Technology leapfrogging: a pathway to sustainable development
Author: Faith Woon | Initiatives Consultant
Can you imagine a world without smartphones? Now considered an indispensable part of modern life, it’s hard to believe that a mere decade ago, these devices were associated with luxury and status, notably absent from most of the developing world*. In fact, back then, the vast majority of people in developing countries remained virtually untouched by the digital revolution taking hold over Western societies, lacking access to even a landline phone, much less any sort of connection to the Internet.
Data: International Telecommunications Union
Fast forward to the present, and more people have access to mobile phones than to electricity, running water and healthcare services, according to a study conducted by the World Bank. Falling costs and increased accessibility have led to widespread adoption, allowing entire nations to bypass costly investments in fixed-line infrastructure and transition directly to mobile broadband networks, empowering millions of individuals in the process - a phenomenon known as “technology leapfrogging”.
*Although the term ‘developing’ country does not have a universally accepted definition, this classification will be conveniently used throughout the article to refer to nations with large pockets of poverty, based on GDP per capita and other human development indicators.
Leapfrogging explained
Leapfrogging, in the simplest sense, refers to the ability of developing countries to make a “quick jump in economic development”. This is done by taking stock of existing technologies that have already been tried, tested and refined elsewhere in the world, and choosing to implement the most up-to-date version, thus skipping over successive generations of the technology in a cost-effective manner.
In advanced economies, technological advancement is typically an incremental, iterative process, whereby current technologies are gradually replaced by improved versions. For example, in the case of the telecommunications industry, we started off with landline connections, then transitioned to basic cell phones, before finally arriving at the smartphones we are familiar with today. In comparison, there exists a far greater potential for developing countries to leapfrog over these intermediate phases and move straight to the latter, bridging any infrastructure gaps that may exist due to geographic inaccessibility, underinvestment or other government inefficiencies.
The Late Mover Advantage
As it turns out, a lack of pre-existing infrastructure is actually advantageous in the context of leapfrogging. Unencumbered by legacy systems, countries that previously lagged behind in economic development can piggyback off technologies developed by advanced economies at a fraction of the initial cost, whilst avoiding the risks associated with experimentation, R&D and slow initial uptake. In this way, adoption can be fast-tracked; it took twenty-five years for mobile phones to be popularised in the Western world, while Kenya achieved this feat in fifteen, and Myanmar in just three.
In a few short years, Myanmar went from being the world’s third-least connected country (2% mobile penetration) to being dubbed the ‘land of $20 smartphones’. Liberalisation of the telecommunications sector, combined with the inflow of cheap imported handsets from China, propelled the country past 2G and directly into the 3G smartphone era. From 2011 to 2017, Myanmar saw an astonishing 97% yearly growth in mobile subscriptions. Furthermore, the share of smartphone users skyrocketed from virtually zero to around 80%, above countries like Germany (78.8%) and the United States (77%).
Such rapid diffusion inevitably creates a ‘mobile-first’ mindset among consumers who previously lacked access to anything remotely similar to this new technology. There is far less resistance to change, and very little behavioural inertia that often manifests in areas where the previous technological paradigm still prevails. This has enabled countries like Kenya to lead the way with innovations such as M-Pesa, a revolutionary mobile money service that is now used by 96% of households and through which 44% of the country’s GDP flows. Driven by Kenya’s pioneering M-Pesa service, mobile money uptake has exploded in Sub-Saharan Africa, with more than half of all mobile money services in the world now operating in the region, according to GSMA Intelligence. Developed nations, on the other hand, have been far slower to follow, due to the prevalence of traditional payment methods such as credit cards and bank transfers.
As mobile services continue to evolve in developing countries, unprecedented opportunities for economic development and empowerment arise, some of which will be explored in the following section.
Mobile Phones: A Tool For Sustainable Development
“Imagine the difference an accurate weather report could make for a farmer planting crops, or the power of an encyclopedia for a child without textbooks. Now, imagine what they could contribute when the world can hear their voices. The more we connect, the better it gets.”
Mobile phones are more than just a communication device. For many, they serve as a lifeline, a gateway to the online world, a platform that democratises access to a multitude of SMS and Internet-enabled services in a diverse range of sectors, such as financial services, e-commerce, healthcare and education. As a cornerstone of contemporary poverty alleviation strategies, mobile technologies are increasingly being harnessed to tackle major social, economic and environmental challenges at scale, transforming the lives of millions across the globe.
Digital Financial Services
In the financial services sector, mobile phones are catalysing breakthroughs in banking and payment solutions. Throughout the developing world, they are helping financial institutions overcome some of the barriers traditionally faced in reaching and serving the poor.
Conventional banking practices often exclude low-income households in rural or marginalised areas, due to the high overhead costs and risks associated with in-person cash disbursements and the lack of credit data and collateral respectively. The demand for small-scale, unsecured credit is therefore typically met by predatory money lenders who charge exorbitant interest rates, forcing families into inescapable debt cycles.
M-Pesa’s mobile money service is used at a open air market in Nairobi, Kenya
Source: Buzzfeed
However, the emergence of new mobile-based technologies has greatly levelled the playing field. The 2018 World Economic and Social Survey found that these have the potential to reduce transaction costs by 90%, streamline operating procedures and lower risk by leveraging smartphone metadata to assess the creditworthiness of borrowers, driving radical improvements in financial inclusion. Consumers in Myanmar and across South-East Asia can now access cheap, flexible credit through mobile lending apps that incorporate e-KYC (Electric Know Your Customer) processes and in-built credit scoring algorithms. For 28 million individuals living on less than $10 a day, affordable micro-insurance is just a click of a button away. Likewise, many farmers in emerging markets are currently able to access financial services and market data via the blockchain. And with a single text message, M-Pesa’s 42 million users can easily send or receive funds, wages and remittances.
Despite substantial progress in the field though, 1.7 billion adults still remain unbanked. Globally, there exists an immense opportunity to leapfrog physical bank branches and costly, traditional wire transfers in favour of more innovative models that harness the power of mobile phones and ultimately improve the livelihoods of the underserved.
Mobile E-Commerce
A Chinese farmer launches a livestream to connect with urban consumers
Source: Inkl.com
With millions now accessing the Internet exclusively through their smartphones, mobile e-commerce has taken off in many emerging economies. In China, for example, e-commerce expansion into lower-tier provinces has been a central pillar of the government’s poverty alleviation and rural revitalisation strategy. Large corporations like Alibaba and JD.com are working alongside the public sector to not only increase the flow of cheap consumer goods to poverty-stricken counties, but also connect micro-entrepreneurs to the digital marketplace, with major investments in last-mile logistics networks, drone licences and e-commerce training programs, creating over 30 million new jobs in the process.
This, in conjunction with the rise of ‘Village Live-Streaming’ via Taobao, Kuaishou and Douyin (the Chinese version of TikTok) has allowed rural smallholder farmers to tap into much larger markets and bring in millions of dollars of revenue to some of China’s most impoverished villages.
m-Health
Healthcare is another sector that is in dire need of innovative leapfrog solutions. Implementing the high-cost, infrastructure-heavy and physician-intensive healthcare model traditionally used by advanced economies is simply not feasible for most emerging nations; for instance, BCG estimates that it would take countries like Nigeria around 300 years to replicate such a system, given their available resources.
Instead, governments should seek to promote more sustainable and cost-effective healthcare models that incorporate mobile-based service delivery methods. Notable examples include SMS for life, which has reinvented medical supply chains and disease surveillance across Africa, and Babyl, a telehealth app providing universal coverage in Rwanda. These services are complemented by an extensive fleet of drones, delivering blood and other essential medical supplies to Rwanda’s most remote villages, made possible by the country’s far-reaching mobile cellular networks and accommodating government regulations.
A medic in Rwanda collects a blood parcel, delivered via drone
Source: Spiria.com
m-Education
Mobile phones are increasingly being utilised to facilitate remote learning and promote education outcomes for all. Today, even the most basic of handsets can be used to access a vast repository of texts, creating immense educational opportunities for disadvantaged students in areas where books and learning resources are otherwise scarce. A UNESCO survey of over 4,000 people across Ethiopia, Ghana, India, Kenya, Nigeria, Pakistan and Zimbabwe found that exposure to reading via mobile phones can have transformative impacts on individuals, families and their broader communities, boosting literacy skills and female empowerment greatly.
PAYG Solar
A rural village in Mali transitions to solar power
Source: Irena.org
The applications of mobile technologies extend even to the energy sector, providing an impetus for new business models that cater to the needs of remote, low-income communities who are currently off-the-grid. With M-Kopa’s pay-as-you-go (PAYG) scheme, countless families across Africa, who previously lacked access to electricity of any sort, are now leapfrogging directly to energy efficient solar products, bringing about profound environmental and socioeconomic benefits. For the first time, children can continue studying past nightfall, without the need to rely on hazardous kerosene lamps. Moreover, women no longer have to trek miles to fetch firewood or to merely charge their mobile phones.
To date, over 245 million lives have been positively impacted by off-grid solar lighting products. M-Kopa alone has connected 750,000 African homes and businesses to affordable solar power. Payments are broken down into cheap, manageable installments, which can be made via mobile phones, averaging US$0.30 - US$2.00 per day, similar to the amount families would spend on kerosene, batteries and candles, minus the environmental, health and safety hazards.
In a broader sense, this constitutes a major step towards sustainable development. By increasing the viability of renewable energies, developing countries have the opportunity to leapfrog the carbon-heavy and resource-intensive development trajectory previously followed by most industrialised nations. As such, pursuing the twin goals of economic development and climate mitigation conjointly has never been more achievable.
The Limits of Leapfrogging
While there are plenty of reasons to feel optimistic, we should not be fooled into believing that technology alone can solve all of the world’s problems. Rather, the introduction and diffusion of new technologies should form part of a broader development strategy that combines both top-down and bottom-up approaches through public-private sector cooperation, and does not neglect the fundamental importance of good governance, enabling regulations and gender equality - among other cultural and institutional factors - in bringing about inclusive growth.
Here are some additional resources for those who are interested in learning more:
The 2018 World Economic and Social Survey: Frontier Technologies for Sustainable Development
Read about some of the ways that frontier technologies are changing our approach to sustainable development in this flagship report by the United Nations Department of Economic and Social Affairs. While harnessing new technologies is key to achieving the 2030 Sustainable Development Goals, this survey finds that in the absence of appropriate policies, they can widen inequalities and lead to social dislocations.
AliResearch Report | Inclusive Growth and E-commerce: China’s Experience
This is an insightful report by Alibaba’s research arm that outlines the efforts undertaken by the Chinese government and private sector in using e-commerce to accelerate economic development across rural China.