How can developing countries make the most of the digital revolution?

The World Bank
Nagy K. Hanna



Digital technologies have been transforming the global economy. Yet many countries have yet to experience the full developmental benefits of digital technologies, such as inclusive and sustainable growth, improved governance, and responsive service delivery. Given the magnitude of change in competitive advantage that digital technologies can confer on adopters, the risks of slow or poor adoption of these innovations can be dire for industries, governments, individuals, and nations. So, how can policy makers successfully harness the digital revolution for development? This is the motivation behind my new publication: Mastering Digital Transformation (Emerald, 2016).

From my long experience in development assistance, I saw how information poverty in its many forms has led to policy planning and management without facts, disconnected enterprises, inefficient markets, poor service delivery, disempowerment, corruption, and more. The ongoing ICT revolution has been long ignored in development thinking and practice. Development practitioners and ICT specialists remain disconnected. I studied the experiences of countries pursuing digital transformation, and captured key lessons and takeaways in several books.

Digital transformation is not a technological fix, a blueprint plan, a one-off event, or a one-size-fits-all strategy. Rather, it is a social learning process, sustained over time, involving diverse stakeholders. Its ultimate objective is to harness the global digital revolution to meet a country’s specific socio-economic priorities. This process is a marathon, not a sprint. It is driven by vision, leadership, innovation, learning, and partnerships among government, business, and civil society.

The three main challenges to digital transformation

Three key challenges bedevil the design and implementation of digital transformation programs.

1. Digital technologies are highly interdependent and constitute a dynamic ecosystem which includes: communication infrastructure, digital platforms, digital economy skills, local ICT services and content industries, service transformation for all sectors, cyber policies, and ICT sector leadership and regulatory institutions. Maximizing digital dividends requires nurturing this digital ecosystem and tapping into its synergies at the national, local, and sector levels.
2. Leadership and institutional capabilities the ICT sector to plan and implement digital transformation strategies. These capabilities are increasingly important to engender shared vision, mobilize long-term commitment, integrate ICT opportunities and investments into development strategies, align complementary policies concerning competition and skills, and pursue partnerships with civil society and the private sector.
3. Digital transformation demands substantial investment in organizational capabilities, process innovation, and institutional learning. Best practice suggests that every dollar invested in ICT should be matched with a $4 or $5 investment in process improvement, training, change management, etc.

These challenges have persisted in countries where complementary assets and coordinating institutions are weak or missing.

How can countries master the digital transformation process?

Fortunately, effective practices are emerging in forerunner countries for transforming government, services, communities, cities, and businesses. The most effective approaches include: taking a holistic view of ICT and complementary investments; mobilizing demand for good governance and better services, and promoting public-private partnerships, among others. Promoting an inclusive information society would emphasize digital literacy, local content, social intermediaries, and grassroots innovation. Developing smart cities calls for adopting an ecosystem approach that nurtures shared visons, engages all stakeholders, and builds platforms and communities for innovation. Policy measures for business transformation would include affordable access to Internet and digital technologies; mobile finance; digitally-enabled government to business transactions; platforms to facilitate trade and e-commerce; and Internet-based training and business services.

Mastering the digital transformation process demands solid managerial and technical skills, leadership institutions, policies and regulations for a digital economy, and a competitive communication infrastructure and ICT industry. It calls for strategies to strengthen educational institutions and reposition them for a digital economy. It calls on stakeholders to define clear roles for government, business, and development partners, and to build competent institutions to lead the transformation process. It addresses key policy issues such as privacy and cyber security. It promotes a local ICT services industry that supports a vibrant transformation ecosystem.

A roadmap for change

I suggest countries start of by addressing the following questions to chart their transformation journey:

• How can a country commit to and sustain a holistic transformation strategy?
• What measures can help integrate digital transformation into a development strategy?
• What complementary policies and institutions will be needed, across the entire economy and in each sector?
• How should policy makers engage stakeholders, build coalitions, and pursue partnerships to implement digital transformation?
• What measures are necessary to scale up and secure digital inclusion?
• What balance should be struck between top-down and bottom-up initiatives?
• How can policy makers support innovation, experimentation, learning, monitoring, and evaluation?

Developing countries have the opportunity to learn from the experience of frontrunner countries while designing policies that meet their own needs and fit the local context. Newcomers like Korea and Singapore, for instance, have been able to leapfrog, learned fast, and have now become innovation hubs in their own right.

Mastering the digital transformation process is no easy feat, but it is likely to be the defining core competency of the 21st century!