How do information and communications technology (ICT) companies currently participate in expanding economic opportunities in developing countries? A report (pdf, 52 pages) published by the Harvard University's Kennedy School of Government in collaboration with the World Resources Institute addresses this question.
Whilst recognizing the incredible diversity in the nature and size of firms in the ICT industry, the report focuses on the contributions made by large ICT firms. The report concludes that the ICT sector has been a pioneer and powerful catalyst in addressing the needs and interests of low-income communities in developing countries. Indeed, ICTs play a crucial role in firm- and macro-level growth. They are also critical in expanding individual economic opportunity, enabling people to enhance their knowledge and skills; identify, apply and qualify for better-paying jobs; use their disposable income more wisely; manage their own businesses efficiently; and tap into broader markets for their goods and services.
The report (pdf, 52 pages) argues that the primary motivation for ICT companies to expand economic opportunity in the developing world has been opportunity, not risk. New and expanding markets are to be found among low-income individuals and households and among small- and medium-sized enterprises (SMEs).
Because the technologies themselves have such significant potential for impact, the most important way ICT companies can expand economic opportunity is to make those technologies widely accessible. Profitable business models are the most sustainable, scalable mechanisms for achieving this, and ICT companies are experimenting with a range of them, though product donation and at-cost provision are still common. Companies are also creating additional economic opportunity impact by working to bring smaller, local firms into their business ecosystems – for example, as manufacturers, software developers, or retailers.
Large ICT companies are also engaging in human capital development on a significant scale. Sometimes these efforts are directly related to inclusive business models, but often they are more philanthropically motivated, with business benefits expected to materialize only in the longer term. To a lesser extent, large ICT companies are also investing in institutional capacity-building, for example through product donation and pro bono time, and engaging with governments to promote policy and regulatory environments conducive to access and innovation.
One area of inclusive business in which ICT has had a major impact is in financial transaction services. Telecommunications carriers are beginning to offer financial transactions via mobile phones across the developing world. For customers, these services reduce the risk associated with carrying cash; save time and expenses in money transfers; enable bill payment; and can even allow un-banked customers to begin building credit histories. For carriers, they help with customer acquisition and retention. The Harvard paper singles out three pioneers in mobile transaction (m-transaction) provision: SMART Communications, Globe Telecom and Vodafone.
SMART Communication and Globe Telecom are national companies in the Philippines that entered (and largely created) the m-transactions market using a commercial, profit-oriented, business investment approach. For its part, Vodafone entered the m-transactions business in Kenya with its local affiliate, Safaricom, using more of a business experiment approach. Development motivations factored strongly and start-up costs where shared with the UK’s Department for International Development (DfID). Both Smart and Vodafone/Safaricom have partnered with local commercial banks, whereas Globe provides m-transactions on its own. All three companies are experiencing very rapid growth rates and actively diversifying the services they offer.
Other business initiatives include Microsoft's efforts to catalyze the growth of local software economies through a network of 110 Innovation Centers in 60 countries – helping individuals and entrepreneurs establish careers and businesses in the software industry and laying critical foundations for its own future growth. Microsoft has also launched a Partnership for Technology Access - customized, multi-party deals designed to transform the ability of governments to provide public services and the ability of citizens to receive the benefits. Using this technology, “eCitizens” and “eGovernemnts” interact virtually to drive social progress. For Microsoft, eGovernment is a sizeable business, and one the company would like to grow.
Meanwhile, IBM, in collaboration with the International FIncnes Corporation (IFC), has developed an SME Toolkit to help SMEs address critical barriers in their business strategies. The Toolkit facilitates SME start-up and growth by providing owners and entrepreneurs with access to information, training, capital, and markets, as well as the opportunity to collaborate with peers.
More information:
The following additional examples of companies' ICT initiatives are available via the website of the WBCSD-SNV Alliance for Inclusive Business:
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