Leveraging ICTs for Development in LAC. World Bank Perspective May 18, 2009 Juan Navas-Sabater
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1 Leveraging ICTs for Development in LAC World Bank Perspective May 18, 2009 Juan Navas-Sabater
2 Agenda Development Impact of ICT Global Perspective Implications for LAC About the World Bank Global ICT Department Opportunities for partnership
3 Development Impact of the ICT Sector ICT s contribution to economic growth...and on investments Wireless economic impact, 2005 USD billions, percent CHINA End user surplus* Enterprise productivity Consumer Use Indirect impact from non-operator players along value chain $108 $47 % of GDP 5% $37 1.7% 2.2% Direct impact from operators $24 1.1% Source: McKinsey & Co. 85,379 Investments on infrastructure in LAC (in US$ million) 22, , ,109 Energy Telecom Transport Water and sewerage Source: Private Participation in Infrastructure Database 10% increase in mobile teledensity contributes to 0.6% of GDP growth 47% of private investments in infrastructure in LAC was from telecom
4 World Bank ICT Strategy Focus on 3 inter-related strategic themes The introduction of information and communication technologies to improve the delivery of public and private services. ACCESS The ability to access relevant information on any platform, anywhere, at an affordable price. MAIN- STREAMING INNOVATION The use of information and communication technologies in transforming traditional sectors and creating innovative new sectors.
5 Access: The Unfinished Agenda Broadband subscribers / 100 inhab. mobile subscriptions / 100 inhab A lot of progress but market gaps remain Difference between Mobile pentration in OECD and LAC Countries OECD The gap in mobile telephony has been decreasing since LAC Difference between Broadband pentration in OECD and LAC Countries OECD LAC World Bank projects: PPPs for backbone infrastructure: Proposal for a Caribbean Regional Connectivity Project (6 countries); IFC-led EASSy Project (22 countries) in Africa; Bank-led RCIP, other projects in Africa and Indonesia New broadband solutions: WiMax (Ukraine, Uruguay) Broadband networks on other infrastructure: Chad, Cameroon / Central Africa (Pipeline), DRC (Electricity Transmission) Many OECD countries are prioritizing broadband rollout in stimulus packages and growth strategies: Australia, Britain, Canada, Finland, France, Germany, Hungary, Ireland, Japan, Portugal, South Korea, Spain, United States 10% increase in broadband penetration will generate a 1.4% increase on annual economic growth in developing countries
6 Mainstreaming: Leveraging the mobile network CHALLENGE WHAT ARE WE DOING? Access to formal financial services still a significant challenge 3 Billion potential impact 6.5 Billion World Population 4 Billion mobile phones 1 Billion have bank accounts Total global remittances $250 billion Transaction costs as high as 25% Mobile Banking Investing in stand-alone solution companies: WIZZIT, an m-banking company (South Africa); True Money (Thailand) Piloting projects with operators: Mobile banking pilot with existing clients, Digicel in Caribbean, Millicom Partnerships and Knowledge: M-Banking Working Group (IFC, CGAP, InfoDev); Mobile Micro-Payment Systems (with GSM Assoc.); Knowledge Map of Micro-Banking in Africa (with DfID); M-Banking Conference (GSM Assoc., DfID, CGAP), Industry Partnerships Other Applications Financial Sector: Investments in Marco Polo (Global), Fino (India), Egar (Russia)
7 Mainstreaming: Transforming government CHALLENGE WHAT ARE WE DOING? Interaction with government costs more in developing countries Number of Tax Payments and Time Burden OECD 15 MENA EAP SAR SSA LAC ECA 25 Source: Doing Business Chile: Online taxes reduced average processing time from 25 days to 12 hours Brazil: Comprasnet Federal $193 million savings achieved in 1 year against an 8-year cost of $40 million Estonia: for national elections, voters will be able to vote from their mobile handsets Korea: Investment of $80 million in e-procurement generated $2.7 billion in annual savings Number of tax payments Time (hours per year) E-Government e-government policy frameworks and programs: Vietnam, Ghana, Mongolia, Analytical work and pilots: e-government toolkit, PPP models and IT governance frameworks (FMTAAS) Private investments in IT companies providing e-gov services: Sonda (Chile), IBS (Russia), Meteksan (Turkey), Chinasoft Sectorial E-Applications Health: Investing in cellular-based health systems, Voxiva (Africa LAC), health data management Education: Investments in, Socket Works (Nigeria) Knowledge Products: ICT in Health and Education
8 Enabling innovation through ICT CHALLENGE Local innovation is a key driver of social and economic development SMEs 80% of the workforce employed by SMEs, in developing countries WHAT ARE WE DOING? infodev: ICT-Enabled innovation network provides financing and TA to over 161 incubators and 9,000 MSME in more than 75 countries, creating 105,000 jobs. Grassroots innovation constrained 90% reported difficulty finding/retaining qualified staff 85% reported risk aversion in their community 85% reported insufficient access to private capital 80% reported lack of policy incentives to encourage new business creation (Results from infodev s Monitoring, Evaluation and Impact Assessment 2007) World Bank: Supporting policy framework and skill development program for IT/ITES IFC: In-house venture capital group investing in IT companies and technology innovation practice beyond IT including cleantech
9 Implications for LAC
10 Policy Reform Agenda Telecommunications Liberalization and Privatization of SOEs lead to striking progress in the Sector Complete In Process No Reforms However, technological changes require second-generation reforms to deal with convergence and digital TV switch-over: We need to provide technical assistance to Ministries and Regulators
11 Addressing the Broadband Gap Broadband Coverage Subsidy Requirement: $3.1 billion ($17 per person2) Challenge 12% 44% What are we doing? Nicaragua Rural Telecommunications Project provided broadband connections to 104 rural municipalities using wireless technologies Caribbean Regional Communications Infrastructure Program will close the connectivity gaps in the Caribbean region, primarily in Haiti, Guyana, and others Large market gap: In 2006, broadband 44% and backbone similar to telephony in Current Market Gap Access Gap Access Source: Stern and Townsend (2006) Opportunities Policy reform through DPLs and/or NLTA and RTA Sub-National connectivity projects National backbone projects to connect rural areas using PPP schemes
12 Doing more in e-government Project example: OECS e-government for Regional Integration Objective: promote the efficiency, quality, and transparency of public services through the delivery of regionally integrated e-government applications that take advantage of economies of scale. Scope: 4 countries sharing development and support of common e-government applications Components: Strategy, policies, laws, regulations, standards, and common databases (eg. Identification systems) Public finance (budget, tax and customs) and health applications Future expansion to tourism, agriculture, and education
13 Realizing the opportunity in IT & IT Enabled Services Global IT/ITES market ~ % ~65 ~130 Percentage of addressable market CAGR between 2007 and 2010 Americas Near shoring to Latin America Canada Estimated Addressable market Penetrated mark et 2007 ~ 14% Estimated penet rat ed market 2010 ~ 27% Source: McKinsey & Co. Mexico project to develop IT industry and IT enabled service exports $80 million; nearshoring Main focus on skills and IT cluster infrastructure Mexico & Central America South America Increasingly, American companies focus Potential on Latin America. new Mexico, Chile and Argentina are starting to compete projects with India Colombia, for offshore work. Uruguay, Advantages Peru are similar and time zones and easier management Argentina
14 Global ICT Department: Who we are A Comprehensive Global Practice offering a full range of services Investments Policy & Regulation Development Programs Multi Donor Grant Program Full Spectrum of Involvement Policy / Regulation Public Investments Technical Assistance Private Investments
15 Opportunities for partnership Policy and knowledge sharing: Participation at regional fora (e.g. RedGEALC, others?) Support to regional institutions (e.g. OECS Secretariat) Joint papers? Projects: Coordinated missions/activities (e.g. EGRIP, civil registries) Co-financing options?
16 THANK YOU!! ICT Opportunity for All Juan Navas-Sabater
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