Internet connectivity and technology have not always been high-priority or big investment areas. In fact just five years ago, it used to be the job of just one man — Antonio García Zaballos. Nor was the IDB alone. Internet connectivity and technology infrastructure has made up only about 1 percent of multilateral development bank funding historically, Zaballos recalls.
Several recent initiatives have worked to raise the profile of the issues, and they are leading to more investment by development banks. Now, there's a team of six working on technology at the IDB and the bank’s President Luis Alberto Moreno has been increasingly active on the issue, sitting on the boards or participating in initiatives organized by the World Economic Forum and the United Nations.
The bank’s strategy, articulated in 2013, focuses on three main areas: helping countries develop broadband plans and indicators to track performance; improving and updating regulatory frameworks related to connectivity; and strengthening institutions and capacity-building.
“The bank is growing on this particular matter, not only because we realize the importance of that but also because the countries in Latin America are demanding more and more how the bank can support this,” Zaballos said. “This is really good news.”
To learn more about the IDB’s strategy to help reach the more than 360 million people in Latin America who lack access to the internet, Devex recently spoke to Zaballos, lead specialist on telecommunications in the IDB’s Competitiveness and Innovation Division. Here is an excerpt from that interview, edited for length and clarity.
Why has such a small percentage of development bank investment gone into connectivity and technology?
The reason for such a low percentage can be found in both sides. We have responsibility in the government side, in the sense that, for instance, there are many governments that still have to prioritize particular sectors, and they see ICT as an important sector, but they don’t see ICT as an urgent matter. So, for example, when they have to discuss their portfolio of issues that they are going to be prioritizing, and they have to decide whether water, whether health, whether education — and [they also need] to improve the quality of the telecom infrastructure — they always go for the first three rather than the telecom infrastructure, because still they are believing the private sector should be the one working on all that.
This is wrong, because what we have observed is that those isolated areas, those rural areas, still are not economically and financially attractive for the private sector, and the best proof is that they haven't gone there. If they had to deploy new infrastructure — 4G, 5G — they started first of all with the urban areas and then whenever possible they move on to the rural areas. The problem is that possibly never happens and at the end of the day what is happening is that the digital divide is increasing between the urban and the rural because the rural remains disconnected in a more connected society.
How has the bank been addressing that challenge?
We've worked with the ministers of finance on how to put this at the top of the agenda so that despite the fact that they prioritize health or education, they incorporate a component on ICT. Because ICT is going to bring sustainability to those projects. It is not anymore just about building a new school or building a hospital. It is about how to keep that hospital or that school that has been built connected with other schools nationally or internationally so those students can eventually have access.
Also there is some responsibility from the private sector. I understand from an economic standpoint all the telecom operators, all the industry, goes first of all to those areas where it makes sense to deploy, where it makes sense to provide those services. But at the same time, we have to start thinking about new business models that somehow could bring those people who are living in rural areas and unconnected areas to become part of the demand. When we are able to find those solutions, that is when somehow we will be able to increase the size of the cake and to increase the amount of the demand.
But also there is some responsibility in terms of the MDBs. Whenever we are designing operations, we should make sure that an ICT component is somehow incorporated as part of that. To do that, we have to look at the government, because it is not what the banks want; the banks are there to help what the government wants. That’s why we have to make sure that there is a symbiotic relationship between the minister of finance and the different MDBs so that the ICT is incorporated as part of that.
You mention the digital divide, particularly between urban and rural areas. How are you addressing this and why is it a focus for you?
Always I'm saying, repeating continuously, that we should establish some distinction between intervention in a rural area and intervention in an urban area. If we were just thinking about that — and taking into account which is the contribution, from a geographic standpoint, to the SDGs — I'm sure that the efficiency of interventions from government, the private sector and the MDBs will be much stronger. We will be able to target in those interventions the people who are really in need. If we provide a government solution to Panama City or Mexico City, those people are already connected. But we are not providing those to the people of rural areas of Panama or Mexico, which are still accounting for quite a lot of people. The geographic component should be incorporated in those discussions.
What challenges have you seen as you have ramped up investment in ICT? What are the particular barriers around getting buy-in from governments?
One is to update the regulatory framework. We are still facing very outdated regulatory frameworks. The other thing is to have some national broadband plans, but also have specific key performance indicators and a dashboard for every minister that is going to assume the responsibility of making that activity. So we have minister of education, minister of health, minister of finance, all the ministers are responsible for bringing technology into their own projects. To do that we will need to define some KPIs [Key Performance Indicators], so this is included as part of the business as usual of those ministries. The other is also to get connected those that remain unconnected. This is like the base of the pyramid. If we cannot do that, whatever we have discussed will just be for those that are connected, but never for those who are unconnected.
[And] local content. There are countries in Latin America, specifically in Central America, where language is a barrier. One thing we have to work on is to create that local content in the specific local language. The second thing is we have to do is train the people how to use it. Digital literacy is not just about using the application. Sometimes the people need to understand the basics of the computer, how to switch on the computer, what to do once the computer is on, which are the programs that they may use for doing particular things.
Again, if we just change our mindset thinking not about the urban areas where we can find fully digitally educated people and think about rural areas — think about the agriculture worker selling strawberries. We have to teach him how to use or how to install an application in a smartphone or in a tablet so he can check out the weather conditions or the price of the crop of strawberries in the particular community or region where he is living. So we really have to start from the basics.
And the other thing is that we have to somehow understand where the ICT may have the biggest impact on society. IDB has built an index that is analyzing from the demand side in a country-by-country basis, which are those sectors where the ICT may have the biggest impact.
The IDB is partnering with the technology company Microsoft and the coffee company Lavazza on a connectivity partnership in Colombia. How did that partnership come about and how does it reflect the way you work with the private sector?
The private sector is a fundamental player here. If we just think about doing whatever public investment without having the private sector involved, it’s going to fail. And similarly if we just think about the private sector, at some point we will realize that those unconnected areas will remain unconnected. That is why the public-private partnerships are going to be a key aspect in whatever intervention where the bank is going to be involved.
In the particular case of Colombia, we are cooperating with three institutions at the same time to improve the productivity of the coffee area of the post-conflict region in Colombia. From one side, Microsoft is providing TV white space technology to reach those unconnected areas of Colombia, this post-conflict area. From other side, we have Lavazza, which is bringing experience from a coffee maker. And then from the other [side, we have] an NGO having a track record about how to use technology just to improve the efficiency and productivity of sectors in that particular country. The three of them got together and invited the bank to get involved as an honest broker, so we can showcase what are the benefits of bringing technology in [for the] productivity of a particular sector, which is coffee. We can come up with specific results that we can promote and publish and showcase in other countries in the region.
The participation of the private sector is going to always be critical. We are always trying to be an honest broker, keeping in mind the technology neutrality aspect. We don’t prefer one technology to another. We are very keen on showing results no matter the technology.
Will the bank invest more in ICT and connectivity efforts going forward?
I think it's going to increase just because there are more governments involved. So little by little the demand is being created. And because of the transformation that is happening in the industry as a consequence of the participation of other players — such as Google and Facebook.
I hope this is not just a fashion, that we are doing this because the governments and the people really believe that this is something that we have to do. Connectivity and infrastructure, even though these are quite boring things for the ministers to discuss, is at the core of the discussion. We cannot try to run after the wind in the sense that we cannot just start building the applications without having the connectivity. Even though this is more appealing from a political standpoint, we are increasing the divide, because those people who remain unconnected will not be benefitting from that particular service that we are trying to provide for society. We still need to keep the debate about connectivity at the top — at the very top.
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