The future of the economy is digital

The transition towards a digital economy and the increased use of new technologies are becoming increasingly important on a global level. From climate change to a sustainable economy and the fight against the Covid-19 pandemic, there are many challenges that, thanks to digitalisation, can be met and overcome. The transition process has accelerated dramatically due to new social distancing habits resulting from this pandemic that has profoundly changed not only the service sector, with increased use of digital platforms, but also production and retail sectors. According to the World Economic Forum, roughly 70 percent of the new value created in the economy over the next decade will be based on digitally enabled platform business models. However, 47 percent of the global population does not have access to the Internet.

Developing countries provide the most interesting example, as they are reported in areas that are virtually devoid of state-of-the art infrastructures. Here, the introduction of digital services has allowed governments to generate significant savings while successfully improving the transparency and efficiency of bureaucratic processes that often highlight the backwardness of state and economic systems. Rwanda, for example, has used digital technology to increase its annual revenue by more that 6 percent, while South Africa has reduced its tax collection costs by 22 percent. By reducing the time needed to open businesses through e-commerce platforms, countries such as Mauritania, Rwanda and Senegal have seen an increase in new small and medium enterprises. India has also saved an incredible 99 billion dollars thanks to the Aadhaar digital identity system, which reduces service delivery costs by extending them to a larger portion of the vulnerable population. In Malawi, “onebillion’s onecourse”, a software application that teaches reading, writing and maths, is helping young students improve their literacy and science skills, while reducing the gender gap in reading and maths skills. Babyl, a mobile app developed in Rwanda, helps people avoid long journeys to see a doctor by indicating appropriate solutions based on the symptoms described. Babyl reaches 30 percent of the adult population and hosts an average of 2,000 visits a day. In Kenya, thanks to digital platforms for online payment, the government has increased access to electricity from 40 to 70 percent of the population over recent years, largely thanks to the use of small, off-grid solar power plants.

The benefits of digitalisation are countless and there for all to see, even in case of emergency during a pandemic. Since the first cases of coronavirus were recorded last March, many countries have equipped themselves with digital technology to contrast the pandemic, as shown by the mobile apps used to support contact-tracing processes. In Europe, for instance, the German app Corona-Warn transmitted 1.2 million test results from laboratories to users during the first 100 days of use. In India, the Aarogya Setu app has been downloaded by 150 million users and has helped public health departments predict areas at risk of clusters and expand targeted tests. Many African start-ups have developed similar solutions for local needs. FabLab, an innovation hub in Kenya, has developed an app called Msafari 5, which monitors people using public transport. In June, Morocco launched a tracing application called Wiqaytna6, which uses GPS and Bluetooth technology.

Digitalisation is also at the centre of European Union policies and will be crucial for the success of the European Green Deal. According to the European Commission, a successful transition towards climate neutrality will depend on Europe’s ability to develop innovation by leveraging on digital technology. Among the technologies under development is “blockchain”, which is used to shed light on the complex combination of supply chains, financial markets and energy services. One example is the German Federal Energy Agency (DENA), which has announced it will use the non-profit blockchain Energy Web to build a digital register for distributed energy resources (DER) across Germany, including solar panels, batteries or thermostats. Internet of Things devices are also paving the way for a circular economy for many European industries and SMEs. Thanks to connected systems and sensors, it is possible to obtain valuable data on products, production processes and waste, which may improve entire value chains.