a longer version of this blog post is available on the MIT Media Lab’s Digital Currency Initiative platform
With Google Trends data showing that searches for the word “blockchain” have exponentially increased, we may be entering the peak of the hype cycle for blockchain and distributed ledger technology.
But here’s the thing: the blockchain is a major breakthrough. That’s because its decentralized approach to verifying changes in important information addresses the centuries-old problem of trust, a social resource that is all too often in short supply, especially amid the current era’s rampant concerns over the security of valuable data. It turns out that fixing that can be a boon for financial inclusion and other basic services delivery, helping to achieve the global objectives laid out in the Sustainable Development Goals (SDGs).
Sorting out hype from reality may depend on how well we identify where institutions that have until now played a role in mediating trust between people are falling short, especially in the key area of money. Deploying the blockchain in those settings to generate secure, decentralized trust could achieve great strides in inclusion and innovation.
What do we mean by decentralized trust? The concept is unfamiliar in part because its converse -- centralized trust – is something that we often take for granted, at least while it’s working. But if we look at the history of transactions since the early barter systems to modern-day digital money exchanges, we can see how different trust protocols for keeping track of our exchanges of value have evolved and how, in each case, centralizing trust within particular institutions has periodically caused problems.
As strategies for dealing with this challenge evolved and as the complexity and frequency of transactions grew, different trust bearers emerged. We went from relying on the memory and discretion of tribal leaders, to central governments issuing currencies in the form of precious metals, to commercial banks acting as trusted intermediaries and issuing their own bank notes, to central banks managing a hybrid system in which sovereign fiat banknotes circulate alongside a debt/credit form of money managed by regulated banks and internal ledgers.
Until recently, mobile and communications services were confined to a few, mostly urban, areas. That left people living in rural areas cut off. When we were in Madagascar, working on this project, we saw many rural communities in dire need of essential infrastructure and services. People in some villages live far from any road, or rely on dirt tracks that turn to impassable mud ways in the rainy season, without access to electricity, hospitals, or banks.
So, in this environment, access to mobile communications cannot be considered a luxury anymore—it’s a vital service that overcomes physical barriers and infrastructure gaps. With mobile service, people can contact family members in case of an emergency, call for medical help, and transfer money via their cell phones. Farmers—a large majority of the country population works in agriculture, and especially the poorest—can use the internet to check market prices for their produce, or get information on fertilizers. Schools with connectivity can reach the world, giving students access to information ranging from Victor Hugo’s novels to Fermat’s last theorem. Phones can be vital tools for health and well-being.
The initiative, funded by the IC4D Trust Fund at the World Bank and launched last September, aimed to assess the feasibility and the market opportunity to turn PET plastic waste into 3D printer filament that can be sold locally or globally, and to then print unique and local marketable products, which could be then traded and sold by waste collectors back to their communities. It also aims to build local capacity on making and digital fabrication in countries like Tanzania. More background on the initiative can be found here.
Despite the palpable and quite understandable tension, the eight finalist teams displayed keen enthusiasm when they presented their prototype applications to a panel composed of officials from Mali and the rest of the Sahel region and several players from the ICT community in Mali. These young people were fully engaged, well aware of what was at stake for the winning teams: smartphones and tablets, incubation opportunities, internships, training… In a nutshell, they would have the tools needed to become digital entrepreneurs and resources that are typically very difficult to mobilize.
These entrepreneurial projects are not only a first step in tackling high youth unemployment in the country. Each of these demonstrations showed that these applications had the potential to be truly transformational in either the agriculture, health, or education sectors. Two of the teams opted to focus on education, with each winning one of the four prizes on offer:
- The second prize was awarded for the Univ Kibaru application, which seeks to facilitate communication between universities and students, on matters such as timetable changes and academic scholarship opportunities;
The International Labour Organization estimates that 73.4 million people aged 15-24 do not have a job (43% of global youth), and three times as many young people are underemployed. At the same time, 40% of employers report skills shortage for entry level vacancies, according to McKinsey (Social Initiative 2015). Hence, skill gaps have become an issue to both employers and the unemployed. This trend is exacerbated by technological advancements which are rapidly replacing manual jobs, leaving millions of young people unprepared to participate in the 21st-century knowledge economy.
Three aspects of the skills gap problem need to be addressed in order to find a sustainable solution: urgency, proficiency in technology, and job market readiness. The 2016 World Development Report finds that returns to education are particularly high for ICT-intensive occupations. The wage premium for working in ICT-intensive occupations is around 5% for both men and women in developing countries (WDR 2016). This suggests a tremendous potential of technology education for reducing poverty and boosting prosperity in the developing world.
In the 1990s and early 2000s, the World Bank Group and other development partners actively promoted the mobile revolution, opening up telecommunication sectors that were largely monopolistic and state-owned. The mobile phone, which was seen initially as a luxury good, became a key driver of growth and social inclusion in Africa, South Asia and throughout the world.
This post is the first in a series about the Principles for Digital Development. Future entries will unpack the individual Principles through case studies of successes and failures.
The World Bank recently endorsed the Principles for Digital Development, a set of nine evolving guidelines to help practitioners integrate technologies in development projects. With this endorsement, the Bank joins dozens of development organizations including DFID, USAID, and UNICEF in recognizing the importance of supporting technologies in operations through human-centered, contextually appropriate, collaborative, safe, and sustainable design.
These Principles seek to mitigate challenges that pervade the digital development ecosystem: an abundance of pilot projects that rarely scale, redundant and bespoke tools built in silos, rigid program design and implementation, and a lack of coordination among stakeholders, to name a few. The Bank’s endorsement of the Digital Principles reflects a commitment to support and implement ICTs in a way that avoids these trappings and furthers its twin goals of boosting shared prosperity and eradicating extreme poverty by 2030.
Why is the Bank endorsing these Principles?
The Bank endorses these Principles partly because they align closely with key recommendations from the 2016 World Development Report. While recognizing the potential of ICTs to support development outcomes, the report urges us to think carefully about the analog elements surrounding a digital deployment. Several Digital Principles reflect this concern, reminding practitioners to devote time to understanding the ecosystem in which a technological intervention is implemented, to think pragmatically about sustainability plans, and to address privacy and security.
In recent decades, India’s growth story has been difficult to ignore. And the Indian technology revolution, a key contributor to this growth, has been remarkable. The information technology industry contributes to nearly 9.5% of India’s GDP and is the largest private sector employer, generating some 3.5 million direct jobs, and over 10 million indirect jobs.
However, the dividends of India’s digital growth have been unevenly realized, providing lots of opportunities for improvement, including:
- Mobile penetration in India is still relatively low. India’s rural populace makes up approximately 68% of the population but account for just over 40% of its mobile users.
- India ranked 156th in the world in terms of broadband penetration (at over 19%) as per the UN Broadband Commission report released in 2015.
- Roughly nine out of 10 workers are informally employed and lack social protection. Most workers lack adequate education or skills and the educated youth faces high unemployment rates.
Population that cannot afford Broadband
Having a formally recognized form of identity provides the poor and vulnerable with the opportunity to climb out of poverty. This is critical for achieving a wide range of development outcomes: from opening a bank account and paving the way for broader financial inclusion to accessing education services, tracking childhood vaccinations, and empowering women. It can also strengthen the efficiency and effectiveness of the state in providing critical services, such as government to person (G2P) payments, and reduce unnecessary waste of resources through better targeting.
With the advances in technology including biometrics, data management, and the ubiquity of mobile connectivity, there is an unprecedented opportunity to deliver services faster and more efficiently than ever before. And a country like India has also shown how, with these advances, a unique identity can be done at a scale not previously possible.
To reach the transformational potential of digital identification, the World Bank Group launched the Identification for Development (ID4D) initiative to support progress towards identification systems using 21st century solutions. We are shaping country priorities through technical assistance, financial support and global expertise. At present we are engaged with approximately 20 countries – either supporting through financial and technical advice, or through our assessment to determine gaps and help develop a forward looking roadmap.