With $US94 million coming for an inclusive digital economy in the region, World Bank report pitches potential – but is blunt about challenges to overcome.
The digital economy offers a ‘unique opportunity’ for the Eastern Caribbean countries to become digital leaders, a World Bank report says.
But the report – accompanying World Bank’s backing for a regional Caribbean Digital Transformation Project – outlines challenges those countries need to overcome to make the opportunity happen.
With World Bank support, some US$94 million is being shared between four Eastern Caribbean countries: Dominica (US$28 million), Grenada (US$8 million), Saint Lucia (US$20 million), Saint Vincent and the Grenadines (US$30 million) and the Organisation of Eastern Caribbean States (OECS) Commission (US$8 million) to build an inclusive digital economy.
This is the first World Bank-financed project to support the development of digital economy in the Caribbean. It aims to increase access to digital services, technologies and skills by governments, businesses, and individuals.
“The COVID-19 crisis has highlighted the essential role of digital technology in keeping people, businesses, governments, and countries connected. It enabled virtual continuity of services and facilitated contactless transactions,”said Tahseen Sayed, World Bank Country Director for the Caribbean.
“The digital economy offers a unique opportunity for the Eastern Caribbean countries to become digital leaders. Wider and more rapid adoption of digital technologies can support countries during the COVID-19 recovery phase and help build resilience, create jobs and boost future growth.”
The project aims to increase internet penetration and access to digital financial services and public services. It will support reforms and regional harmonization of the legal and regulatory environment to promote investment in digital infrastructure. It will support activities to make telecommunications and financial services more affordable, while addressing risks related to cybersecurity and data protection.
The project will also support public sector modernization and delivery of citizen-centric, digital public services. Support will be provided to individuals and businesses for skills and entrepreneurship development.
Financing for the project comes from the International Development Association (IDA). The OECS Commission will receive a grant, and the four Eastern Caribbean islands will receive interest-free financing with a maturity of 40 years, including a grace period of 10 years.
While the project countries are recognised as having made some strides in developing their digital foundations, most notably in upgrading digital infrastructure, the World Bank says more remains to be done.
At present, Eastern Caribbean countries are acknowledged as continuing to lag significantly across most of the digital economy foundations, as well as in comparison to peers at similar levels of socioeconomic development.
Issues identified include:
- Access to broadband is still challenging with service quality unreliable
- An ‘urgent need’ to modernize the legal, regulatory and institutional frameworks governing the region’s telecommunications sector
- Utilization and acceptance of digital payments is very low across the region, limiting financial inclusion.
- Regulatory bottlenecks and weaknesses in the region’s payment system infrastructure inhibit digital financial services innovation, affordability and uptake.
- Critical networks, information systems and online transactions remain insecure and vulnerable to cyberattack, fraud and natural disasters.
- The region lacks a comprehensive cybersecurity or data protection framework, including policy, legislation and regulation at regional and national levels.
- Governments have yet to fully take advantage of improved connectivity to modernize their internal operations, improve the efficiency and convenience of accessing public services and ensure continuity of operations in the wake of natural disasters and pandemics.
- Awareness of the potential benefits of digital technologies and business models and the skills, comfort and financial resources to deploy them are lacking – particularly among small and medium enterprise management
- Interoperability and integration between existing systems in all countries is ‘low’ and line ministries and agencies are said to struggle to ensure proper cybersecurity, maintenance and upgrades after the initial capital expenditures
- Awareness of the potential benefits of digital technologies and business models and the skills, and financial resources to deploy them are lacking
- Few businesses are tapping into regional and global market opportunities to adopt digital centric business models or to use data analytics to inform strategy, integrate customer feedback and improve efficiency. Conversely, the lack of a large base of digitally active consumers in the region suppresses the perceived return on such investments, the report says, with simultaneous push on both the supply and demand sides needed to break out of this stalemate.
The report sees a solution in translating high educational outcomes in the region into development of the skills needed in the digital era.
“Building digital skills and creating a stronger local and regional market for them will be critical to tackling the region’s unemployment challenges and maintaining competitiveness in the global economy of the future,” the report says.
But here, too, the high costs of investment in specialized digital skills are acknowledged as a challenge, with the report suggesting that a regional approach is needed to share costs and expertise to create a pool of digital talent to attract investment and support technology adoption by traditional industries.
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