Technology can be a powerful tool in emerging markets.
by Brian Liberatore, MBA ’16, EMI Fellow, Zuyao Mao, MBA ’16 and Laura Simion, MBA ’16, EMI Fellow
Across from a picture of a child lying against his mother, Facebook’s Internet.org offers the following, “Imagine the difference an accurate weather report could make for a farmer planting crops, or the power of an encyclopedia for a child without textbooks.”
This is one version. It is not universal.
Imagine in rural Peru a bank of computers in a damp municipal building, loaded with viruses and bootleg video games. The computers, free to the public, stopped working one-by-one from the humidity. All the children in this mountain village had laptops. None of their teachers knew how to use them. The laptops too died from humidity and neglect.
Technology can be a powerful tool in emerging markets. It improves people’s lives. It can help lift people from poverty offering access to new markets and capital. Connecting people to technology in a meaningful way, however, is challenging and complex.
This is a truth Colombia’s former IT minister, Diego Molano, knows well. He spoke in March as part of the Leaders in Emerging Markets series about the power of connectivity, and the difficulty of delivering it. Every country and every region has unique needs. Success requires a deep understanding of the country and the culture.
The power of connectivity
Mr. Molano shared the story of ComproAgro, a marketplace that enables farmers to sell crops through the Internet. The site connects buyers, distributors, and sellers, helping to improve the lives and businesses of many families across the country. Vive Digital Colombia, led by the IT Ministry and executed through public/private partnerships, helped launch the program.
The program’s goal is similar to M-Pesa’s, a successful Kenyan program. Profesor Ndunge Kiiti has studied the program extensively. She spoke earlier this year to the Leaders in Emerging Markets class. M-Pesa, she said, has transformed the Kenyan population’s ability to conduct business. M-Pesa is a mobile payment platform and a virtual bank with agents across the country. The company has opened financial services to millions of customers who, with no Internet access, would otherwise have no access to capital.
The application has revolutionized the way people transact and the speed at which people in remote areas can now access cash. The developers behind ComoproAgro are hoping for this same level of connectivity, which eliminates market barriers and brings efficiency. There are now 80,000 farmers involved in the system.
Both ComproAgro and M-Pesa are technology-based tools that understand the local markets. They connect supply and demand and empower small business owners. Both are private enterprises with government support. This partnership is key to the success.
Public and private partnerships
The Vive Digital plan set out to expand IT infrastructure. With limited funds and a monumental task, the government needed support from the private sector. The government sought long-term contracts with private Internet providers to make this happen.
The practice is common in China, which every year invests around $10 billion into public-private partnerships. Private companies invest capital in exchange for a return from tolls. The government fills in the funding gaps through tax dollars. These same Chinese firms have contracts building infrastructure around Africa, helping fund projects that would otherwise be beyond the means of government coffers.
Delivering IT is not as simple as government handouts. The tendency toward paternalistic-giveaways across the international development spectrum are strong and often well-intentioned. But many ignore market realities. There are few success stories. Donated grain bankrupts local farmers. Free clothes cut into local retail revenues. And communities across the world are left with infrastructure they can’t operate or maintain, built by well-intentioned volunteers and left to crumble.
Mr. Molano had success in Colombia in part because he understood the importance of stakeholder engagement. He helped people buy into the vision. And he knew how to use limited funds and strong partnerships to bring IT that worked. The government helped fund the capital expenditures, cut taxes on tech, and made it easier for the private sector to fill the demand. He did not install free computers, on government-subsidized Internet, and pose for a photo. The government worked with the private sector to create the infrastructure. And he worked to help people understand both the value and the function of connectivity. The demand side is crucial to this equation. This was a homegrown demand. The users created the demand, understood the program and supported Molano’s efforts. The providers understood the market and were able to deliver with the government’s help.