INFORMATION ECONOMY REPORT 2010

ICTs, Enterprises and Poverty Alleviation

Presentation in[VENUE], 14 October 2010

David SouterUNCTAD Consultant

EMBARGO EMBARGO The contents the Report must not be quoted or summarized in

the print, broadcast or electronic media before 14 October 2010 17:00 GMT.

Reducing poverty a major challenge

• 1.4 billion people live on less than $1.25 per day

• Most poor are in Asia• Sub-saharan Africa has

highest poverty rates• MDG1: Eradicate

extreme poverty and hunger

• 17/10: International Day for the Eradication of Poverty

Distribution of poverty, 2005People living on less than $1.25 (PPP) a day (millions)

Source: UNCTAD, based on data from PovcalNet of the World Bank.

Technology should be better leveraged in meeting the MDGs

New technology-based solutions that did not exist when the Goals were endorsed can and should be leveraged to allow for rapid scaling up. The most important of these technologies involve use of mobile telephones, broadband Internet, and other information and communications technologies. ”

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Source: Report of the Secretary-General, 12 February 2010, A/64/665.

Informational dimension of poverty

• Poor people often lack access to vital information, for example about:– market price information – income-earning opportunities– weather forecasts– what pesticides and fertilizers to use– health– disaster risk reduction

• Lack of information greater vulnerability

Focus of the IER 2010

• Trends in affordable access to different ICTs• Direct use of ICTs in enterprises

– Different industries– Subsistence-based and growth-oriented

enterprises– Value chain stages

• Direct involvement of the poor in the ICT producing sector– as workers or entrepreneurs– ICT manufacturing– ICT and IT-enabled services– Large/medium vs. small/micro enterprises

Mobile revolution is reaching the LDCs

bringing interactive connectivity for the first time

Source: ITU World Telecommunication/ICT Indicators database.

Penetration of selected ICTs in Least Developed Countries, 2000-2009(per 100 inhabitants)

Some unfinished business remains Half of rural population in LDCs lack access to mobile

signal

Source: ITU.

New applications and services emerging

• Voice-based services – helplines, agro-messages

• SMS services– Election monitoring (Ghana)– Earthquake relief (Haiti)

• Mobile money services – E.g. M-PESA, M-Paisa, Wizzit, GCash

• Mobile micro insurance (Kilimo Salama, Kenya)

• Rural health applications

More mobiles than bank accounts in LDCs

Source: Data from ITU and CGAP.

Mobile subscriptions and bank accounts per 100 inhabitants, selected LDCs, 2009

Affordability is keySouth Asian model attractive to low-income mobile users

Source: Idea, MTN, Orascom, Portugal Telecom and Zain operating reports.

Average revenue per mobile user, selected LDCs and India, 2009 (U.S. dollars)

Attractive features for low-income users:

- Long period for inactivity

- Per-second charging- Nationwide tariffs- Low denomination

recharge- “Friends and family”

Exploit the diversity of ICTs

• ICTs– Mobile telephony– Fixed telephony– Personal computers– Internet– Broadband– Radio

• Different features– Costs– Skills requirements– Power needs– Functionality– Access

Each technology has its pros and cons to meet different user needs

Opportunities for combined solutions

ICTs in enterprises can help the poor

Preliminary evidence across sectors and countries• Cases cited in report

– Dairy farmers in Bhutan– Grain traders in Niger– Fishermen in India and

Ghana– Women weavers in

Nigeria– M-Paisa in Afghanistan– Micro-enterprises in

Mumbai– Handicraft in Viet Nam– And more…

• Most important effects– Reduced information search

and transactions costs– Improved communications

within supply chains with benefits for individual enterprises and improvements in overall market efficiency

• Preference for mobiles– Affordable access– Easy to use– Two-way communication– Serve basic needs

The poor and the ICT producing sector

Some find new livelihoods in changing ICT landscape• Cases cited in report

– Sellers of airtime in Bangladesh, Ghana, Uganda

– SIM card sales in the Gambia

– Mobile entrepreneurs in Venezuela

– ICT micro-enterprises in urban slum in Mumbai

– ICT manufacturing in China

– Social outsourcing in India– And more…

• Key findings– Micro-enterprises have large

involvement of poor; exposed to risk and volatility

– ICT manufacturing concentrated; but significant effects in China

– High skill requirements a barrier in case of outsourcing, but second-order effects

– “Social outsourcing˝ new development tool?

– More attention needed to e-waste problem

Ecosystem for policies to reduce poverty

via ICTs and Enterprises

Source: UNCTAD and Emdon.

The Policy ChallengeHow to bring more benefits to the poor from ICTs in

enterprises

1. Expand mobile coverage in places with no mobile signal

2. Make services affordable – learn from South Asia3. Focus more on ICT adoption at low levels of economic

activity and sophistication, incl. for subsistence enterprises

4. Make interventions more demand-driven – needs of enterprises differ by size, industry, location and skills

5. Assign greater role to mobile solutions in policy interventions

6. Work in partnership with development partners, private sector and civil society

7. Feature ICTs in poverty reduction strategies and UN Development Assistance Frameworks (UNDAFs)

The policy challenge is to take full advantage of the significant improvements in connectivity in ways that bring benefits to the poor. This task is far from complete.

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Source: IER 2010 Preface

Thank you!

The Information Economy Report 2010

can be downloaded free of charge at www.unctad.org.