Join Us

A global coalition working to make broadband affordable for all

Closing the investment gap: The critical role of development banks to advance digital inclusion

Matthew Gridley CC BY-NC-ND 2.0

This post was written by Sonia Jorge, Executive Director of the Alliance for Affordable Internet and Digital Inclusion Programme Lead at the Web Foundation.

 

Over the past few years, we’ve seen more countries — and the global community — recognise the importance of internet access and ICTs to sustainable global development. However, the resources needed to invest in enabling access to these technologies for all have remained scarce, leading to a growing divide between the digital haves and the digital have-nots and stunting potential global economic growth. A new report from A4AI and the Web Foundation finds that $100 billion is needed to close this digital divide in the next 10 years — equivalent to about $10 billion a year.

 

The report, Closing the Investment Gap: How Multilateral Development Banks Can Contribute to Digital Inclusion, looks at the role of multilateral development banks (MDBs) in this endeavor, exploring specifically how — and how much — MDBs are investing in the ICT sector across low- and middle-income countries. The report finds that:

 

  • MDBs play a critical role in funding global development projects, committing an average of $100-$120 billion each year to development projects in low- and middle-income countries. Yet, despite increasing recognition of the importance of digital access to the realisation of the Sustainable Development Goals, MDBs are investing just 1% of their total commitments in ICT projects.
  • ICT sector investments by MDBs are low because ICT sector growth is generally seen as an industry driven by the private sector alone. This private sector-led model is showing its limits, as telecoms companies are increasingly less willing to take on the considerable capital requirements required to expand connectivity in the rural and poor areas that need it most.
  • Policy is a critical underpinning of ICT sector growth, yet just 4% of the limited MDB investment in ICT projects goes toward policy development. We must encourage increased investment in the development of these enabling policy frameworks.
  • The time for new, innovative financing models is now. We must work to create funding mechanisms that are more suitable for projects in rural and poor areas, and we must optimise the use of government incentives to attract private capital and improve the rural business case.
  • We must also change the investment narrative within and outside of MDBs to prioritise the ICT sector, impressing upon stakeholders the strong link between digital access and the SDGs and encouraging public investment in ICTs and digital access.

 

The report findings and its recommendations were shared today at the World Bank Group-IMF Spring Meetings, and will be further promoted through the work of the Multistakeholder Working Group on MDB Investment Strategies in the ICT Sector. A4AI and the Web Foundation will continue to work with the MDBs and our partners to support actions to close the investment gap and increase the effectiveness of investments in the ICT sector. Such investments must be focused on supporting policy frameworks that will incentivise increased investments across both supply and demand dimensions, as well as the development of new financing mechanisms more suitable for rural projects and development.

 

As we reach the point where 50% of the world’s population will be online, we have a great responsibility to ensure that the next 50% — especially the last billions — are also afforded the benefits and opportunities made available through access and use of the internet. Given the immense needs and urgency of the issue, current investment trends are unacceptable. Unless action is taken now, we are likely to witness greater exclusion and increasing digital divides.

 

To learn more, read the full report, the report Executive Summary, and view a presentation of the report and its findings, given today by Guy Xibi, primary author of the report, at the WBG-IMF Spring Meetings.

Leave a Reply