How to finance digital inclusion so universal access to the internet drives sustainable growth
Almost two years into the pandemic, the world continues to rely heavily on technology for everyday life activities – and it does not seem that this will change any time soon. It is estimated that global internet traffic in 2022 will exceed all the internet traffic up to 2016. And while COVID-19 has accelerated a global transition towards a digital economy, the crisis has also shed even more light on the digital divide.
Today, access to the internet remains a luxury for many, leaving those who are unconnected behind. Almost half of the world is still offline (3.7 billion people), and yet 85% of the world’s population is covered by at least a mobile network. To ensure an inclusive future, it is crucial to address inequalities in access to technology, as well as gaps in affordability, adoption and use of digital services.
“As the world is fast becoming digital, today more than ever we must work together, collaborate and pool our resources to ensure no one is left behind,” said Doreen Bogdan-Martin, Director of the Telecommunication Development Bureau at the Telecommunication Development Bureau (ITU). “We need to find new ways to overcome connectivity barriers, level-up affordable access to technology and empower everyone, everywhere with the opportunity and choice to access life-changing, enabling, digital services.”
Innovative financing for inclusive development
The challenge to enable affordable digital services for billions of people is significant – estimated at $2.1 trillion. This includes the pipeline to teach digital skills, enhance trust in technology, and develop digital solutions in key areas such as health, education, and financial services. Traditional financing mechanisms – and the traditional digital infrastructure actors – cannot address either the solutions or the financing alone. There is therefore a pressing need for innovative instruments and mechanisms to encourage more players to participate in the financing of digital inclusion.
As a result of the realization through the pandemic of the central role digital participation plays in social and economic inclusion, there is a tremendous amount of enthusiasm from businesses and policymakers to close the digital divide. This has created a unique opportunity to capitalize on the momentum and find new and creative ways to invest in access, inclusivity and equality, so that the most vulnerable are connected.
Trillions of dollars are being invested in environmental, social and governance (ESG) projects from both the public and private sectors. Investors, operators, and other players are deploying new financial arrangements on initiatives promoting digital inclusion as these are key enablers for the achievement of the Sustainable Development Goals (SDGs). This shift towards sustainable and social financing creates an opportunity to unlock capital that will advance digital inclusion and contribute to the SDGs.
“Digital technologies are unlocking new pathways for rapid economic development, job creation and access to services in finance, education and health which would have been unimaginable only a decade ago,” said Riccardo Puliti, Vice President for Infrastructure at the World Bank. “Yet, there is also a growing ‘digital divide’ and increased cyber risks which need urgent and coordinated action to mitigate. Countries around the world have an unprecedented opportunity to harness the digital economy as a driver of growth and innovation.”
Some innovative financing arrangements that are emerging and broadening the base of contributors include earmarking proceeds from ICT sector participants, reforming Universal service and Access Funds (USAFs), creating an international fund, and issuing bond financing for digital inclusion – enabling organizations to leverage existing market frameworks to tap into the $500 billion ESG bond market to finance investment in digital infrastructure and services.
Establishing shared principles in the digital economy can also help provide a foundation to ensure an inclusive financial system. The development and implementation of resources, policies and regulation, and services that are inclusive by design, interoperable, digitally-led, economically sustainable, trusted, and informed by data will foster an environment for rapid uptake of digital solutions.
A cross-sector approach to building inclusive, sustainable societies
The United Nations aims to bring 75% of the world online by 2025, with the internet costing no more than 2% of earnings. Mobilizing public-private collaboration is crucial to bridge the financing, regulatory, and policy gaps to reach universal broadband access within the next decade. With greater access and more affordable digital services, we can stop the widening of existing divides and ensure that the other half of the world gets connected.
For the world to build back better, governments must embed digital within all other national priorities and set up horizontal and whole of government approaches to facilitate the necessary policies, regulatory, and economic environment to connect the unconnected while also progressing toward the achievement of the SDGs.
“Now is the time to make use of the increased profile and political awareness of the advantages of digitization,” said Mats Granryd, Director General at GSMA “to stimulate all levels of government to actively support policies that lead to long-term digital strategies and promote the private investment required to deliver them.”
The World Economic Forum’s EDISON Alliance is prioritizing digital inclusion by fostering collaboration between governments, companies and other organizations globally. Through the 1 Billion Lives Challenge, the Alliance will accelerate digital inclusion for 1 billion people through affordable and accessible digital solutions across, at least, health, finance, and education by 2025.