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CHAPTER 1

Introduction: The ICT/poverty nexus in Africa

Julian May, Timothy M. Waema, and Elise Bjåstad

While some views hold that information and communication technologies (ICTs) improve access to global markets and create conditions that enhance economic growth, others point to a growing digital divide. ICTs are argued to further entrench inequalities and to potentially lead to social exclusion. As such, ICTs can be defined as a process, and not simply as products. This is because socio-economic choices have a bearing on the final outcome, are implicitly or explicitly made in the process of technological innovation. This chapter reviews the literature on ICT and development and proposes that one way of resolving the link between ICT, development, and inequality is to see the digital divide not as the root cause but rather as a symptom of inequality and poverty. The implication is that access to ICTs cannot be a solution to poverty in and of itself, but can at best be adopted as a tool in poverty reduction initiatives.

Keywords: poverty reduction, information and communication technologies, Africa, policy, pro-poor growth

Information and communication technologies (ICTs) have been hailed by some as the solution for developing countries, one that provides the opportunity to leapfrog stages of development and enter directly into what has been labelled the information age. ICTs are said to enable developing countries to gain access to global markets and create conditions that enhance economic growth. However, others are more pessimistic, pointing to the growing digital divide that excludes some countries and regions unable to tap into the global marketplace, and makes the distance to those operating within the global network increasingly large. Seen through this perspective, ICTs simply represent a new way in which inequalities are further entrenched, a new source of social exclusion. Exactly how ICTs can contribute to poverty reduction remains elusive.

This chapter provides the context within which the rest of the chapters should be read, defining what is meant by ICT and reviewing what is known about the link between ICTs, growth, and poverty reduction. Although the link between ICTs and poverty has frequently been suggested, the mechanisms through which this link takes place have yet to be systematically interrogated. The chapter describes the sustainable livelihoods framework, which brings together a multi-dimensional approach to poverty with the assets and activities used by households in order to obtain the resources that they need. In this approach, ICTs are taken to represent a new asset and a new form of deprivation, and the chapter advances the theorization of 'digital poverty', defined as 'the lack of goods and services based on ICT' (Barrantes, 2007a: 30). Thus digital poverty can be included as the sixth dimension of poverty in addition to the five interrelated dimensions of financial, assets, physical, human, and social.

The chapter continues by providing the socio-economic and ICT context of the four East and two Southern Africa countries covered in this book, namely Kenya, Uganda, Tanzania, Rwanda, Namibia, and South Africa. It then offers the research questions that link these chapters.

Defining ICTs

It is not always clear what the concept of information and communication technologies or ICTs really refers to. Some theorists appear to equate ICTs with new technologies such as computers and the internet (Langmia, 2005) or deal with computers and internet connectivity alone when discussing ICTs (Polikanov and Abramova, 2003). However, the concept can be wider than this. In a document prepared by Batchelor and Scott (2005) for the Organisation for Economic Co-operation and Development (OECD), this point is elaborated:

While the common use of ICTs tends to refer to the newer technologies of phone and internet, the term ICT is best used to also include more traditional communication media such as radio and television. Digital convergence is gradually bringing devices to the market that include the traditional media (phones with radio, media centres with computing capability and television), which will increasingly blur the distinction between old and new ICTs. (Batchelor and Scott, 2005: 11)

Hence, there is a common distinction between old/traditional and new/ modern ICTs, although these lines are increasingly blurred. ICTs can also be defined in terms of their qualities or the set of tasks they can perform. The OECD panel of statistical experts have defined ICTs as '... the set of activities that facilitate, by electronic means, the capturing, storage, processing, transmission and display of information' (de Alcantara, 2001: 3). This definition captures the set of attributes associated with ICTs, rather than listing the various devices possessing these attributes, and is as such perhaps a more useful definition. This is even more so due to the digital convergence discussed by Batchelor and Scott (2005), in which phones can also be radios and mini-computers, while computers can be TVs, radios, and phones.

More than two decades ago, Lorentzen (1988) developed a theoretical framework for understanding technological innovation, which still has much to offer when trying to understand the concept of ICT and the role of ICTs in socio-economic development. She defines technology as a process, and not simply a thing that can be bought and used. This is because socio-economic choices, which have a bearing on the final product, are implicitly or explicitly made in the process of technological innovation. This makes technology a social product.

ICT, globalization, and development

Rapid developments in ICTs over the last two decades have prompted the question of not only what role these can play in development, but also of whether developing countries can in fact cope without them. As a way of understanding this field of research, Heeks (1999) has suggested that the debates concerned with the role of ICTs can be summarized by picturing two continuums. First, there is a continuum of views on technology impacts. This dimension ranges from ICT optimists, who believe that the new technologies have largely positive impacts such as wealth creation and improved service delivery, to ICT pessimists, who associate ICTs largely with negative impacts such as unemployment and growing social exclusion. Second, he suggests a continuum of views on impact causes from technological determinism, in which inherent features of the technology are seen to determine the impact of introducing ICTs, to social determinism, in which human choices within social structures shape the influence ICTs have.

Understanding these different points of view is important. As Castells (1999) argues, we are in the middle of a historical period of transformation that is made possible by the collapse of the Soviet Union and by new developments within ICTs. Although the capitalist pursuit of profit is not a recent development, there is something fundamentally new about the current brand of capitalism. Castells argues that it is driven by the new ICTs, which have tooled the development of new productivity sources, of new organizational forms, and of a new and global economy. For Castells, we have entered the information age, in which ICTs are the functional equivalent of electricity in the industrial age. However, he argues that the essential role of ICTs in stimulating development is a two-edged sword, and on the basis of this suggests two possible scenarios or paths for developing countries. These scenarios capture two prominent positions within the discourse on ICT and poverty reduction, which have strong roots in two opposing traditions within development theory.

The first scenario is one in which developing countries are enabled, by adopting new technologies, to leapfrog stages of development and increase their competitiveness faster than in the past. Several examples of economies that have managed this leap are found in the Asia Pacific region, such as Hong Kong, Taiwan, Singapore, Malaysia, and South Korea. Negroponte (1998) and Primo Braga (1998) have suggested that ICTs might enable a similar development path for other developing countries:

Developing countries can, for example, leapfrog stages of development by investing into fully digitized networks rather than continuing to expand their outdated analogue-based infrastructure. There are advantages of being a follower – e.g., not having to cope with the technological obsolescence of well-developed wireline networks – and they are illustrated by the fact that low-income economies presented a higher share of digital telephone lines (94.7 per cent) than high-income economies (85.5 per cent) by 1996. (Primo Braga, 1998: 2)

This view puts forward a vision of how modern digitalized ICTs can be introduced in developing countries and thereby changes in their development path achieved. A second position is one in which certain economies are unable to catch up or keep up with the technological developments. These economies fall increasingly far behind, and their retardation is cumulative. The situation is described as an increasing digital divide or gap that can be found both within and between countries (Gillwald, 2005).

These two positions have also been labelled ICT optimism/pessimism (Bedia, 1999) or utopia/dystopia (Hamelink, 1997). One has its roots in modernization and the other in dependency theory. In both positions, ICTs are placed at centre stage of development and seen as having either detrimental or highly beneficial impacts on the position of developing countries. Hence, together they also represent what Heeks (1999) has called technological determinism. However, a third possible scenario or position is available, one in which ICTs are assigned a less significant role in determining the future of developing countries and the poor, but simultaneously are seen to play a role in supporting efforts to reduce poverty or deprivation.

In some cases, ICTs have been given a central role in poverty reduction arising from their potential benefits for increasing incomes of the poor and enhancing overall national social and economic growth. Research designed to provide empirical evidence of this presumed relationship has tended to adopt a broad macro-level focus, as opposed to the micro-level at which the linkages between ICTs and poverty-reducing activities actually take place (Hamelink, 1997; Adhikari, 2002; Kenny, 2001). As a result, such studies have tended to make very general statements concerning the high correlations between higher levels of development and intensities of ICTs (see Sridhar and Sridhar, 2007; UNDP, 2003). Other research has studied the correlation between the level of socio-economic development and use of information or the size of the information sector (Jeong, 1990; Menou, 1985). Often, reference is made to the contribution of information to development at a global, national or regional level, avoiding any discussion of the potential benefits, costs, trade-offs, and conflict that might arise at the level of individuals, households, and communities (Menou, 1993). An opposing view is depicted by Chowdhury (2000) who observes that 'the poor can't eat high speed internet access.' What does appear evident, though, as advanced in Primo Braga (1998) and Brown (2001) in Adeya's comprehensive review paper, is that excluding the poor from the benefits of ICTs will result in a widening of the economic gap between haves and have-nots. There is also an abundant literature supporting the argument that ICTs have the potential of combating rural and urban poverty if appropriately deployed (Samiullah and Rao, 2000, as quoted in Adeya, 2002).

A more optimistic scenario on what ICTs can do for developing countries is offered by Cairncross (1997) who predicts the 'death of distance':

To allow communications to work their magic, poor countries will need sound regulations, open markets, and, above all, widely available education. Where these are available, countries with good communications will be indistinguishable. They will all have access to services of world class quality. They will be able to join a world club of traders, electronically linked, and to operate as though geography has no meaning. This equality of access will be one of the great prizes of the death of distance. (Cairncross, 1997, quoted in Venables, 2001: 1)

Many arguments have been put forward for how ICTs can impact on economic growth. The theoretical information approach to development provides that information asymmetries are among the major causes of transaction costs, uncertainty, and, therefore, also market failure (Wolf, 2001). The lack of access to information is a particularly prominent problem in poor populations and small firms, and therefore plays a central role in perpetuating disadvantage and inequality. A reduction in information asymmetries can enhance the efficiency of resource allocation and decrease the chances of well-informed large firms extracting rent from less-informed small firms. On a macro-level this can create faster growth and diversify the economy.

Jalava and Pohjola (2002) suggest three avenues through which ICTs can have growth-enhancing effects. First, the production of ICT goods and services can directly contribute to the gross domestic product (GDP) size of an economy. Second, the use of ICT as an input in the production of other goods and services can have growth-enhancing effects. In fact, they argue that these benefits can be even greater than the growth-enhancing effect of ICT production. Third, ICTs can enhance growth through the impact of ICT industries in multi-factor productivity. The OECD (2003) offers a similar view on how ICT impacts on productivity growth. First, the investment in ICTs contributes to labour productivity growth. That is, it contributes to a more efficient use of capital and labour. Second, progress in the production of ICT-related goods and services has contributed to increased labour and multi-factor productivity growth. This has been called 'competitive effects', referring to the effect of growth within firms, of the entry of new firms and the exit of declining firms, and of more productive firms gaining market shares. Thirdly, OECD found investment in ICTs to contribute to an increase in overall efficiency, related to lower transaction costs and more rapid innovation.

Oliner and Sichel (2000) conducted a study measuring the contribution of ICTs to economic growth in the US economy of the early 1990s, but found the contribution to be modest since computing equipment only represented an extremely small fraction of the total capital stock. However, when the study was replicated in the late 1990s, a much more substantial contribution from ICTs was found. In fact, they conclude that information technology was the primary force behind the sharp rise in productivity growth in the late 1990s.

However, the majority of the evidence for the positive impacts of ICTs on economic growth has been collected in developed countries, and many of the findings cannot be directly transferred to a developing country context (Bedia, 1999). With Jalava and Pohjola (2002), Roller and Waverman (1996) argue that investment in telecommunications infrastructure will create economic growth only through the increased demand for certain products such as cables and switches. However, the extent to which an economy benefits from this increased demand depends on where these products have been produced. If they are imported, which is the case in most African countries, the demand for such products can further entrench a negative trade balance, even if it also stimulates trade within the country. Also, even if there is some evidence indicating that ICTs can contribute to general economic growth, there is not much evidence that the poorest countries are able to fully utilize the potential of new technologies to increase efficiencies in their industries, particularly since these are largely based on the production of raw materials and subsistence agriculture (Batchelor and Scott, 2005).

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Excerpted from "ICT Pathways to Poverty Reduction"
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