Home Asia-Pacific III 2001 E-business for Poverty Alleviation in Rural Areas

E-business for Poverty Alleviation in Rural Areas

by david.nunes
Hak Su Kim Issue: Asia-Pacific III 2001
Article no.: 4
Topic: E-business for Poverty Alleviation in Rural Areas
Author: Hak Su Kim
Title: Executive Secretary
Organisation: UNESCAP
PDF size: 24KB

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Article abstract

There is little doubt that access to information and knowledge can alleviate poverty, but there is still a need to identify those solutions that have the greatest impact and work best under different circumstances. Mr. Hak Su Kim, Executive Secretary of UNESCAP, examines best practice for applying new technology to support rural needs for market, educational and health information, and defines the scope for ICTs in small and micro-enterprises that have a direct and growing relationship with poverty alleviation.

Full Article

We are now witnessing an ongoing revolution in Information and Communication Technologies (ICT) that is impacting every aspect of human activity and endeavour. In a desperate world characterised by wide differences in income levels, race, religion, language, level of economic development, education, access to technology, development of infrastructure and so on, the manner in which this revolution affects these differences is gaining increasing attention. Some people believe that the new technologies constitute the magic wand that can eliminate or transcend these differences. Others believe, equally passionately, that the new technologies accentuate these differences, particularly the divide between the rich and the poor, the haves and the have-nots, and create in the process an even greater and more impenetrable divide between the ‘digital haves’ and the ‘digital have-nots’. In a world in which rampant poverty, hunger, malnutrition and disease are widely prevalent, uniform access to telecommunications, knowledge and information is a distant dream. It is obvious that equal access to these technologies is as elusive as equal opportunity to food, clothing, shelter, education, wealth and in general, economic opportunity. Less intuitive or obvious is the answer to the question of whether these technologies inherently tend to accentuate these differences or hold the potential of fundamentally altering and reducing these imbalances to an unprecedented and hitherto unimaginable extent. The relevant question therefore is whether people will or can become more equal with the advent of these technologies and whether economic opportunity and human development can be more evenly spread through more imaginative use of these technologies. In this respect, the experiences of Asia and the Pacific has demonstrated that when e-business is wisely used, it can significantly contribute to poverty alleviation by creating direct and indirect income and employment generation opportunities in rural areas and empowerment of the rural population at large. Although agriculture has been the mainstay of the rural people in developing economies all over the world, with the population growth and often shrinking of arable land, many have little or no work, resulting in millions marching towards the cities in search of jobs and income. In order to meet the increasing aspirations of the people for a better quality of life, fresh avenues for employment have to be found in non-agricultural vocations. Grameen Telecom (GTC) was founded by Grameen Bank as a non-profit organisation dedicated to spreading ICT to rural areas of Bangladesh. The ‘Village Phone’ concept was developed through combining Grameen Bank’s experience with the village-based micro-credit enterprises, the latest digital wireless technology as well as the well tested idea of Public Call offices and the privately operated phone centres. Under the ‘Village Phone’ programme, a member of Grameen Bangladesh obtains ownership of the phone on the lease-financing basis from the bank and provides the services to the people in the adjoining area, including both outgoing and incoming calls. After paying the airtime bills along with other duties, the operator average income is around US$100 per month. Starting with 31 phones in 1997, there are currently 5,154 phone operators who provide services to around 4,600 villages with a total population of 11 million. GTC is further planning, over the next four years, to provide services to 100 million rural inhabitants in 68,000 villages. It also plans to introduce fax, e-mail and other value-added services at a later stage. Fourteen Internet sub-hosts have been established by the India Foundation of Occupational Development (FOOD), with eleven hosts acting as individual telecentres. FOOD provides computers, communication equipment, training and day-to-day support to the sub-hosts until they become self-supporting. The network provides multipurpose services that are used by a handicraft shop and a herbal processing centre involving 300 women among other ‘clients’. FOOD has also established a closed group communication network for community-based women’s organisations and promotes inter-city direct sales of their products. These community-based organisations (CBOs) are provided with cellular phones to enable them to network for marketing their product. The foundation is now establishing links among 100 CBOs with the population of around 1 million people. Six village information centres and a value addition centre (information hub) have been established in Pondicherry in South India by the M.S. Swaminathan, Research Foundation. A hybrid of technologies is used-wired with wireless (VHF radio) for communication and solar for power supply. The hub provides connectivity to the Internet through dial-up telephone lines, and the staff there creates locally useful content. The village centres receive queries from the local residents and transmit information, collected from the hub, back to them. An important feature of this project is the strong sense of ownership that the village communities developed towards the village centres-villages are required to commit to supporting the project. The other key feature is the active participation of rural women in the management of the village centre as well as in using it. Sceptics of ICT may argue that despite all efforts e-business use is still very limited in rural areas and only a small number of rural poor have access to information. Indeed, Asia had an estimated 53 million Internet users in 2000 and that number is expected to rise to 157 million by 2004 but only in regional developed countries and a small number of the most advanced developing economies. Internet use is more or less evenly spread among these territories. In ASEAN, China and India, Internet use is concentrated in the big cities and the larger organisations, while the access of the population in rural and remote areas to the Internet is very limited. The situation is even bleaker in the least developed, Pacific island and transitional economies where most of the rural population have never heard a dial tone. E-business opportunities and applications are, however, motivating business enterprises even in rural and remote areas to adopt the Internet sooner than anticipated. The vast majority of Small and Medium Enterprises (SMEs) in the region still lack the ability to tap into e-business as a channel to conduct business with suppliers and customers. More significantly, SMEs have found the Internet to be of immense value in reaching out to global markets and attracting potential partners and clients. ICT has created a level playing field for big and small companies alike in the national and global market places. No longer does a company need to have a physical presence in urban areas. A presence in cyberspace is good enough to provide access even to global markets. The information needs of national and international traders span a wide spectrum, ranging from simple business enquiries to detailed market intelligence reports. While exporters seek more market-oriented information such as prices, potential demand, details of competitors already operating in a specified market, the creditworthiness and credit ratings of clients, and so forth, importers wants as much product- and producer-related information as possible. A whole range of general information such as trade statistics, regulations, tariffs, import and export documentation, transportation infrastructure, and services and payment and settlement procedures relating to national, regional and international trade is always in demand. Even the logistics of transport and delivery of goods is expected to be increasingly facilitated by Internet-based services. Declining Internet access fees, growing online communities and readily available payment ‘gateways’ are additionally strengthening possibilities for developing e-business infrastructure. For the 5 years from 1998 to 2003, business to business (B2B) e-commerce in Asia and the Pacific is expected to increase 400 times to reach US$ 400 billion. These figures look really impressive. However, in spite of their significant contribution to the economy in most developing countries of the region, SMEs, especially those in remote and rural areas, suffer from a number of shortcomings that result in low productivity and other operational problems. The most significant issue is the need for the upgrading of technology, especially the adoption of ICT. The slow uptake of new technology has various causes, such as: a lack of awareness of the benefits of ICT; the high cost of ICT products; their complexity and the lack of skills in the use of ICT products; and the lack of local content (in terms of products and services in local languages). There is therefore a need to evolve a comprehensive strategy for ICT adoption by SMEs which would include the following: building strong institutional support; encouraging the establishment of an ICT infrastructure for SMEs; providing education and training; and launching programmes for ICT awareness. Technology and cost are not the only issues relevant to the digitalisation of societies and economies. It is necessary to encourage and selectively fund experiments, particularly in socially useful areas such as rural education, agriculture, medical services and employment, that optimise cost, technology, ownership and management patterns, and business models in an integrated fashion. These experiments should help to speed up the diffusion of ICT in the developing countries of the ESCAP region. Internet and mobile phones can help, and indeed are already doing so in several countries, to improve the population’s health, education and training and to enhance the transparency of the decisions and actions taken by public and private agents. These outcomes are achieved through the use of ICT to foster communication among civil society, state institutions and the market. It is nonetheless true that the penetration, use and impact of the Internet and mobile phones are, in turn, determined by economic and social variables, as well as innovative partnership arrangements amongst the government, private sector and NGOs. Therefore, ICT systems and appropriate content are best developed through a participatory process so that they meet the need perceived by the community, are suited to local conditions, take proper account of the roles of men and women, and are efficient, affordable, usable and repairable by local people. Such efforts may ultimately render pilot projects that employ multimedia community centres or telecentres as nodal points for community connectivity, capacity-building, content development and communications centres more successful for the applications indicated. In doing all this, it must be borne in mind that it is not enough just to set up infrastructure and get people on the Internet. A reason must be given for the community to use it, as, if it is not seen to be useful, the incentive to get online is absent. A number of steps to facilitate the participatory process in ICT promotion at the community-level are suggested below: (a) Create partnerships with low-income communities to design portals for them; (b) Create simple ways for these groups to find useful information on the Internet; (c) Train groups to develop their own content; (d) Encourage investors and venture capitalists to develop business models that support portals and websites that target low-income communities.

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