Health Assembly’s consideration of a global strategy for digital health in 2020 presents an opportunity to launch such projects, which could initially be aimed at global health challenges such as Alzheimer’s and hypertension.³⁹ 

The slowing progress in bringing more people online points to the urgent need for new approaches to building digital infrastructure, a complex task that requires better coordination among many stakeholders: governments, international organisations, communications service providers, makers of hardware and software, providers of digital services and content, civil society and the various groups that oversee protocols and standards on which digital networks operate.

Improved digital cooperation on a data-driven approach to public health has the potential to lower costs, build new partnerships among hospitals, technology companies, insurance providers and research institutes and support the shift from treating diseases to improving wellness. Appropriate safeguards are needed to ensure the focus remains on improving health care outcomes. With testing, experience and necessary protective measures as well as guidelines for the responsible use of data, similar cooperation could emerge in many other fields related to the SDGs, from education to urban planning to agriculture. 

Many types of digital technologies and content – from data to apps, data visualisation tools to educational curricula – could accelerate achievement of the SDGs. When they are freely and openly available, with minimal restrictions on how they can be distributed, adapted and reused, we can think of them as “digital public goods”.⁴² In economics, a “public good” is something which anyone can use without charge and without preventing others from using it.⁴³ Digital content and technologies lend themselves to being public goods in this respect.

Combinations of digital public goods can create “common rails” for innovation of inclusive digital products and services. The India Stack is an example of how a unified, multi-layered software platform with clear standards, provided by public entities, can give government agencies and entrepreneurs the technological building blocks to improve service delivery and develop new business models which promote economic inclusion.⁴⁴ 

There is currently no “go to” place for discovering, engaging with, building, and investing in digital public goods. Along the lines of the MOSIP model – and with the participation of civil society and other stakeholders – such a platform could create great value by enabling the sharing and adaptation of digital technologies and content across countries in a wider range of areas relevant to achieving the SDGs. 

EXPANDING ACCESS TO DIGITAL INFRASTRUCTURE 

The proportion of people online in the developing world expanded rapidly in the last decade – from 14.5% in 2008 to 45.3% in 2018 – but progress has recently slowed.⁴⁵ Internet access in many parts of the world is still too slow and expensive to be effectively used.⁴⁶ The cost of mobile data as a percent of income increased in nearly half the countries according to a recent study.⁴⁷ Without affordable access, advances in digital technologies disproportionately benefit those already connected, contributing to greater inequality. 

The people being left behind are typically those who can least afford it. Growth in new internet connections is slowest in the lowest-income countries.⁴⁸ Rural areas continue to lag, as companies prioritise improving access in more densely populated areas which will offer a better return on investment.⁴⁹ 

The slowing progress in bringing more people online points to the urgent need for new approaches to building digital infrastructure, a complex task that requires better coordination among many stakeholders: governments, international organisations, communications service providers, makers of hardware and software, providers of digital services and content, civil society and the various groups that oversee protocols and standards on which digital networks operate.⁵⁰ As these actors cooperate, it also represents an important moment to re-emphasise and address the complex social, cultural and economic factors that continue to marginalise many groups. 

Some countries, such as Indonesia, have set targets that treat internet connectivity as a national priority.⁵⁷ While finance alone will not achieve universal internet access, it can help if invested wisely: some countries are generating financing from fees on existing communication network providers to help expand systems to those who are currently uncovered, for example through Universal Service Funds.⁵⁸

Advance market commitments deserve further consideration as a possible way to incentivise investment, as they have in other areas such as vaccine developments. They involve a commitment to pay for a future product or service once it exists; the commitment in this case could come from consortia of governments, international organisations or others interested in enabling specific uses in areas such as health or education.⁵⁹

Many local groups are also working on small-scale community solutions: for example, a rural community of 6,000 people in Mankosi, South Africa, built a solar-powered “mesh network” in collaboration with a university.⁶⁰ Such community projects are often not just about getting online but building skills and empowering locals to use technology for development and entrepreneurship.⁶¹

Digital cooperation should increase coordination among the public and private entities working in this space and help tailor approaches to economic, cultural and geographic contexts. Governments have an important role to play in creating a policy framework to enable private sector enterprise, innovation, and cooperative, bottom-up networks.

SUPPORTING MARGINALISED ‎GROUPS AND MEASURING ‎INCLUSIVENESS

Even where getting online is possible and affordable, extra ‎efforts are needed to empower groups that are discriminated ‎against and excluded. For example, digital technologies are ‎often not easily accessible for elderly people or those with ‎disabilities;⁶² indigenous people have little digital content in their ‎native languages;⁶³ and globally an estimated 12 percent more ‎men use the internet than women. ⁶⁴ ‎

Even where getting online is ‎possible and affordable, extra ‎efforts are needed to empower ‎groups that are discriminated ‎against and excluded.

Responses need to address deep and complex social and cultural factors, such as those contributing to the gender gap in access to and usage of mobile phones, smart phones and digital services – gaps which persist in many cases despite increases in women’s income and education levels.⁶⁵ Social marketing could play a role in changing attitudes, as it has in many other areas with backing from donors, governments and civil society organisations.⁶⁶ Initiatives to improve access for marginalised populations should start with consultation involving these groups in the design, deployment and evaluation of such efforts.

Efforts to improve digital inclusion would be greatly helped if there were a clear and agreed set of metrics to monitor it. Initial work – notably by the Organisation for Economic Co-operation and Development (OECD), the Group of Twenty (G20), ITU, and the Economist Intelligence Unit – needs to be broadened to reflect the wide variety of global contexts and, importantly, needs greater buy-in and participation from developing countries.⁶⁷ The Panel urges international organisations, civil society and governments to develop action plans around reliable and consistent measures of digital inclusion with sex disaggregated data. Discussion about measurements and definitions would also focus attention on the issues underlying inclusion.