Old Music, New Rhythm: Digital technologies and the development landscape in emerging markets
Digital technologies have impacted every sphere of human lives. Although the pace of adaptation and the changes vary across geographic regions, the trend is opening new revenue sources and transforming the development landscape for emerging markets.
The emerging markets are home to 85 percent of the global population... The traditional value chain as we know it thrived on hyper-personalized experience and a brick-and-mortar structure of operations. But the increasing adaptation of technology across different industries has seen more significant and small-and-medium-sized businesses embrace innovative business models for profitability and sustainability.
These changes can also be viewed through the Sustainable Development Goals (SDGs) lens, the development of human capital, or widespread impact across sectors.
For example, the power sector in some countries is moving from centralized to a more distributed system such as mini-grids, thereby broadening access to clean energy for all. The IFC is a key enabler or driver of these changes in the sector. An IFC-backed liquefied natural gas to power (LNG- to-power) project will displace heavy fuel oil and diesel-fired generation in Brazil. In April 2019, IFC invested $288m in the country’s thermal power project. The project, which is the largest LNG-to-power complex in Latin America, will include:
- A 1.3-gigawatt combined-cycle natural gas turbine.
- An LNG import terminal.
- A new transmission line.
- The expansion of an existing substation.
In the transport sector, mobility has become easier with the proliferation of internet-enabled transport services. Not only can one make travel plans months in advance by purchasing their tickets online, but technology has also made it easy to hail a cab while in the comfort of one’s home. Uber, a popular ride-hailing service with operations in about 15 African countries, was reported to have created job opportunities for over 60,000 drivers registered on their app.
Online shopping like Amazon and logistics/delivery companies is fast taking root in emerging markets, creating job opportunities for entrepreneurs and small businesses who would typically not have what it takes to compete with larger FCMG or logistics companies.
Technology is also helping emerging markets diversify and expand their manufacturing sector. For example, an IFC €5 million loan to Societe Industrielle Agro-Alimentaire (SIAGRO) will enable the Senegal-based beverage company to expand its operations in West Africa.
M-Pesa, a mobile phone-based money transfer service in Kenya, blazed the trail for other disruptive changes that technology brought to financial institutions. The growth of FinTech companies in emerging markets has fostered financial inclusion, especially among the poor. In 2016 IFC invested in a Brazilian FinTech company that uses Big Data analysis to offer financial products to new users. Cryptocurrency and blockchain are becoming popular alternatives for addressing some of the gaps in the industry.
Indeed, technology holds enormous potential for emerging markets. But there is a need to harness this revolution to connect directly to individuals, businesses, and citizens, according to an IFC report, which examined disruptive technologies their link to gender, climate change, microfinance, housing, logistics, and personal identification systems. “Such disruptions will be critical to achieving the Sustainable Development Goals, many of which can be advanced and accelerated — particularly in emerging markets — through technological innovations and the alternative paths to development that they offer,” the report stated.
As digital technologies continue to transform businesses and the development landscape, and people’s lives, it is imperative to make digital infrastructure more accessible for sustainability. Affordable mobile phones, high-speed internet, and other digital services can further enhance development and create new opportunities.
What is your take?
Sources:
- IFC Report (re-inventing business through disruptive technologies): https://www.ifc.org/wps/wcm/connect/8c67719a-2816-4694-9187-7de2ef5075bc/Reinventing-business-through-Disruptive-Tech-v1.pdf?MOD=AJPERES
- Energize Weekly https://www.euci.com/brazilian-lng-to-power-project-gets-288-million-loan-from-international-finance-corp/
- PWC Emerging markets driving payments https://www.pwc.com/gx/en/industries/financial-services/publications/emerging-markets-driving-payments.html
