Technology’s Growth Potential Possible Only by Proactive Policy

Connectivity has become the new measure of prosperity around the world. Varying in forms and intensity, the concept has become the definitive factor in improving human well-being. There has never been a time that connectivity mattered in human life like now.

With the popularity of the concept, governments are now given a new job description, on top of the long list of traditional obligations. Bringing people closer by way of enhancing connectivity has become the key factor with which performance of governments is measured. Not only does the concept entail considerable direct budgetary responsibilities, but it also vies for customized national strategies.

It was back in the 1990s that the incumbent Ethiopian ruling elite adopted an Information & Communication Technology (ICT) Policy. In what could be considered as an intuitive step, especially considering the fact that Ethiopia was just trying to recover from an extended war, the policy document stipulated the need to have a competitive ICT backbone and capability. But ICT was considered a facilitative factor for economic growth.

Certainly, the policy line is not that surprising. After all, the main target of the ruling EPRDFites at the time was the farming community. They knew that giving priority to the growth of the agriculture sector was crucial to consolidate the war-torn economy of the nation. Investing their time, energy and resources on agricultural development was, therefore, a vital issue for them.

In light of that, their perception of ICT as a supportive element in the economy was not all wrong. But the policy perspective should have changed with the changing times.

Over the past two decades, the world has changed so much. Connectivity has become an economy in its own right. Multinational companies with a focus on providing the means to connect people around the world have emerged. The Internet and its multiple services have become part of daily life. Physical distance no longer constrains people from trading, sharing ideas, exchanging services, enhancing knowledge and gaining skills. Thanks to the power of technology, things that have been traditionally impossible have become possible.

From sharing cars to running workshops, the Internet of Things, as the sharing sphere is often called, has enabled people to conduct businesses in a shorter time and with a fraction of cost. Alongside this change have emerged new transport, taxation, labour and intellectual rights as well as migration policies. Countries have increasingly become aware that they cannot sail through the winds of the 21st Century with their 20th Century policies.

Ethiopian ICT policy, however, remains unchanged. ICT is still perceived as a complement to the real economy, not as part of the real economy. The sector is still state-driven. Led by the powerful EPRDFite, Debretsion Gebremichael (PhD), the Ministry of Communications & Information Technology (MoCIT) is the ultimate guardian of the sector. Key institutions include a telecoms monopoly – ethio-telecom; a licensing and overseeing body – the Ethiopian Telecommunications Agency (ETA); and a state-driven technology security apparatus – the Information Network Security Agency (INSA).

Whereas the world is enjoying services of private initiatives, such as Google, Yahoo, Facebook, Microsoft and many more, the role of the Ethiopian private-sector in the ICT sector remains marginal. Big state and private sector contracts are grabbed by Western, Indian or Chinese firms. Ethiopian firms, on the other hand, toddle at the feet of the multinationals as sub-contractors.

Of course, discounting the investment the ruling EPRDFites have made in the sector would be naïve. Vast national resources have been used to enhance the backbone ICT infrastructure. Mobile penetration has increasedby an average of 19pc over the past 10 years. The number of people having Internet access has shown progress, though it is still low compared to neighbouring countries. Diversity of service package has also improved. But connectivity remains poor, in every sense of the word.

The state of affairs in the nation’s ICT sector is a result of multiple factors. On the one hand, there is an overall economic policy direction of the ruling elite that sees communications as a vital sector that ought to remain under the grips of the state. Mentioning universalization of service as a rationale, the Revolutionary Democrats argue that the state is the only agency that can serve the broader developmental purpose of ICT.

On the other hand, there is an ICT policy that has been crafted, without taking into consideration the changed reality. Instead of perceiving ICT as an economic activity and sector, in and of itself, the ICT policy puts the sector as subservient to other economic activities. Under the basis of the policy lies a reductionist understanding of ICT and its linkages with the real economy.

Furthering the policy plights are the procedural snags that private investors in the sector face. These include cumbersome a registration process; inconsiderate tax and tariff rates; a poor investment support system; an obsolete education curriculum; and the brain drain. Viewed under the prism of ICT, therefore, Ethiopia is an island with huge untapped potential. And locking this potential up are the policy and procedural barricades.

Globally, various models exist on how to make ICT a driver of an economy. Targeted state investment and linkage have enabled the United States, the largest economy in the world, to create a vibrant ICT private sector. Not only has the US government given the private sector the ground to create and innovate, but it remains the major consumer of technology. By way of Public Private Partnerships (PPPs), the US government empowered the private sector to grow, mature and thrive. It is through this policy approach that big US technology companies emerged and rose to championship.

In contrast, ICT development in India, a big player in the global ICT sphere, is largely driven by the private sector. Indians with the knowledge, networks and resources believed in the capacity of their fellow citizens and invested in basic ICT infrastructure, skills and knowledge. While the investors see the opportunities and finance the ventures, the Indian state created a conducive investment climate for them.

Many other countries, from Japan to Vietnam, from the United Kingdom to Morocco, have succeeded in making ICT a major driver of their economies. And the secret resides in the realisation of the potential and putting in place effective policies.

With Ethiopia standing at the lower rungs of the ICT development ladder, having a proactive policy approach is vital to ensure structural economic transformation. As such, the ruling Revolutionary Democrats have to realise that their old policy presumptions no longer work.

Ethiopia’s is an economy with a total population of 91 million, 70pc of which is between 18 and 35. The number of graduates coming out of colleges and universities is increasing and unemployment remains a major headache to policymakers. Annual job creation remains far lower than the average increment of unemployment. And a large proportion of the new jobs created comes from the construction sector and small and micro enterprises (SMEs).

If ICT could be made a policy focus, then, it could stir the service sector of the economy in a new direction. A new breed of entrepreneurs could emerge from the sector, creating jobs for themselves as well as for millions of others. And this could generate income, foreign exchange, a new skills base and new forms of economic linkages.

Certainly, for an economy constrained by capital, a vibrant ICT private sector could have a lot to contribute. But it cannot happen in vain. Creating such a sector needs a customized and flexible policy framework.

For the ruling EPRDFites, this entails reviewing their old ICT policy in line with the changing realities of the time. And they ought to start from recognising that ICT could be a driver of economic growth, in and of itself.

Further, they need to recognise that a lively ICT sector cannot happen without vibrant private investment. For this to happen, however, they have to create an enabling environment free from monopoly, cumbersome bureaucracy and an extortionate taxation regime.

Published on May 31,2016 [ Vol 17 ,No 839]



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