Posted November 2000
The purpose of this paper is to contribute some ideas to the discussion about what information technologies (IT) can do to alleviate poverty. This is a complex matter, and despite the enormous enthusiasm among donors, governments and stakeholders in the development field, the tangible benefits of using IT to fight poverty are still being assessed. Although there is little doubt that information and knowledge can affect poverty reduction, we still lack enough measurable data to identify the solutions that have the greatest impact.
This paper will examine the kinds of interventions that are being used today. Are they direct or indirect? That is, do the poor deal directly with IT or is it expected that the benefits 'trickle down' to the poor, thus have an indirect impact? At what level does one target these interventions: village, district, nation or global? What are some current examples where IT is helping to reduce poverty? Finally, are there other factors that should be considered when utilising IT as a poverty reduction tool?
An important note: this discussion about the benefits of IT for poverty alleviation is really about the benefits of the information that is made available via IT. The technology itself is not the point, although we will use the term IT loosely to indicate both the information and the conduit used to carry it.
It is important to define the scope of the interventions, which, with few exceptions, happen at three levels: local, national and global. At the local level (the village, district or in some cases the urban level) IT provides citizens with information about, for instance, market prices and social services, such as health and knowledge and education. At the national level one finds more complex IT systems that carry information about jobs, investment opportunities or goods and services. Finally, at the broadest level, there are systems that connect to the global information infrastructure. Each higher level usually includes elements of the proceeding levels.
As for the types of intervention, first are those where the poor benefit directly. This usually happens at the local level. The clearest example is the farmer who benefits from technology to get daily market prices and can subsequently buy seeds at 20% less and sell produce for 20% more by eliminating the middleman. Although the technology may actually only reach a center in the district nearby and the data be carried to village level on paper or by word of mouth, the farmer is still the direct beneficiary of the information itself.
If we employ a broader definition of poverty however, where poverty is also defined as being deprived of the information needed to participate in the 'wider' society (be that at the local, national or global level) there are other examples where the poor benefit directly from IT. Some have been implemented by, among others, UNDP-APDIP programme. These include: the child who learns how to use technology on Malaysia's Mobile Internet Unit (then hopefully gets regular access later) and the citizen who accesses job opportunities through a Citizen Information Service Center (CISC) in Mongolia. As we will see later, other examples include the Family Law Cd-rom, which enables NGO workers to give accurate answers to citizen in need of legal assistance, to collect, say, alimony payments.
Indirect intervention is where the benefits of IT are felt upstream from the poor, but may trickle down through the social-economic fabric. An example would be the child who comes from a very poor family but managed to go to school. He or she now works in the capital city, at a job that uses technology, and with the money supports the family in the village. These examples are common today in South Asia, and may be the majority of all cases.
The third type of intervention is using IT in support of poverty reduction mechanisms and development projects. Cross-cutting areas in poverty management can be greatly aided by introducing technology. Here we are describing, for example, a database that organises and monitors the progress of a number of poverty alleviation projects implemented by a development organization. This may include direct polling of information from the field, email, informative websites, monitoring and evaluation data, etc.
It is important to outline the prerequisites to implementing IT in a country. These apply to any country, and are especially relevant when the technologies are used in conjunction with new market opportunities and the provision of goods and services. Prerequisites to using IT are:
The graph above is an attempt to illustrate the trends in locale versus time of various applications of IT for poverty alleviation. For instance, information provided directly to citizens at the local level, such as the price of market goods to farmers, may be valid for only a day, and the relative system maybe take less to implement. Larger e-commerce projects may need more efforts to be implemented and their information valid for a much longer period. If an entrepreneur creates a web site with information about a tourist spot, that information will certainly be useful more than one day, probably longer than one month and possibly beyond even one year. What the graph also shows is the absence of short duration activities for poverty reduction at the global level, such as "day trading" of stocks.
In other words, working for poverty reduction at the global level requires considerable time, knowledge and money. Developing countries may have the time, but they do not have sufficient knowledge about IT or financing. Just because these countries cannot operate at the global level, does not mean they cannot effectively implement IT for poverty alleviation, as the farmer example below illustrates. But it does mean that developing countries, without support, are usually unable to participate in an important aspect of the new global economy, which represent an important opening for development organisations.
What the graph also illustrates is that scaling activities makes them more suitable for larger-scale IT interventions. For example, the local farmer can use IT to more effectively do business at his local market, but if he continues to grow the same amount of produce, his business will not expand beyond the local scale. However, if he teams up with other local farmers and they create a co-operative, they will be able to work on a larger scale and the cost to each farmer of using IT to access larger markets will decrease. The impact on poverty alleviation, theoretically, can be greater because the farmers have aggregated their activities.
The graph makes a distinction between service jobs and e-jobs. Services are offered to any buyer at any time, for example, a translation service. Basically, once the business is established the work doesn't change, only the customer does. After the particular task contracted for is finished, the relationship ends. E-jobs, on the other hand, are when a more permanent structure is created to fulfil a longer-term contract. The important consideration about e-jobs is that they may reverse the historical trend of migration in search of work, as we will see in the Examples section. This could strongly influence the way that donors approach developing countries: instead of providing them with funds, they might provide them with jobs.
This issue has been raised by several people, especially those in least developed countries that have specific language constraints (particularly the written form). The graph tries to describe language requirements at different levels.
This section describes in more detail the impact of implementing IT at different levels of society. At the local level, as previously noted, IT is used to alleviate poverty both directly and indirectly. Here, IT often follows existing opportunities. For instance, the farmer who uses IT to get information about prices is already buying and selling from the market; the technology simply allows to diversify his or her activities - the farmer can now choose to sell to one or another market instead of being forced to accept the middle-man's offer, for example. Local opportunities may be aggregated to create scale to "feed" a larger national market. At the local level, initiatives are not usually proposed by residents; the concept and funding usually comes from elsewhere. Again, this is where the development community can play an important role.
Other examples of interventions at the local level include information about citizens' rights - having access to knowledge of how a country's social system operates, for example. If a wife is abandoned by her husband, she might be eligible for alimony payments. But without knowing how the system works, without being 'plugged in', the woman cannot access her rights. Technology-enabled NGOs can play a role here by acting as efficient providers of that information and a link between the system and the citizen.
Another sort of intervention that could be leveraged at the local level is IT paired to micro lending. With few exceptions, the development community still hasn't fully taken advantage of the opportunity to provide both money to foster activities and the channels, via IT, to market goods and services produced from those activities. Crafts and tourism, especially the growing area of eco-tourism, are two types of activities that can benefit.
Interventions at the national level are both direct and indirect. They tend to get implemented in urban centres, because of lower costs and are often initiated by companies or organisations. An important characteristic of working at the national level is that activities here can become leverage points for larger-scale projects. Examples include business to business (B2B) e-commerce in the most advanced developing countries, for goods, mainly agricultural and textiles, aggregated from local enterprises and sometimes exported to international markets. IT-related industries, such as the software industry remain the stronghold of few countries following the India and Singapore example. The provision of news through informative website, website advertisement, etc, are sectors that are becoming stronger daily.
The step between implementing IT at the national level and the global level is very large. Consider just the complications involved in sending goods overseas: physical goods require a strong shipping infrastructure; financial transactions involve, as we said before, a banking sector that has been adapted to operate at the international level. Hence these activities are slower to catch up. E-commerce projects may take up to a year to be set-up and require a considerable investment.At the global level, e-jobs is a concept that our programme has developed. We see these jobs as an opportunity to reverse 'brain drain' and historic migration trends where people move to where jobs are. With today's technology, jobs could instead be made available where people live. An example of e-jobs would be a donor country 'contracting' a developing country to digitise its older legal archives, an operation that may be too costly in the donor country but more affordable in the developing country thanks to its lower costs of doing business. Development organisation could work with bi-lateral donors to make some of these opportunities available to their recipient countries, alongside the normal financial interventions. The advantage of e-jobs is that they have the potential to create an entire service industry that may eventually serve other clients, while making the investment in infrastructure worthwhile. Finally e-jobs may not necessarily require the knowledge of a specific language: drafting and digitising are examples of non-language oriented activities. Other examples of interventions at the global level are web sites supported by advertising and back-office services providing routine administrative labour.
What are the developments to come? How will they affect the global economy and our lives? Take the example of amazon.com. Somebody woke up one day with an idea of one-click shopping and changed the retail industry basically overnight. If an individual anywhere in the world has a marketable idea, it should be possible for he or she to sell that idea through the Internet. That innovation is exactly what is changing the economy today. Again, creativity and imagination are primary requirements to make this happen.
The global economy is increasingly a market economy and our systems must operate under market constraints. That means, for example, that infrastructure is expanding where it is most convenient - usually where it is profitable and there is a large enough market for private-sector investment. Conversely, it is not infiltrating areas below the minimum revenue threshold, sparsely populated regions for example. In other words, scale is also of utmost importance. Even the Grameen Bank can operate its cell-phone project in Bangladesh partly because the population density in that country makes it feasible. One way that developing countries can address that market constraint is to be more strategic about infrastructure investments. Instead of investing in land-based telecom infrastructure that is used only part of the time and often not for any productive effort (in economic terms), a country could invest in satellite links to beam down Internet connectivity to rural areas. That connectivity may prove more productive because it would be a catalyst to a number of other activities as we have seen in the local level examples. Over the Internet, voice communication would also be possible, and scale may be achieved over a multitude of communities in large rural areas, thus decreasing costs even below the levels of the originally intended land-based systems.
One strategy for initiating that change to more productive investments would be to identify leverage points, to do a cost-benefit analysis of making any IT infrastructure investment. For example, three areas of a country need information. One area produces silk, another okra and the third fish. Because the global market for silk is far larger than for the other products, it would make more sense to initially concentrate the IT infrastructure to serve the silk-producing areas. That analysis is often missing and may represent another role for development organisations to play.
It might not be an exaggeration to argue that in a global economy, IT is a material necessity. Many people say 'Isn't it more important in rural areas to have electricity than it is to have IT access'? Common wisdom might say yes, but if an investment in IT can spark greater growth in the long term, wouldn't that justify the initial costs for IT? If the silk-producing community can use IT to generate economic activity that is greater than what would be produced if the community invested in electricity to power a factory, should they not make the IT investment?
An investment in IT can also be measured in different terms, as a social good. Perhaps having the technology to contact a hospital and describe the symptoms of a very sick person and receive a written procedure back, would be more important to the community than electricity to light village homes at night. Of course the decision is to be taken by the local community, but in the information age, for the first time, the question of what comes first among electricity, telephone, and information does not have to be a foregone conclusion.
There are already a number of other examples, at all levels, of implementing IT for poverty reduction. We now need to step back, so we can separate the hype surrounding IT projects from the reality. Although this paper does not encourage lengthy, old-fashioned and expensive assessment studies, the entire international community - donors, governments, NGOs - should be motivated to seriously monitor and evaluate these experiences and opportunities to discover which approaches work best under different circumstances. Developing evaluation guidelines would be an important first step. After this important monitoring and evaluation phase, we should move on to implement further initiatives in many different areas, with full confidence that they will reap the largest possible impact in the reduction of poverty for the investments made.