John Obaro
There are parts of Nigeria so disconnected from the reality that we have come to know and live, that one could be forgiven for believing those places existed in a different century. In the Atlantika Hills of Adamawa State, it is said that the Koma people still rub sticks together to generate fire for cooking.
Otu Abagi in Bayelsa State has had no power for the last five years. Unsurprisingly, neither of these places has internet or indeed, mobile connectivity.
Whilst the technology hubs of Lagos, Abuja, Kaduna and Port Harcourt thrive and expand, many parts of Nigeria remain vulnerable to the scarcity and poverty that often afflict those excluded from the inventions of the 21st Century. In a country where extreme poverty rises by six people every minute, and whose economy is set to double within a few decades, should we not be worried about the dangers posed by an explosion in the numbers of excluded individuals?
Nigeria has the largest mobile market in sub-Saharan Africa, yet our minimal fixed broadband infrastructure in rural areas – where the majority of the country lives – enhances the marginalisation of these Nigerians. Furthermore, beyond a lack of access to basic amenities like water, electricity, proper healthcare and basic financial services, our marginalized citizens are often faced with additional barriers: they are cut off Nigeria’s formal economy, and worse still, her burgeoning digital economy.
While the digital economy is forecast to overtake the ‘real economy’ in its contributions to GDP, if nothing is done to correct our trajectory, much of that growth will be concentrated around a small number of individuals and enterprises. Inevitably, the outcome of such skewed growth would be rising inequality. There is no path to real growth without plugging the gap for underserved individuals and small enterprises which currently make up the majority of our country.
At the recently concluded e-Nigeria Conference on the digital economy, President Muhammadu Buhari rightly noted that a critical mass of digitally literate Nigerians and the empowerment of digital entrepreneurs will be a core enabler of the digital economy.
However, when we talk about leveraging our digital potential, we often speak in imprecise, grandiose terms: we point out that there is room for so much more growth. However, what is sometimes left unsaid is what it means for our progress as a nation; that there remains a greater degree of trapped economic potential within our excluded communities. One main reason for this is that the absence of connectivity infrastructure continues to cripple mobile (and mobile money) penetration which, coupled with the absence of financial institutions, keeps swathes of our nation excluded from formal financial services – a critical pillar for creating enhanced economic outcomes for these individuals.
That is why we must invest in building ‘digital bridges’ to connect our marginalised communities and businesses to those most basic of technologies needed to improve their socio-economic outcomes. A comprehensive approach is required to build these bridges however: there must be concerted efforts to improve digital literacy, ICT infrastructure and access to digital financial services.
Digital Bridges: the Benefits of Connectivity
The potentials of a holistic digital economy is immense, and for African countries, ICT infrastructure is the most inclusive infrastructure. This means that our approach to enabling the growth of our digital economy must ensure more inclusive access to the digital tools and financial services needed to create prosperity.
Digital platforms are one of the most significant catalysts of growth: changing the manner and speed with which individuals and businesses interact, resulting in significant cost savings and increasing customer base, cross-border trade, efficiency as well as collaboration. For instance, in remote markets, where cash-based transactions are the norm and are often unsafe, with a secure platform to receive payments from customers, deployed through existing trusted merchants within the community, create a savings history or even receive credit, (M)SMEs can – as a result – protect their finances, make solid future plans, create and establish records, track progress, and tap into their unleavened potential to spur national economic growth.
Imagine the economic gains that could be realised, just from allowing the excluded access to bigger markets, greater sources of information and finance? In Kenya, extreme poverty fell by a staggering 22%, when households headed by women adopted mobile money.
The dynamics of poverty often make it such that sudden or random changes in circumstances deplete spending power and keep people trapped in a cycle of low income. The evidence is clear: for Nigeria’s poorest – particularly our women, youth and internally displaced people, digital financial services and digital money bring empowerment – the ability to manage money quickly and securely, and to withstand unexpected health or economic shocks. In Kenya, studies have found that households who do not use M-PESA suffer a 7% drop in consumption when hit by a negative income shock while the consumption of households who use M-PESA is unaffected. For the marginalized, bridging the digital divide and conferring the benefits of inclusion also presents the opportunity to receive small remittances or gain access to affordable loans similar to the one powered by Remita, and can often be the difference between keeping kids in school or scaling a small enterprise – all of which have a knock-on effect in those marginalised communities. When faced with a negative shock, households with access to mobile money technology were found to be more likely to receive a remittance from a larger network of people. For governments in Niger, India and Brazil, digitalizing social transfer payments resulted in billions of dollars of cost savings. In South Africa, the use of digital cards for government safety net transfers increased the likelihood that women participated in the labour market by 92%!
Towards a National Digital Economy
In my role as SystemSpecs’ Chief Executive, I have garnered useful insights into the power of various digital remittance platforms. To be frank, individuals at the bottom of the pyramid were not our primary audience when we built Remita. However, we have since realised that it is essential for us as a company, and as a nation, to enable structures for the most underserved communities and enterprises.
Instituting these digital bridges – financial services or infrastructure – has the potential to bring our most excluded into our economy. More importantly however, these structures can embed the most economically marginalised citizens in an automated system: of savings, pensions, life or health insurance – products and services which are critical enablers of intergenerational prosperity.
To be clear, digital bridges are only a first step. But they are a necessary step.
There are very high stakes involved, as we begin to future-proof for a Nigeria that will look very different in just a few years. It is commendable that this administration has developed a national digital strategy. There is every benefit in recognising the opportunities inherent within our nascent digital economy, as well as the challenges we will need to overcome. However, Nigeria’s problem has never been a lack of policies or strategies. It behoves on this administration and all stakeholders to treat the digital economy as a matter of topmost national urgency, while remembering that we can only truly grow when we all grow together.
Read more at: https://www.vanguardngr.com/2020/01/digital-bridges-the-game-changer-for-nigerias-most-marginalised-citizens/
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