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Out of Crisis, Digital Opportunity

Andrew Mayeda | Ahsan Z Khan, IFC communications officer in Dhaka (contributor)

The chaotic streets of Dhaka had gone strangely quiet. The government had imposed a national lockdown on March 26, 2020—Bangladesh’s Independence Day—ordering residents to stay indoors and shutting down public transportation. Hunkered down at a hotel with his management team, Waseem Alim was in a bind.

Alim’s business, Chaldal, had made impressive inroads delivering groceries through a web and mobile phone application. The people of Bangladesh were used to shopping at small stores and produce stalls, but they’d been warming to the idea of having fresh mangoes and other goods delivered to their door with a few swipes of their mobile phones. Flush with new financing, Chaldal had been looking to expand. Now, amid the worst pandemic in a century, nearly a third of its employees were unable to come to work because of lockdown restrictions. As firms around the country put their operations on hold, Alim was facing pressure inside the company to shut down the business.

But he couldn’t ignore a simple fact: orders for Chaldal deliveries were spiking. In fact, demand was so strong for some products that Chaldal had to ration essentials such as rice and cleaning supplies. Alim took a chance in keeping the business running, securing a permit from the government so the company’s bicycles, minivans, and motorbikes could continue making deliveries.

Chaldal’s sourcing warehouse in Dhaka.
Chaldal’s sourcing warehouse in Dhaka. Photo courtesy: Chaldal

Today, more than 18 months into the pandemic, Chaldal has more than doubled its revenues, expanding its staff from 900 to 2,600 people. Alim is considering other business lines where Chaldal can expand, such as the delivery of medicines and other necessities.

Around the world, companies like Chaldal are looking to surf a wave of accelerated digital technology adoption that business leaders and policymakers hope could transform emerging markets and developing countries. A company called Fawry is helping Egyptian shopkeepers and their customers simplify the shopping experience through electronic payments. TradeDepot is supplying tens of thousands of small-scale retailers in Africa through its digital platform. And in Argentina, a company called Affluenta is expanding its peer-to-peer lending network.

By cutting out middlemen and allowing consumers to use mobile technology, Chaldal believes it has a competitive advantage in the fragmented retail supply landscape of Bangladesh, a country of 165 million people that’s celebrating its 50th birthday this year and aspires to be an upper-middle income country in the next decade.

Chaldal staff monitor the company’s logistics system at its facility in Dhaka.
Chaldal staff monitor the company’s logistics system at its facility in Dhaka. Photo courtesy: Chaldal

“We think we can play a very big role in consolidating the customer supply chain, providing more variety and quality to our customers,” said Alim, the company’s co-founder and CEO.

Globally, as countries imposed lockdowns and companies asked their employees to work from home, internet bandwidth usage around the world grew 38 percent, according to the International Telecommunications Union. McKinsey has described the acceleration in digital adoption by companies as a “quantum leap.” The average share of customer interactions that are digital, for example, jumped to 58 percent globally in July 2020, compared with 36 percent in December 2019, according to a survey by the consulting firm. The digital drive is impacting companies in a variety of ways, from pushing assets into the cloud to exploring ways to “reshore” production, replacing factories spread around the globe with domestic plants using robotics and automation.

An inflection point for emerging economies?

In developing countries, the challenge will be to ride the technology wave in a way that helps them emerge from the pandemic stronger. In the 1990s and early 2000s, emerging markets and developing economies had been the engine of global growth. But even before the pandemic, labor productivity was slowing.

Then came COVID-19. Firms that didn’t shut down were forced into semi-hibernation, sometimes propped up by government stimulus, loose monetary policy, and financing from international financial institutions. Investment took a major hit, plunging by 10.6 percent in emerging markets and developing economies (if China is excluded)—a much deeper hole than during the Great Recession. School disruptions have interrupted learning, undermining the accumulation of human capital. Economists expect the scars of the pandemic will run deep. Now, even as some advanced economies reopen, many developing countries are being battered by fresh waves of COVID-19 cases.

Emerging markets and developing economies are expected to grow 6 percent in 2021, according to a World Bank Group forecast issued in June, but the growth forecast is notably uneven across the developing world. In updated forecasts released in July, the International Monetary Fund warned that the outlook for emerging markets is darkening compared with advanced economies, with vaccine access acting as the main fault line.

But emerging markets and developing countries could re-establish themselves as dynamic forces in the global economy—if a technological virtual circle takes hold that boosts productivity. That optimistic scenario, according to World Bank Group economists, would require vaccination campaigns to proceed smoothly and policymakers to implement business-friendly reforms, including diversifying their economies away from over-reliance on commodities and tourism, and allowing resources to be shifted to more productive parts of the economy.

The digital surge could turn out to be a major inflection point in the history of development, said William Sonneborn, senior director of disruptive technologies at IFC. The growth of remote working, for example, could open opportunities for workers in developing countries to fill the needs of companies in advanced economies, stemming the “brain drain” that has often plagued poorer nations and helping them adopt a new development model based on skilled talent, he said.

The key, he believes, will be for governments to create a regulatory and tax environment that allows entrepreneurs to flourish. “It’s really about ease of setting up businesses and creating a risk-taking culture,” said Sonneborn. “What we need is for countries to avoid the tendency to tax at the early stage, when these businesses are losing money. If they’re patient and let the business become successful, then they can institute the right policies to recoup revenues for the government.”

Prioritizing digital connectivity

Policymakers in developing countries must balance the benefits of investing in digital connectivity with urgent needs in areas such as water, electricity, and health care, said Bogolo Kenewendo, Managing Director of Kenewendo Advisory and former minister of investment, trade, and industry in Botswana. Given the fiscal constraints many governments are facing, they will likely have to use public-private partnerships and other vehicles to crowd in private capital to invest in IT infrastructure, she said.

“Just two years ago, very few major businesses and governments wanted to engage in this conversation of digitization, mainly because it wasn’t seen as a priority,” said Kenewendo, referring to countries in Africa. “COVID has given everyone a kick to transform.”

In a country like Bangladesh, ongoing development of its digital infrastructure—and the skills of its people—will be key to the country’s fortunes. Buoyed by the strength of its ready-made garment sector, Bangladesh has been a development success story in recent decades. The rate of extreme poverty, defined as an income of less than $1.90 per day, fell from 43.5 percent in 1991 to 14.3 percent in 2016. Child mortality rates are falling, life expectancy is rising, and high-school enrollment for girls is on the rise.

But COVID-19 has hit hard in the garment sector, the nation’s biggest source of foreign exchange. Nearly half the population remains vulnerable to falling back into poverty. According to a Country Private Sector Diagnostic report released by IFC and the World Bank in June, the recovery will force a reimagining of the country’s development model, which previously relied on the relatively low labor costs. It will be critical for the government to introduce a new round of reforms to strengthen and modernize the private sector, which in recent years had become increasingly concentrated and inward looking, according to the report.

More investments in digital infrastructure will be important to Bangladesh’s efforts to build a more open, competitive private sector. Large capital investments are needed to build up high-quality digital infrastructure, including fiber-optic backbone, 4G capacity and telecom towers, the report said.

Digital banking grows quickly

A digital push could spawn more successes like bKash Ltd., which has been offering mobile payment services to its customers since 2014. The service quickly proved popular in Bangladesh’s traditionally cash-based economy. Mobile money has been a key driver of financial inclusion in the country, expanding the share of the population with access to financial accounts. Initially, when opening a bKash account, new customers would visit a bKash agent who checked their identification and set up an electronic wallet. Now customers can just scan their national ID and enroll from the app directly. They can also add money to their e-wallets by depositing cash at an agent, through remittances and other payments, or by transferring money from their bank account.

Since the pandemic, accounts have only continued to grow, reaching 54 million accounts as of July 2021. The service has literally become a lifeline during the crisis. The government has been using bKash and Nagad, another mobile financial services company, to distribute social safety-net allowances. bKash, a subsidiary of BRAC Bank Ltd., launched in 2010 and received a $10 million investment from IFC in 2013. Other investors include the Bill & Melinda Gates Foundation and Ant Financial.

“It was fundamentally designed for the unbanked,” said Kamal Quadir, CEO of bKash. “Today it’s become a universal platform.”

New forms of banking are also gaining traction in the Philippines. BPI Direct BanKo is the financial inclusion arm of Bank of the Philippine Islands, the country’s oldest bank. Since 2016, BanKo has been making microfinance loans to entrepreneurs, many of whom were previously borrowing from informal lenders. From an initial pilot of four branches, the service expanded to 307 branches. The pandemic has persuaded the company to further modernize its credit scoring model and develop new products under which the lending process would be mostly digitized, said Jerome Minglana, President of BPI Direct BanKo Inc. Under an advisory deal with IFC, the company is working to achieve those goals.

A client of Banko, Ms. Joan Laguardia at her business.
A client of BanKo, Ms. Joan Laguardia at her business. Photo by: Abeson Argosino/BanKo

“What the pandemic has done is it’s now challenging us to look for alternative ways to serve the customers without necessarily putting up brick and mortar branches,” said Minglana.

The digital wave is also hitting other parts of the developing world, including Latin America. Venture capital is plowing into the region at a rate outpacing the global average, according to data provided by Mountain Nazca, a venture-capital firm based in Mexico City that invests in early-stage startups in Latin America. The region is likely still early in its digital transformation, with promising opportunities in sectors such as fintech, e-commerce and clean tech, said Jaime Zunzunegui, managing partner at Mountain Nazca.

“The transformation is happening now and you have to be a part of it,” Zunzunegui said, echoing many of his peers from other parts of the world.

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Gender equality and digital development are inextricably linked. Yet globally, men are 21 percent more likely to be online than women, a figure that rises to 52 percent in low-income countriesThe Web Foundation estimates that barriers that keep women and girls offline — high device and data costs, lower digital skills, and restrictive social norms, to name a few — have cost developing countries about $1 trillion over the last decade.

The Digital Development Global Practice recently launched a new approach to accelerate its work on gender equality, with an ambitious vision that centers women and girls across its financing and analytics. The approach orients solutions to the five foundational pillars of the digital economy: digital infrastructure, digital public platforms, digital financial services, digital businesses, and digital skills. It also emphasizes the need for more and better sex-disaggregated data and to tackle risks, such as algorithmic bias and online gender-based violence.

Digital Infrastructure

Within infrastructure, practical solutions that increase access, affordability, and usage are critical. Intentional design that locates public Internet access points in safe spaces (for example, libraries and community centers) is a good start. Other interventions that support the closing of adoption gaps improve the affordability of devices and data plans and tailor digital skills programs for women. Traditionally underutilized universal service and access funds can help. However, only four out of 69 countries have deployed these funds to close the gender digital divide.  Device affordability schemes also show promise. The recently approved Uganda Digital Acceleration Project will test some of these innovations.

Digital Public Platforms

Access to digital public platforms often requires digital identification, which women lack compared to men. Barriers that women face often include legal requirements to present additional documents, for example, a marriage certificate. High registration costs and inconveniently located registration points also deter women. The Nigeria Digital Identification for Development Project conducted a qualitative study designed to understand the needs of women and marginalized groups, which surfaced several solutions. These include working through trusted networks and women’s groups to share information; locating registration centers close to communities; and designing registration policies that prioritize vulnerable groups. Other options include women-only registration centers, mobile registration services, and female enrollment agents.

Digital Financial Services

Digital payments, whether to provide wages, social assistance, or agricultural transfers, can save women time and provide added privacy, security, and control, thereby contributing to women’s empowerment. This is a key focus on the G2Px initiative, launched in early 2020 in partnership with the Bill and Melinda Gates Foundation.

In Benin, where an estimated 19 percent of women make or receive digital payments compared to 38 percent of men, another World Bank initiative aims to provide women smallholders with a safe and private place to store their money and connect them with other financial services. Complementary training on digital financial literacy for recipients and promoting a network of women agents can also help, as social norms often limit women’s ability to interact with male agents.

Digital Businesses

Women entrepreneurs often face a range of barriers, including unequal access to financing, legal discrimination, differences in skills, less access to networks, and more care responsibilities. They are also poorly represented in technology startups. To address these constraints, the Digital Cabo Verde Project aims to support women entrepreneurs with business and entrepreneurial mindset training, access to business networks, peer support, and mentoring.

Beyond comprehensive support for women-led businesses, tackling investor bias is critical. Research suggests that the persistent gender gap in financing cannot easily be explained by differences in education, experience, sector, intellectual property, or geography.

Digital Skills

Building digital skills starts early with hands-on exposure to technology to build girls’ interest and confidence. Typically, complementing technical skills training with soft skills, engaging role models, and creating structured linkages to the labor market through internships, apprenticeships, and job placement programs have positive outcomes. The Kosovo Digital Economy Project, which trains rural women in programming and web design to become online freelancers, shows how digital skills training can create pathways to economic prosperity. Women with disabilities, older women, and illiterate adults may require tailored curricula and flexible programs with active outreach to develop their basic digital skills — another key area for engagement.

Cutting across these pillars is the need to address restrictive gender norms that prevent women from fully participating in the digital economy. Solutions to tackle these vary with context but addressing gender stereotypes and engaging men and boys are essential steps in shifting beliefs and behaviors.

Ensuring that women and girls have equal access to and use of digital technologies — mobile phones, computers, and the internet — is central to their economic and social empowerment and inclusive economic recovery. As we accelerate our efforts on the digital inclusion of women and girls, we call on our partners to join us in this ambitious agenda.


Some 2.9 billion people still have never used the internet, and 96 per cent live in developing countries, a new UN report has found. According to the International Telecommunication Union (ITU), the estimated number of people who have gone online this year actually went up, to 4.9 billion, partially because of a “COVID connectivity boost”.

This is good news for global development, but ITU said that people’s ability to connect remains profoundly unequal – as many hundreds of millions might only go online infrequently, using shared devices or facing connection speeds that hamper their internet use.

“While almost two-thirds of the world’s population is now online, there is a lot more to do to get everyone connected to the Internet,” Houlin Zhao, ITU Secretary-General said.

“ITU will work with all parties to make sure that the building blocks are in place to connect the remaining 2.9 billion. We are determined to ensure no one will be left behind.”

‘Connectivity boost’

The UN agency’s report found that the unusually sharp rise in the number of people online suggests that measures taken during the pandemic contributed to the “COVID connectivity boost.”

There were an estimated 782 million additional people who went online since 2019, an increase of 17 per cent due to measures such as lockdowns, school closures and the need to access services like remote banking.

Uneven growth 

According to the document, users globally grew by more than 10 per cent in the first year of the COVID crisis, which was the largest annual increase in a decade. But it pointed out that growth has been uneven.

Internet access is often unaffordable in poorer nations and almost three-quarters of people have never been online in the 46 least-developed countries.

A ‘connectivity Grand Canyon’

Speaking in Geneva, Doreen Bogdan-Martin, Director of the ITU said: “The internet divide runs deep between developed and developing countries. Only a third of the population in Africa is using the internet.

“In Europe, the shares are almost 90 per cent, which is the gap between those two regions of almost 60 percentage points. And there is what the UN Secretary-General António Guterres, has called in his Common Agenda blueprint for the future, “a connectivity Grand Canyon”.

‘Digitally excluded’

The report found that younger people, men and urban dwellers are more likely to use the Internet than older adults, women and those in rural areas, with the gender gap more pronounced in developing nations.

Poverty, illiteracy, limited electricity access and a lack of digital skills continued to hinder “digitally excluded” communities, ITU noted.


For citizens in countries around the world, paying taxes is among their most challenging and time-consuming interactions with government.  For many governments, enhancing tax compliance and collecting sufficient revenue have been a matter of necessity to finance public goods and services.

That is why tax administrations are undertaking the digital transformation and automation of their systems. The adoption of technology can enable successful and sustainable tax reforms, ensure the proper taxation of the digital economy, and reduce the obstacles to compliance. The COVID-19 pandemic, which led to a boom in the use of digital commerce, made this change especially urgent for tax administrations.

The transformation has progressed increasingly rapidly over the past decade, as the cost of digital technologies has plunged and powerful tools to develop applications have become more user-friendly. One example of the falling cost: Cloud storage is now over 50% cheaper than it was a few years ago.

The rise of big data is an important factor in the shift because it can allow easy cross-checking of information, which enhances compliance by taxpayers. Overall, global data volume from mobile payment providers, electronic cash registers, online marketplaces, and other digital sources is expected to nearly triple from 2020 to 2024. 

Digital transformation is also being driven by the rapid growth of e-commerce, which is projected to expand 24% from 2020 to 2025, making it an increasingly important part of the tax base.

The increasing use of cashless payments, through mobile phones and other devices, is also powering the change. Such payments can be easily reviewed by tax administrations and often leave a digital trail that can be audited.

Digitalization makes life easier for authorities by easing the administrative burden, which gives officials more time to focus on higher-value activities.  But it also allows authorities to simplify procedures and reduce the compliance burden on taxpayers. Research shows that in South Korea, for example, digitalization has reduced compliance costs by as much as 19% in the 2011-2016 period.

A real-time, more user-friendly future

With these changes underway, taxation is likely to look a lot different in the future:

  • Instead of storing huge amounts of taxpayer data, administrations will have access to encrypted, distributed ledgers that allow them to capture tax information seamlessly and in real time. This has the added benefit of making tax administrations “less visible” to the public.
  • The decisions of the tax administrations will increasingly be supported and strengthened by artificial intelligence. But the system will need to be closely monitored for errors.
  • Tax administrations could become warehouses for more and more government data. That will give them a central role in the formulation of economic policy, enabling policymakers to review transactions in the economy and allowing better forecasting.
  • The tax system could become much more user-friendly. Services could include prefilled tax returns, taxpayers’ access to their own filing information, the sharing of data with banks to expedite credit approval, along with privacy preserving queries on the tax file by researchers and local communities.
  • Tax administrations will streamline the interface between taxpayers and tax officials, for instance by connecting corporate accounting systems with the tax administrations’ e-filing and e-payment platforms.

Making change work

Despite all the benefits, this transformation is up against major challenges. Research shows that most digital transformation initiatives don’t succeed. Of the $1.3 trillion spent in 2018, an estimated $900 billion was wasted.

To have the desired result, the digitalization of tax systems must enlist a broad coalition of stakeholders to make the necessary legal reforms and provide the funding. 

The shift should also focus on providing value by simplifying procedures and permanently bringing taxpayers into the e-filing, e-payment, and e-document ecosystem. The value could be provided by reduced compliance costs, increased tax certainty, and higher compliance.

In addition, reform should aim to change the culture from managing processes to managing data, and administrations should focus on getting the right data. One high-income jurisdiction told us that there were errors in 15% of their taxpayer files and that 98% of returns could be prefilled with data from just banks.

Finally, tax administrations must develop scalable and interoperable systems that can be used across departments, in headquarters and in the field. 

The process can be cumbersome, but by providing finance and technical assistance, the World Bank has already supported administrators’ efforts on automation and digitalization in dozens of countries—benefiting governments and citizens alike.


ITU Digital World 2021 SME Awards showcase sustainable digital solutions, helping creative start-ups forge partnerships and attract investment

​Inspiring technology solutions hold the potential to change and improve lives across the globe through the drive and dedication of small and medium-sized enterprises (SMEs).

Winning solutions from digital SMEs based in Hong Kong (China), Mexico, Saudi Arabia, Switzerland, South Korea, and the United States were showcased and announced at the ITU Digital World Awards Ceremony, the finale of the ITU Digital World 2021 event and a key SME promotion programme from the United Nations tech agency on Wednesday.

The International Telecommunication Union (ITU) – the UN’s specialized agency for information and communication technologies (ICTs) – has highlighted SMEs as crucial contributors to help harness the world’s ongoing digital transformation to ensure sustainable development.

The latest ITU Digital World Awards recognized outstanding SME contributions to advance connectivity, smart cities and smart living, e-health, digital finance, and education technology.

“Innovative tech SMEs – fast-moving and responsive to the needs of different markets on the ground – have a vital role to play in accelerating digital transformation,” said ITU Secretary-General Houlin Zhao. “Governments and the ICT industry need to act together to foster a climate that supports technology and business innovation, helping companies like our award winners scale up and flourish.”

Six winners emerged this year, spanning the five key categories.

Winning SMEs

The winners were:
Company Category​ Country
Benefit Vantage Limited – Ipification Connectivity Hong Kong, China
WIWI Connectivity Mexico
URBIT GROUP LLC Digital finance United States of America
Baobabooks Education Sàrl Education technology Switzerland
Mawidy E-health Kingdom of Saudi Arabia
SCE Korea, Inc. Smart cities, smart living Republic of Korea

ITU Deputy Secretary-General Malcolm Johnson recognized the winners and presented their certificates in the presence of Viet Nam’s Deputy Minister of Information and Communications, Phan Tam.

This seventh edition of the Awards marked the final event of a three-month online conference and exhibition co-hosted by Viet Nam. Opening in September, ITU Digital World 2021 also marked the 50th anniversary of ITU’s flagship Telecom conference and exhibition series.

During the ceremony, a new partnership for ITU with US technology firm Hewlett Packard Enterprise (HPE) was announced, aimed at accelerating the programme next year and equipping SMEs with access to HPE tools, networks, and mentoring.

Competitive selection

The competition was open to all SMEs worldwide, with winning projects ranging from mobile authentication and information accessibility to connectivity for public transport, financial technology (fintech), creative writing, and healthcare powered by artificial intelligence (AI).A jury of experts, representing the fields of business, technology and entrepreneurship, selected the winners from a total of 133 eligible applicants from 53 countries.

Prepping transformative SMEs

The ITU Digital World Awards formed part of an expert-led SME Programme of online masterclasses and pitching for digital SMEs. Maintaining the virtual format, the final awards ceremony celebrated the creativity and innovation behind digital solutions meeting real-world needs.

The special masterclasses explored areas such as sustainable start-ups and SME-corporate collaboration, bidding for government procurement opportunities, customer service and innovation, e-health, designing for disability inclusion and fundraising. The SME Programme and Awards are key components of ITU Digital World 2021, which was co-hosted with the Government of Viet Nam and took place from September-December 2021.

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