Information and communication technology (ICT) has become a major factor in business over the past decades.
ICT has been accepted as a technology that enables firms in various sectors to develop or optimise new products, services and processes.
The degree to which ICT is ultimately used is not necessarily the same for all organisations and often remains a decision made on economic grounds.
The second phase of the Rwanda Economic Development and Poverty Reduction Strategy (EDPRS II) names technology and ICT as the second priority sector after skills and attitudes. This is not surprising given that Rwanda seeks to transform into a knowledge-based economy by 2020, and rightly recognises that the ICT sector has a key crosscutting role to play in supporting businesses, skills and public service delivery. Thus the development of ICT capacity will be essential for reaching Rwanda’s Vision 2020 goal of transforming the country into a competitive knowledge-based economy and making Rwanda one of the leading EAC countries in this regard.
Knowledge-based economies are those economies, which are directly based on the production, distribution and use of knowledge and information. Because employment in the knowledge-based economy is characterised by increasing demand for more highly-skilled workers, government policies need to prioritise upgrading human capital through promoting access to a range of skills, especially the capacity to learn, as well as policies geared towards supporting an increase in high-technology investments in research and development and high-technology industries .
By enabling the development of new products or processes, innovation makes it possible to secure a competitive advantage over other market players.
Innovation means developing new or signiﬁcantly improved products (product innovation) or introducing new or signiﬁcantly improved production processes (process innovation). We can, therefore, view innovations as an expression of a society’s capacity to reinvent and revitalise itself, which is a crucial indicator for economic growth.
Investing in research and development makes it possible to realise new products and processes and, thereby achieve a competitive advantage over competing economies. For instance, the continued investment on Rwanda’s broadband strategy denotes the importance to which the government regards an adequate ICT knowledge infrastructure as being critical on creating a good business environment.
To provide the requisite resources required to build a knowledge economy, policies for upgrading human capital will be needed to promote broad access to skills and competencies through the provision of a broad-based formal education.
Other policies should establish incentives for firms and individuals to engage in continuous training and lifelong learning and improve the matching of labour supply and demand in terms of skill requirements. It is, therefore, incumbent on research institutions and the academia to increasingly leverage industrial partners for financial as well as innovative purposes, combining this with their essential role in more generic research and education.
We share the view that investments in ICT have a far greater impact on productivity when they are combined with intangible investments, particularly in education and training. The importance of ICT in the world economy is increasing at a rapid rate, while innovation is a key factor in the development of new economic activities.
To be able to continue applying the latest technologies or, put more broadly, compete with other economies on the basis of knowledge, Rwanda must continually exceed requirements, positively impacting the knowledge and skills of its labour force. Therefore, as developing economies such as Rwanda are increasingly based on knowledge and information, one may be tempted to think that the knowledge economy is synonymous with ICT.
However, a more accurate depiction is that knowledge drives productivity and economic growth, leading to a new focus on the role of information, technology and learning in economic performance.
Thus the term “knowledge-based economy” stems from this fuller recognition of the place of knowledge and technology in modern and growing economies like Rwanda’s.
The writer works as the director in technology advisory services at PwC Rwanda