As the Covid-19 crisis accelerates a global trend towards digitisation, many businesses have become wholly reliant on technology in order to operate. Countries ill-equipped for this sudden and rapid transition risk falling further behind in a changing commercial landscape where tech preparedness may become a defining factor for future international development.
The NS Media Group (Computer Business Review’s parent company) Tech Preparedness Index 2020, which examines the top 100 global foreign direct investment locations, ranked Japan, South Korea, Germany, Singapore and Sweden as the most technologically advanced countries, while Zambia, Nigeria, Mozambique, Ethiopia and Cambodia ranked the lowest.
A favourable environment
This deep geographic divide in the robustness of technology infrastructures was addressed in early April at an emergency virtual session of the UN’s broadband commission, convened in response to the pandemic.
The commission’s co-chair Houlin Zhao, who is also secretary-general of UN technology agency the International Telecommunications Union (ITU), urged the governments of developing countries to ensure favourable environments for technology investment, while acknowledging that industry may have an even bigger part to play.
“Infrastructure in the physical world has always enjoyed public financial support, whereas 90% of support for the cyber world comes from the private sector,” says Zhao. “Encouragingly, ongoing investment in digital technologies looks to be steady. From Alibaba to Shell to Microsoft, multinationals are investing in technologies to cope with Covid-19 and prepare for the post-pandemic world – a world that will rely even more on technology.”
According to the ITU, while just over half (53.6%) of the world’s population has access to broadband there are still 3.6 billion people offline, the majority of whom live in the world’s least developed countries.
Digital diplomacy specialist Daniel Akinmade Emejulu attended the ITU virtual symposium and says the multi-stakeholder virtual discussions saw big tech companies announce efforts to ramp-up local partnerships, highlighting the need for collective action to bridge digital infrastructure gaps.
“Policymakers are increasingly affirming that bridging the digital divide will also remove structural barriers to opportunity, equality and information – which are significantly amplified during lockdowns,” says Akinmade Emejulu.
This is borne out by a 2014 World Economic Forum study, which found that each additional 10% of internet penetration can lead to a 1.2% increase in per capita GDP growth in emerging economies.
Investment at risk
Ongoing information and communications technology (ICT) investment flows to these less developed countries may now be at risk, according to GlobalData senior analyst Emma Mohr-McClune.
“There are certainly questions around less developed locations and how fitting they now are for scenarios such as entire call centres needing to start working from home,” she says. “The fact that connectivity is basically welfare for your workers makes it a growing concern.”
For investors in a post-Covid-19 landscape there are lessons to be learned going forward, adds Mohr-McClune.
“We have learned that it is not very clever to have all your supplies coming from so far away,” she says. “There may be a move towards nationally provisioning core suppliers. Why are we dependent of Huawei for 5G, for example? Questions are arising that might sway investor sentiment less in the direction of opportunistic, low-cost opportunities towards strategically important national opportunities.”
However, while Mohr-McClune acknowledges the global digital divide, she contends that the divide often runs along city versus rural lines, which can sometimes render national statistics for broadband coverage meaningless.
“A multi-national expansion opportunity to a country such as Mozambique, for example, always brings with it a very complicated set of questions, and though the broadband element is probably going to be higher on the list after Covid-19, it is still only one of many considerations,” she says.
Beyond the statistics
When a company like Apple is looking to make an expansion, it will examine the investment at city level, whether it be Cork or Cairo or Harare, explains Mohr-McClune.
“You can draw conclusions from national averages, but some developing country capital cities have a broadband set-up which equals those of western European markets,” she says. “Though there is probably a bigger gap between remote areas in less developed countries and their capitals than there is a rural/city divide in more developed countries.”
Mohr-McClure cautions investors to look beyond country statistics.
“You can prove anything with statistics,” she says. “There is a massive digital divide, for instance, when comparing a country such as Mozambique with the UK, but when you are looking for investment opportunities within Mozambique’s key cities the infrastructure may be sufficient.”
NS Media Group ranked Mozambique 86th for tech readiness, compared with the UK’s more favourable 17th place. Though the rankings demonstrate a continental divide in tech preparedness, the problem is not limited to less developed countries: global tech giant Cisco’s UK and Ireland chief executive David Meads warns of a widening digital divide within the UK. According to Cisco’s Annual Internet Report, one in ten households in the UK have no access to internet connectivity.
“Businesses have a vital role to play in connecting the unconnected – whether through the roll-out of technologies such as 5G that will further democratise internet access, or through funding third-sector initiatives within local communities,” says Meads, citing initiatives such as 5G RuralFirst, a UK Government-funded project for which Cisco helped build the business case for rural connectivity in Orkney, Shropshire and Somerset, as well as Cisco’s collaboration on smart city initiatives with local authorities in Hull, Manchester and Newcastle.
Going forward, there is no doubt an increased reliance on home working and cloud infrastructure capacity will prompt investors to scrutinise locations more closely based on their tech preparedness. Countries that ranked highly in the Tech Preparedness Index, such as Poland and New Zealand, are cases in point and have seen investment flows increase during the pandemic.
Microsoft has announced a $1bn investment in a new Polish data centre in an agreement with local cloud provider Chmura Krajowa. The announcement on 5 May also included Microsoft’s plan to invest in its first data centre in New Zealand. Both countries have proved technologically resilient throughout the pandemic and highlight just how important a location’s technology environment may prove in attracting future inward investment from the ICT sector.
For more of the index’s analysis, click here: