New study shows ICT is underutilised

Businesses and governments must make better use of their communications and computing infrastructure if they are to benefit from the full economic and social benefits of ICT, according to a breakthrough study by Prof. Leonard Waverman of the London Business School and global economic consulting firm LECG. The Connectivity Scorecard analyses not only a nation’s ICT infrastructure but the effectiveness of its use.
Karisimbi project, to position Rwanda as an ICT hub. (File photo)
Karisimbi project, to position Rwanda as an ICT hub. (File photo)

Businesses and governments must make better use of their communications and computing infrastructure if they are to benefit from the full economic and social benefits of ICT, according to a breakthrough study by Prof. Leonard Waverman of the London Business School and global economic consulting firm LECG. The Connectivity Scorecard analyses not only a nation’s ICT infrastructure but the effectiveness of its use.

According to the study, commissioned by Nokia Siemens Networks, even the world’s best connected countries are not exploiting communications technologies to their fullest potential and in many cases policy and regulatory activity designed to promote connectivity is not having the impact intended.

The Connectivity Scorecard ranks the United States first in a group of 16 innovation driven economies [as defined by the World Economic Forum], although its score is only 6.97 out of a possible 10.0.

The differentiated nature of the Scorecard compared to other rankings is illustrated by the fact that Korea, typically a high scorer on other indexes, is ranked 10th on the list, with a rating of just 4.78.

It measures the extent to which governments, businesses and consumers make use of connectivity technologies - the copper wires, fiber-optic lines, mobile phones and PCs that underpin today’s information economy - to enhance social and economic prosperity.

For each component of the Scorecard, countries are benchmarked against the best in class in their tier; thus if a country was best in all dimensions, it would score a maximum of 10.0. Countries typically considered to be highly connected achieved only modest scores on the Scorecard - the average score for a group of 16 countries that include the U.S., Sweden and Korea was 5.05.

These results indicate an opportunity for countries to add hundreds of billions of dollars in economic benefit by rethinking how they measure and enable connectivity, according to the study authors.

The authors point to a well-known study by Crandall and Jackson1 (“The $500 Billion Opportunity: The Potential Economic Benefit of Widespread Diffusion of Broadband”), that showed a $500 billion long-term economic benefit to the U.S. just from achieving near-universal broadband penetration.

Given the room for improvement on multiple measures of connectivity, there is every reason to believe that the worldwide gain from improving connectivity would be several multiples higher.

“What this study demonstrates is that not even the world’s richest countries can afford to become complacent about their current telecom and computing profile. Every nation has substantial work to do before achieving an ideal score in connectivity,” says Leonard Waverman, Professor of economics at London Business School and the creator of The Connectivity Scorecard.

“To increase the societal and economic benefits made possible by connectivity, countries need to consider infrastructure and usage as a combined yardstick.”

Russia placed first among the nine nations that are classified in the study as resource or efficiency driven economies. The country’s high literacy rate, along with solid scores on several measures of usage and infrastructure, especially mobile usage, resulted in a rating of 6.11.

Malaysia finished second, while India and Nigeria placed at the bottom of the rankings, with scores of 1.68 and 1.10 respectively. Other countries like Brazil, South Africa and Philippines scored 4.28, 4.11 and 2.38 respectively, in this category.

“This study is a call to arms for government and businesses. In a period of great economic uncertainty there are great benefits to be gained from the effective use of communications infrastructure,” says Ilkka Lakaniemi, head of global political dialogues and initiatives at Nokia Siemens Networks.

“And as we move toward the vision of five billion people connected by 2015, policy makers and business leaders must simultaneously encourage the deployment of infrastructure and invest in the complementary assets - people - that will enable this infrastructure to be used to its maximum potential.

The research also finds that different countries have different “to-do lists” to achieve maximised gains from connectivity.

The U.S. needs to address the issue of raising broadband penetration and improving affordability; Korea needs to understand why its businesses spend apparently so little on enterprise telephony and IP applications: India and Nigeria face the daunting challenges of improving performance on basic literacy and access measures, while not falling behind in the deployment of cutting-edge broadband and mobility technologies.

Rwanda ICT pacesetter

Regional media houses describe as pacesetter in Information, Communication Technologies (ICT) initiatives. That the country has achieved what to many other African countries like Ethiopia for instance, would consider a feat in the ICT deregulation.

East African Business Week, a regional weekly paper says  for President Paul Kagame, ICT is the most pro-active invention ever created against poverty, whose use he advocates in order to cut down on the role of the middle-men, who eat the hard earnings of farmers. He believes ICT tools should cease to be symbols of status.

“In 10 short years, what was once an object of luxury and privilege, the mobile phone has become a basic necessity in Africa,” President Kagame told a recent Summit in Kigali.

“Farmers use this medium to receive market information of where to sell their products at better prices,” The East African Business Week quotes President Kagame telling delegates including six African leaders during an ICT summit. 

In Rwanda, ICT is rapidly becoming the engineering tool on which every business transaction is based. Even though the prices of various ICT tools and equipment still remain beyond the reach of many, efforts to reduce these prices are now underway. 

Internet access in Kigali is free in most international hotels unlike in most places in Africa where access to the internet is still considered a terrible luxury.

ICT is an enabler for businesses in Kigali. Rwandan businesses utilise free broadband access to lure customers to their shops, in effect using the internet to add value to their products, unlike in places like Nairobi, where such facilities are not as yet accessible.

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