by Kiyotaka Akasaka

Bringing the Benefits of IT to Emerging Markets

May 17, 20075 mins

It's time to examine opportunities in emerging markets.

IT companies may seem justified in neglecting consumers in countries with emerging economies, because only 8.5 percent of people in such countries are connected to the Internet, compared to 54 percent of people in the developed world.

But the number of users in these countries is mushrooming: Users increased by 28 percent in 2002-2003, by 26 percent in 2003-2004 and by 30 percent in 2004-2005, according to the International Telecommunication Union. The connection rate jumped by 52 percent in Africa in 2004-2005 alone.

Increased Internet access in developing countries has provided a host of applications, such as e-education, e-health, e-business, e-agriculture, e-tourism and e-government. IT uses are as varied as monitoring food security in Africa, using geospatial mapping to identify food-insecure communities in Cambodia, providing informal education in Mexico, enhancing teacher training in Tanzania and tracking rises in disease rates after the 2004 Indian Ocean tsunami.

Universal Internet access is the goal of all 192 member countries of the United Nations, which in 2006 unanimously proclaimed World Information Society Day, to be observed on May 17. The Day, which is informally celebrated in many countries as World Internet Day, should “help to raise awareness of the possibilities that the use of the Internet and other ICTs can bring to societies and economies, as well as of ways to bridge the digital divide.” Appropriately, the date marks the anniversary of the signing of the first International Telegraph Convention in 1865, which helped to open grand new frontiers to business.

At a meeting on February 28 between more than 100 Silicon Valley executives and officials from more than 30 countries, participants stressed the difficulties of knowing the exact needs of consumers in the developing world. Others mentioned problems such as limited broadband capacity and scarcity of locally produced content.

But various participants at the Silicon Valley meeting argued that lowering the cost of Internet access and computer equipment could help drive the same type of growth that mobile phones have experienced in developing countries. Privatization and a sound regulatory structure, they said, underlay the explosion of mobile phones in these markets, aided by innovative models such as prepaid cards for those without bank accounts or fixed addresses. This holds lessons for Internet access as well.

It is true that making available low-cost computers and affordable Internet depends on a complex chain of on-the-ground realities, of which technological innovation is only one component. Others include expanded domestic Internet connections, adequate domestic service providers, IT-educated users and content in local languages that meets local needs.

Governments must of course do their part, by supporting fair competition and business innovation through sound regulatory systems. Particularly important at this juncture is the development of policies and regulations that will help realize the full benefits of Internet protocol convergence.

Many IT companies feel hampered by limited knowledge of local needs. But international actors such as the United Nations, the International Telecommunication Union and the World Bank have a great deal of expertise in these markets, and they stand ready to provide information on their technical and regulatory frameworks as well as on specific local needs.

Various initiatives are already well under way. MIT Media Lab founder Nicholas Negroponte has developed the $175 “XO” laptop for Third World children. Technology leaders such as Intel and Cisco Systems have invested billions to connect schools, bring low-cost financing of personal computers and establish research and development facilities in emerging countries. The Geneva-based Digital Solidarity Fund channels voluntary corporate financing to specific and urgent needs. The U.N. Global Alliance for ICT and Development, chaired by Intel’s Craig Barrett, works to meld the efforts of all those seeking to spread technology globally.

But to really boost the spread of IT, a more systematic approach is needed. This is no longer an area for nonprofit activity or for showcasing corporate responsibility. Some leading companies have woken up to the business opportunities that emerging economies represent. The mobile communications industry, which now has more than 800 million users in developing countries, has, after all, developed very healthy and profitable markets in precisely these markets.

At the Silicon Valley meeting, many participants argued that investing in new business models and technology solutions tailored for developing countries would help meet people’s needs and create new markets and business opportunities. Public-private partnership “are what the world needs and what governments want for their citizens,” Barrett said at the meeting. “It’s the right thing to do and it makes business sense.”

“Closing the digital divide should not be seen as charity, but as a sound business practice,” added Hamadoun Touré, the head of the International Telecommunication Union.

And government interest is keen. Many developing countries have adopted e-strategies that call for more access and use. A World Bank review of 40 e-strategies created by developing countries found that the vast majority—more than 85 percent—seek to expand IT use in governments and schools, to develop telecommunications infrastructure and to provide an adequate legal and regulatory framework.

Between 2000 and 2004, the fastest growth of Internet users—370 percent—occurred in North Africa and the Middle East. “There is incredible enthusiasm among the poorest countries to be part of the information society,” according to International Telecommunication Union expert Cosmas Zavazava. “This, coupled with the emergence of new, low cost and affordable technologies, especially wireless, will hasten the pace towards universal access.”

Universal access is the goal of World Information Society Day, whose theme this year is “Connecting the Young.” Young people are perhaps the most prolific and knowledgeable users of IT. All over the world, young men and women are ready to join the information revolution, if they are only offered a chance. And if they get their chance, those farsighted businesses that offer it will also benefit.

Kiyotaka Akasaka is U.N. Under-Secretary-General for Communications and Public Information.