Two kinds of businesses are struggling with the COVID-19 pandemic. One, businesses that are connected to the internet but don’t know how to navigate the digital market; two, businesses that don’t have good internet connectivity. Speakers at the 15th annual Internet Governance Forum (IGF) 2020, backed by the United Nations (UN), deliberated on how the pandemic has affected the growth of digital economies and what governments need to do to promote inclusivity.
The pandemic has forced many small businesses and consumers to adopt the internet in their daily lives. This adoption has, in turn, given rise to digital payments, internet penetration and increased e-commerce activity. Speakers, however, noted that there were many on the other side of the digital divide who were at the risk of being left behind, who need government support and guidance.
Need for regulatory and government response
Not just small business, but many consumers are also entering the realm of a digital economy for the first time in their lives. Therefore, there is a need for dialogue between the government, consumers, entrepreneurs and others to craft policies going forward, speakers said during a discussion on building inclusive policies in the digital economy for emerging markets.
“We have a landscape that’s so scattered with overlapping of different agencies and ministries and we are looking into these issues. Co‑regulation is coming out very soon. We believe that everybody needs to be in constant dialogue on issues and also entrust other players than just the government to actually enforce certain regulations” — Rainer Heufers, Founder and Executive Director of the Center for Indonesian Policy Studies
There are two types of businesses that are dealing with the pandemic, says Mary Rose Ofianga, a member of the UN IGF from the Philippines. The first, businesses that are connected to the internet but do do not have enough skills to manoeuvre or navigate in the digital market and the second, businesses who face difficulties building their business online because there’s no good Internet connectivity in their location, she said. On the one hand, there is a need to build capacities to help businesses navigate the internet. On the other hand, there is a need to improve access to the internet.
OECD guiding countries on these matter: To help governments and regulators navigate this new terrain, the OECD is preparing multiple policy briefs for international cooperation, guidance for policy making, improving trade and investment between countries, as well as establishing standards for privacy, digital security, broadband connectivity and other areas, said Nicole Primer, Senior Policy Director, Business, OECD.
“In our work on digital, we have worked with OECD in something that’s called the OECD Going Digital Project. This, again, is developing an integrated policy approach and they have also developed something called the going digital toolkit, which allows countries to benchmark their performance across different policy areas” — Nicole Primer, Senior Policy Director, Business, OECD.
Disparities in internet access growing
As the dependence on digital technologies has increased in the wake of the pandemic, roughly 1.3 billion citizens in OECD (Organisation for Economic Co-operation and Development) countries have turned to digital technologies to work remotely and study at home, speakers said during a discussion on the policy responses for the digital economy in the wake of COVID-19.
However, access to communication services isn’t equal among or even within countries, said Bengt Molleryd, Senior Analyst at the Swedish Post and Telecom Authority and chair of the OECD Working Party on Communication Infrastructure and Services Policy. He said this disparity in access is likely to accentuate the consequences of the crisis. “Therefore, policies that seek to foster connectivity for all are not only important but essential. To close the connectivity divide, people not only need to have access to broadband, they need to be connected well, which means access to high quality communication networks and services at affordable prices.”
This disparity exists even among age groups, in addition to education and income levels, said Mark Uhrbach, Program Manager for Statistics Canada and chair of the OECD Working Party on Measurement and Analysis of Digital Economy. Access to internet is almost universal among younger people, while only 58% of people aged 50-74 use the internet on a daily basis. While the new normal of “telework” may open up opportunities and flexible work options for those who can do it, for people employed in other industries, their participation in the economy will continue to be constrained, he said. This has the potential to create a “gulf” between the haves and have-nots in society.
“We have seen through data we collected that digital minorities are over represented in segments hardest hit, including food and accommodation services. This has contributed to high rates of unemployment in these groups” — Mark Uhrbach, chair of the OECD Working Party on Measurement and Analysis of Digital Economy
Similarly, Carolina Botero from Colombia, a representative of the Civil Society Information Society Advisory Council, said that the pandemic has shown that due to existing social-economic, gender and geographical conditions, the digital divide has increased inequities within society.
“As has been addressed, connectivity and digital skills are essential in a digitally transformed society. Those challenges will be important to the digitals and inequities in our society too […] Therefore, all societies will need to identify, measure, assess and address the different digital divides tied to the use of technologies” — Carolina Botero, representative of the Civil Society Information Society Advisory Council
Digital payments can lead to better access to finance
During a discussion on how digital payments can support inclusive growth, the speakers said that there was a need for public and private participation to build suitable payments infrastructure, particularly in Europe. Konrad Ślusarczyk, Senior Policy Lead, Visa said that for every percentage increase in the usage of digital payments an economy’s annual consumption increased by $104 billion, according to a survey across 70 country. He added that digitisation is taking place not only in the private sector and among consumers, but also in governments for the distribution of welfare benefits.
“The COVID crisis has clearly proved that the need for digital disbursement is of a great importance right now. And we see what digital disbursements try to start replace older measures of distribution of money like cash, cheques for vouchers, which historically the government tends to use” — Konrad Ślusarczyk, Senior Policy Lead, Visa
Willem Pieter De Groen, from the European Credit Research Institute and Research Fellow at the Centre for European Policy Studies, said that today there are many unbanked people because the financial services are too expensive. In rural remote areas, where people did not have access to a bank branch before, digital infrastructure has helped banks reach out to them and make better lending decisions, he said.