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1. African Jobs in the Digital Era: Export Options with a Focus on Online Labour

Author:
Elvis Melia
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
This study asks what impact the Fourth Industrial Revolution will have on job creation and catchup development in Sub-Saharan Africa over the coming decade. Can light manufacturing export sectors still serve African development the way they served East Asian development in the past? If factory floor automation reduces the need for low-cost labour in global value chains, can IT-enabled services exports become an alternative driver of African catch-up development? I present case study evidence from Kenya to show that online freelancing has become an interesting sector, both in terms of its growth trajectory, and in terms of worker upward mobility in the global knowledge economy. As life everywhere moves further into the digital realm, and global internet connectivity between Africa and the rest of the world grows, more and more young Africans who stream onto the labour market may find work in the world of global online freelancing. I discuss the building blocks needed to make online work a sustainable vehicle for African catch-up development in the years ahead.
Topic:
Development, Science and Technology, Labor Issues, Internet, Exports, Manufacturing, and Industry
Political Geography:
Kenya and Africa

2. Digitalisation and its Impact on SME Finance in Sub-Saharan Africa: Reviewing the Hype and Actual Developments

Author:
Sabrina Disse and Christoph Sommer
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
The vast majority of enterprises worldwide can be categorized as small and medium-sized enterprises (SMEs). They play a crucial role in providing a livelihood and income for diverse segments of the labour force, in creating new jobs, fostering valued added and economic growth. In addition, SMEs are associated with innovation, productivity enhancement as well as economic diversification and inclusiveness. However, almost half of the formal enterprises in low and middle-income countries (LMICs) are financially constrained, meaning that SMEs’ financing needs are unserved or underserved. Digitalisation is often seen as game changer that overcomes the challenges of SME finance by capitalising on the reduced transaction costs, the broader access to more and alternative data and the new customer experience shaped by convenience and simplicity. This paper aims to answer the question what the role of digital financial instruments in SME finance in Sub-Saharan Africa is. It reviews and discusses the opportunities and challenges of digital advances for SME finance in general and of three specific financing instruments, namely mobile money (including digital credits), crowdfunding (including peer-to-peer lending) and public equity. It contrasts the hype around digital finance with actual market developments and trends in Africa. Main findings indicate that even though digital advances have led to impressive growth of certain digital finance instruments, it has not triggered a remake of the financial system. Digitalisation of the financial system is less disruptive than many expected, but does gradually change the financing landscapes. Some markets have added innovative and dynamic niches shaped by digital financial services, but new digital players have in general not replaced the incumbents. Furthermore, the contributions of digital instruments to finance in general and SME finance in particular are still very limited on the African continent compared to either the portfolio of outstanding SME finance by banks or the capital raised by similar innovative instruments elsewhere in the world. Many uncertainties remain, most importantly the response of regulators and responsible authorities. They need to provide a suitable legal framework to strike a balance between the innovation and growth aspiration of the digital finance industry and the integrity and stability of markets and the financial system at large. Also regulators have to safeguard data privacy and cybersecurity and prevent illicit financial flows, bad practices around excessive data collection, intransparency and poor reporting as well as exploitation of vulnerable groups with limited financial literacy. Governments also have to address the increasing gap towards those left behind by digital finance due to issues with ownership of a digital device, mobile network coverage and the internet connection or issues of basic digital and financial literacy.
Topic:
Development, Science and Technology, Digital Economy, Business, Economic growth, and Diversification
Political Geography:
Africa

3. The Impact of Information and Communication Technologies on Jobs in Africa: A Literature Review

Author:
Elvis Melia
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
In the past two decades, Africa has experienced a wave of mobile telephony and the early stages of internet connectivity. This paper summarises recent empirical research findings on the impact that information and communication technologies (ICTs) have had on jobs in Africa, be it in creating new jobs, destroying old jobs, or changing the quality of existing jobs in levels of productivity, incomes, or working conditions. The paper discusses various channels in which ICTs can impact jobs: In theory, they have the potential to allow for text-based services platforms that can help farmers and small and medium-sized enterprises (SMEs) become more productive or receive better access to market information; mobile money has the potential to allow the most vulnerable workers more independence and security; and the internet could allow women, in particular, to increase their incomes and independence. This literature review examines what rigorous empirical evidence actually exists to corroborate these claims. Most of the studies reviewed do indeed find positive effects of ICTs on jobs (or related variables) in Africa. On the basis of these findings, the paper reviews policy options for those interested in job creation in Sub-Saharan Africa. The paper concludes by highlighting that these positive findings may exist in parallel with negative structural dynamics that are more difficult to measure. Also, the review’s findings - while positive across the board - should be seen as distinct for ICTs in the period of the 2000s and 2010s, and cannot easily be transferred to expect similarly positive effects of the much newer, Fourth Industrial Revolution Technologies (such as machine learning, blockchain technologies, big data analytics, platform economies), which may produce entirely different dynamics.
Topic:
Development, Science and Technology, Labor Issues, Women, Internet, Economic growth, Political Science, and Literature Review
Political Geography:
Africa

4. The Development Policy System under Pressure: Acknowledging Limitations, Sourcing Advantages and Moving towards a Broader Perspective

Author:
Victoria Gonsior and Stephan Klingebiel
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
This paper uses the development policy system as an entry point assuming that various fundamental changes along three dimensions – narratives (why?), strategies (what?) and operational approaches (how?) – can be observed over recent years. Changes are diverse, ranging from new narratives translated to the development policy context (such as the migration narrative) to strategic considerations (for instance, developing countries’ graduation implications), new instruments (in form of development finance at the interface with the private sector), and concepts for project implementation (including frontier technology). We discuss the implications and effects of these trends in terms of holistic changes to the wider development policy system itself. Do these changes go hand-in-hand with and ultimately build on and re-inform each other? Or are we actually observing a disconnect between the narratives that frame the engagement of actors in development policy, their strategies for delivery, and operational approaches in partner countries? Based on a consultation of the appropriate literature and information gathered during a number of expert interviews and brainstorming sessions, this paper sheds light on these questions by exploring current trends and by highlighting continuing disconnections between the “why”, “what” and “how” in the development policy system. Further, we argue that the importance of such disconnections is increasing. In particular, the persistent or even increasing disconnections in the development policy system can be more problematic in the face of a universal agenda and the need to upscale delivery to achieve the Sustainable Development Goals (SDGs)
Topic:
Development, Science and Technology, United Nations, Sustainable Development Goals, and Public Policy
Political Geography:
Germany and Global Focus

5. Digitalisation in the Lives of Urban Migrants: Evidence from Bogota

Author:
Charles Martin-Shields, Sonia Camacho, Rodrigo Taborda, and Constantin Ruhe
Publication Date:
01-2019
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
As increased migration, particularly to urban centres, and digitalisation play a greater role in development cooperation, more research on how these phenomena interact will become critical. Information communication technologies (ICTs) offer pathways for potentially making it easier for migrants to settle in, whether it be through e-government programmes or by accessing social networks that can help in finding housing and work. To better understand how ICTs fit into urban migrants’ lives, we gathered new survey data in Bogota comparing how long-term residents, short-term residents, and Venezuelan migrants access and use ICTs. We identified a new factor that influences internet access among migrants after controlling for economic and social factors: duration of time in a neighbourhood. While migrants initially lag behind their neighbours in ICT and internet access, the longer they stay in one neighbourhood, the more likely they are to gain access to these technologies. Indeed, over time, our data shows that migrants become more likely than their neighbours to gain access to ICTs and the internet when they continue to stay in the same neighbourhood. Our results also show that uptake of e-government services remains a challenge. Citizens generally do not interact with their governments more than a few times a year, and migrants may not interact at all. Especially when working with vulnerable or “hidden” populations, development organisations need to put significant resources into education and outreach so that the populations they are trying to reach know about e-government services, and their value. The data collected in Bogota paints a potentially positive picture about using ICTs with migrants and migrant communities. By effectively engaging migrants early on and meeting basic initial needs such as housing or access to identification, development and humanitarian agencies could help migrants gain greater access to ICTs and make use of e-government platforms.
Topic:
Migration, Science and Technology, Communications, Internet, and Urban
Political Geography:
South America and Latin America

6. Potential of Blockchain Technology for Trade Integration of Developing Countries

Author:
Jakob Schwab and Jan Ohnesorge
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
German Development Institute (DIE)
Abstract:
Blockchain technology (BT), famous due to its use in digital currencies, also offers new opportunities in other fields, one of which is trade integration. Developing countries especially could benefit from greater trade integration with BT, as the technology can, for example, remedy deficiencies with regard to financial system access, intellectual property protection and tax administration. BT allows virtually tamper-proof storage of transactions and other data on decentralised computer networks. In fact, it is possible to store not only data, but also entire programmes this securely: Smart contracts enable the automation of private transactions and administrative processes. This article summarises the latest research on the use of BT in trade integration by examining in more detail five key and, in some cases, linked fields of application. The first is trade finance, where BT could deliver direct cost savings for exporters and importers by removing the need for credit-lending intermediaries. Second, tamper-proof storage of information on the origin and composition of goods could enhance supply chain documentation. This makes it possible to more reliably verify compliance with sustainability standards, particularly for globally produced goods. However, for the information in blockchains to be truthful, it must be entered correctly (it is then tamperproof), a process that therefore requires monitoring. Third, BT could deliver improvements in the field of trade facilitation by making it easier for border authorities to access information on goods and thus easing reporting requirements for exporting firms. By reducing dependence on central database operators, BT could help bring about a breakthrough with existing digital technology in the area of trade. Fourth, facilitating access to information on goods could also simplify customs and taxation procedures and make them less vulnerable to corruption and fraud. This goes hand in hand with cost reductions for exporters and better mobilisation of domestic resources for public budgets. Fifth, in the field of digital trade, BT also facilitates management of digital file rights in environments where, for institutional reasons, there is little intellectual property protection. This could help to promote digital industries in developing countries. However, when it comes to using BT in border and customs systems in particular, it is essential to involve the relevant authorities at an early stage. At the same time, it is necessary to promote uniform technical standards for supply chain documentation in order to safeguard interoperability between the different systems across actors and national borders and thus fully leverage the cost advantages. If these guidelines are taken into account, then BT could effectively support sustainable trade integration of developing countries.
Topic:
Science and Technology, Currency, Trade, Integration, and Blockchain
Political Geography:
Germany and Global Focus

7. Governing Digital Trade – A New Role for the WTO

Author:
Wallace Cheng and Clara Brandi
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
German Development Institute (DIE)
Abstract:
Digitalisation is transforming the economy and redefining trade. Recently, members of the World Trade Organization (WTO) have started to discuss how trade policies and rules should be adapted to address this transformation. For example, in January 2019, 76 WTO members announced the launch of “negotiations on trade-related aspects of electronic commerce”. The scope of these e-commerce negotiations is yet to be defined, but to ban tariffs on electronic trans­missions will certainly be on the priority list of WTO members such as the United States (US) and the European Union (EU). The idea of banning tariffs on electronic transmission originated at the WTO’s Ministerial Conference (MC) in 1998, when Members declared that they would “continue their current practice of not imposing customs duties on electronic transmissions”. This temporary moratorium on e-commerce tariffs needs to be regularly extended, requiring a decision made “by consensus”. Members have repeatedly extended the moratorium on tariffs on “electronic trans­missions”, most recently at the latest WTO MC in 2017. But the WTO e-commerce moratorium is increasingly disputed: First, while net exporters of digital products and services, typically industrialised countries, understand the tariff ban to apply to digital content, net importers interpret it as referring only to electronic carriers (e.g. CDs, electronic bits), which means that they regard themselves as permitted to impose customs duties on the content of online trade. Second, while net exporters like the US and the EU propose a permanent ban on e-commerce tariffs in order to provide greater certainty to consumers and business, arguing that the resulting revenue losses are small, net importers like India and South Africa underline that they suffer much greater revenue losses than industrialised countries and have to bear the brunt of the moratorium. Third, while industrialised countries argue that the ban on tariffs on electronic transmissions would reduce market distortions, developing countries are concerned that a permanent moratorium would limit their options to protect domestic products and services traded online. Fourth, the moratorium has stirred a debate about how to create a level playing field between domestic and foreign suppliers of digital products and services.
Topic:
Development, Science and Technology, World Trade Organization, and Digital Economy
Political Geography:
India, South Africa, United States of America, and European Union

8. Digitalisation and Flight: How Can Donors Leverage Digital Technologies to Support Refugees?

Author:
Charles Martin-Shields
Publication Date:
01-2017
Content Type:
Policy Brief
Institution:
German Development Institute (DIE)
Abstract:
This policy brief provides a review of how refugees use digital tools, gives examples from organisations deploying digital technologies in the field, and discusses the effectiveness of and the ethical issues surrounding the use of digital technologies to support refugees. By putting the needs of refugees at the centre of their digital strategies and working with implementing organisations, such as UNHCR and Mercy Corps, to develop technology solutions that meet the needs of refugees and field staff safely and ethically, donors can get the most out of digital tools for supporting refugees.//In der vorliegenden „Analyse und Stellungnahme“ wird ein Überblick über die Verwendung digitaler Tools durch Flüchtlinge gegeben. Des Weiteren werden Beispiele von Organisationen vorgestellt, die digitale Technologien einsetzen, und die Wirksamkeit sowie ethische Fragen im Zusammenhang mit dem Einsatz digitaler Technologien zur Unterstützung von Flüchtlingen erörtert. Durch Fokussierung auf die Bedürfnisse von Flüchtlingen bei der Entwicklung von Technologielösungen und die Zusammenarbeit mit Partnerorganisationen, die in der Lage sind, Sicherheitsstandards im Datenschutz zu erfüllen, wie z.B. dem UNHCR und Mercy Corps, können Geber digitale Tools bestmöglich zur Unterstützung von Flüchtlingen einsetzen.
Topic:
Humanitarian Aid, Migration, Science and Technology, and Refugees
Political Geography:
Europe, Germany, and Global Focus

9. Risks of Maladaptation: Climate Insurance in Agriculture

Author:
Benito Müller, Leigh Johnson, and David Kreuer
Publication Date:
01-2017
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
Weather risk is an issue of extraordinary concern in the face of climate change, not least for rural agricultural households in developing countries. Governments and international donors currently promote ‘climate insurance’, financial mechanisms that make payouts following extreme weather events. Technologically innovative insurance programmes are heralded as promising strategies for decreasing poverty and improving resilience in countries that are heavily dependent on smallholder agriculture. New subsidies will amount to hundreds of millions of dollars, yet funders and advocates have thus far neglected the social and ecological ramifications of these policies. Reviews have focused largely on near-term economic effects and practical challenges. This briefing draws on an initial inventory of potential adverse effects of insurance programmes on local agricultural systems that we have recently assembled. Our review shows that farmers with insurance may alter their land-use strategies or their involvement in social networks previously used to mitigate climate risk. Both processes constitute crucial feedbacks on the environmental and the social systems respectively.
Topic:
Agriculture, Climate Change, Development, Environment, and Science and Technology
Political Geography:
Germany and Global Focus