Emerging economies must make most of digital revolution

Sri Lanka aims to be a rich country by the next decade by transforming this beautiful island nation into the hub of the Indian Ocean, added with a knowledge-based highly competitive economy. 

To make it happen, it is important that the governing bodies and decision-makers at the highest levels focus more on the digitisation of the country’s economy and develop the information communication technology (ICT) infrastructure. This can create an environment where all citizens have the opportunity to achieve higher incomes and better standards of living.

Telecoms leading the way

Currently, the global economy is driven by ICT and every citizen, community and business across the globe is impacted and transformed with the innovation, productivity and growth delivered by the advancements of technology. 

Both developed and developing countries are witnessing ICT as a primary driver, which is vital for economic development and many countries around the world are adopting new technologies to transform their economies into smart economies. 

Sri Lanka, as a South Asian economy, is a mature market, especially in the telecom operator segment, having witnessed a consolidation phase in both fixed and mobile telecommunications. 

The country has maintained the lowest mobile tariffs in Asia in the last decade, while the global telecom giants such as Huawei had, directly and indirectly, helped almost all operators to develop the necessary infrastructure and technology. 

Since the mid-1990s, Sri Lankans have widely adopted the very latest telecom technologies. Sri Lanka is a proven case study to show that ‘connection’ has become a human need and the vector of human love and the texture of human future. 

Today, every Sri Lankan has the ability to book his or her cab, taxi, movie ticket, doctor online, a lawyer online or perhaps to sell products such as tea, clothes, shoes, cakes, bakery from a mobile app or a web page or perhaps to read the latest news or to get cricket updates about Sri Lanka at the touch of a button.

If you are travelling abroad, at the touch of a fingertip, a signal hardly perceivable to human senses is automatically transformed into binary codes at the nearest base station and rapidly flows – deep down in the ocean or high up above – diverting, converting, compressing and decompressing and almost simultaneously. 

What is happening in Sri Lanka is vividly presented on your smart device at the other end of the planet. This is a connection and it is accessible practically wherever you are on earth: Colombo, Kandy, Jaffna, Galle, Trincomalee, Beijing, Moscow, Delhi, London, Paris, New York or wherever.
Nearly 13 years ago, Sri Lanka was just a US $ 24.4 billion economy, less than a one-third of what it is today. As a leading global ICT solutions provider, companies like Huawei, serving 45 largest global telecom companies and being present in over 170 countries in the world, has played a significant role in Sri Lanka’s growth story.  To help the country become a US $ 81 billion economy in less than a decade, Huawei alone is connecting over 70 percent of the 21 million Sri Lankans in a thriving telecommunication industry contributing a huge revenue base to the Government of Sri Lanka. Furthermore, it brings in foreign direct investments from countries including China, Japan, Malaysia, Singapore, India and Saudi Arabia. 

As of now, Sri Lanka’s active mobile connections had grown from just 5.4 million or 20 percent of penetration in 2005 to 28.1 million, 131 percent mobile penetration after 13 years.  

Future direction for digital transformation

Digitisation is gaining momentum around the globe and investment in cloud computing is ramping up on regional and national scales, while ICT infrastructure is now an important pillar of national economic growth. 

If Sri Lanka wants to position itself among the competitive developed East Asian economies, it is high time that Sri Lanka focuses on ICT infrastructure development to add more value to the country’s educated generations and future generations. 

Sri Lanka has the potential to open up value-driven growth in traditional industries via digital transformation. For this reason, Sri Lanka could get assistance from companies such as Huawei that is already helping to turn industries to become a driver for growth and pursue greater development and investment opportunities in emerging fields like cloud computing, Internet of things and big data to reap the benefits of technological development.

Above all, ICT is a high-potential sector in any economy. The ICT sector currently stands between 6.4 percent and 9 percent as a proportion of global gross domestic product (GDP). The global ICT industry is growing at 2.6 percent, faster than the 2.4 percent average growth rate for world GDP. 

Analysts highlight that the ICT industry contributes 30 percent – 40 percent of economic growth annually, while a 20 percent increase in ICT investment could accelerate GDP growth by one percent. Accordingly, every US dollar invested in ICT infrastructure could generate additional value of US $ 1.4 value to the economy.  

Potential

In a digital economy, business-to-business, e-commerce and Internet retailing are altering how firms and individuals interact to enable greater efficiency in purchasing, production processes and inventory management. 

Also, in Sri Lanka, we have already witnessed that many online start-ups have come into the marketplace attracting many consumers, cutting the exorbitant travel costs that they had to waste on travel to do their purchasing while helping them to enjoy amazing discounts and save money and time that could be utilised for other avenues or purposes.

Thus, the transfer of ICT, in particular, Internet technology, to rural areas in developing countries enables the leaping of technological stages and provides a basis to enhance macroeconomic growth. 

The telecom industry experts highlight that Sri Lankans had to stand in long lines to get a fixed telephone before 1994 from the country’s only state-owned telecom operator while today people could get a SIM card within few minutes if they walk out to a mobile operator’s outlet. 
The telecom industry alone provide jobs to over 12,000 people directly and over 100,000 young Sri Lankan entrepreneurs had been able to generate over 250,000 other employment opportunities in Sri Lanka indirectly as a result of the development of telecommunications industry. 
Smart manufacturing, smart cities, smart education and efficient citizen-friendly public services will be the key for Sri Lanka’s future. It will have a profound impact on the nature of jobs, the viability of business models and the structure of the economy of the country. 

New jobs, businesses and sectors will be created; some may be modified or enhanced. Therefore, it is vital that Sri Lanka must focus and assess the future of its economy amidst changing global technological trends. Such moves will reduce energy consumption by over 15 percent, generating millions of dollars a year in energy savings, transforming Sri Lanka to a greener and a digitized economy. 

In the final analysis, digital technologies have totally transformed the global economy in the last 10 years. Yet, many countries are yet to experience the full developmental benefits of digital technologies, such as inclusive and sustainable growth, improved governance and better services to the public. 

(Cathrine Weerakkody, a freelance journalist, an Associate member of CIMA (UK), a graduate in financial management (UK), has a master’s degree in financial analysis (UK) and currently works as an investment analyst for a multinational corporation)