Value creation and capture in the digital economy: Implications for developing countries

Event report

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Mr Torbjorn Fredriksson (Chief, ICT Policy Section, UNCTAD) started by introducing the findings of the Digital Economy Report 2019. The report highlights how the digital economy has been changing the global economy and the implications that has on developing countries. Fredriksson mentioned two key drivers of disruptions on global trade: data and platforms. The amount of data being produced and the distance travelled by data have skyrocketed over the last few decades. However, the market capitalisation of digital platforms is disproportionately concentrated in a few countries, but there is a positive implication for developing countries as well. Fredriksson emphasised that entrepreneurs in the global south are taking advantage of these digital platforms, assuming that there is infrastructure in place and access to technology.

Mr Stefan Weyler (Teamleader eCommerce, Deutsche Gesellschaft für Internationale Zusammenarbeit) introduced several initiatives that Germany is supporting to help developing countries be part of value creation and capturing in the digital economy. One of the efforts is the IT initiative to support local start-up companies in African countries such as Kenya, Ghana, and Nigeria. The agency, he elaborated, partners with financial institutions to help entrepreneurs make a difference in their own countries. Moreover, the New Africa-Europe Digital Economy Partnership was established to provide a platform for actors from public and private sectors, civil society, donors, and international organisations to further promote the cross-border integration and deliver benefits to all citizens. Weyler stated that investment and continued discussion are needed in order to come up with a solution for disruptions caused by the digital economy.

Mr Jonathan Donner (Senior Director, Caribou Digital) explained that social media platforms used in the digital economy were not originally built for commerce purposes, which hinders regulatory agencies to do their part in the way they regulate labour platforms and market-place platforms. He highlighted the fact that companies are not receiving as much scrutiny as their platforms are. However, Donner also introduced positive cases of the digital economy empowering entrepreneurs in developing nations. For instance, an African woman who had taught herself to bake by watching Youtube videos of a French baker, has opened her own business. He concluded that fuzziness and complexity around data and technology need to be deconstructed to address the issue of inequality comprehensively.

Mr Parminder Jeet Singh (Executive Director, IT for Change) pointed out that in the fast-changing environment of the digital economy, the point to focus on is understanding what role data plays in the digital economy. Data, he emphasised, creates intelligence, and intelligence creates value. He raised the example of using Uber in Jakarta. Uber services allowed local residents to transport themselves conveniently and reasonably by having them provide their data to the company. Singh acknowledged that this business model – where services are made available at the expense of giving up personal data – drives the digital economy. He noted that developing countries should claim ownership of their data, and that they should be fairly compensated.

Ms Monica Kerretts-Makau (Academic Director for Africa, Thunderbird School of Global Management, Africa Hub) said that it is vital for developing countries to start by overcoming their fear of technology in order to fully benefit from the digital economy. Additionally, she mentioned that readiness and infrastructure are still inadequate to harness digitalisation and that the disparity between urban and rural areas needs to be reduced. Despite the challenges involved, she said that technology is changing lives in Africa. As an example she mentioned M-pesa, a mobile phone-based money transfer and financing service that offers people a different option for day-to-day financial transactions and banking. Technology such as M-pesa, she elaborated, raises the inevitable question of how to begin the engagement process with all the various stakeholders.

In his concluding remarks, Frederikson reiterated that the number of issues needed to be discussed will increase as new technology will become more prevalent to our everyday lives, thus dialogue with all stakeholders of the digital economy has a vital role in resolving the challenges.