Data is the new oxygen for international development

Leveraging the power of data for a human-centered and inclusive digital transformation

The rise of the data economy

The open access, use and sharing of data is a key asset providing unprecedented opportunities for economic and social development. ?The digital economy is producing a huge amount of data every second. People and businesses are collecting, analyzing and sharing data on a rapidly growing number of digital platforms and devices. The global data universe is estimated to reach the unimaginable size of 175 zettabytes by 2025. The relevance and impact of the data economy cuts across all aspects of international development. Research by the World Bank found that a more integrated and competitive digital market in the six countries of the East African Community (EAC) alone would add up to?US$?2.6 billion to GDP and 4.5 million new jobs in the sub-region. It is however critical to analyze who are the winners and potential losers of the data revolution an unpack the impact of the data economy on the economy and society overall.

Who is benefiting most from the data economy?

?It is key to assess the market conditions and to analyze who will benefit the most from the data economy and which groups are facing the risk of being left behind. Due to the rapid growth of data platforms and high-tech companies in general, the data economy is characterized by important economies of scale effects resulting in significant inequalities in terms of economic and social benefits.

The market alone will not regulate these important effects and will not be able to address the unequal distributional effects of the data economy within an economy. Thus, ensuring that the benefits of the data economy are more equally distributed within society and to leave no one behind, it is critical that governments intervene and develop strong national and regional data governance framework that level the playing field and avoid the creation of data monopolies. Furthermore, such regulations are critical in terms of safeguarding digital citizen rights and to ensure that the highest possible standards in terms of data protection, privacy, sustainability, and cybersecurity. Thus, government regulations and strong data governance frameworks are critical to avoid and/or minimize the significant risks associated with the use of data.

Towards a human-centered approach to the data economy

A human-centered approach to the digital economy enables a sustainable digital transformation by: (i) ensuring digital citizen rights; (ii) promoting responsible and safe use of data and digital platforms; (iii) unlocking public-private investments in sustainable digital infrastructure (i.e. green data centres, low-energy broadband, etc.); (iv) leveraging the use of data as a catalyst for digital innovations, entrepreneurship and local economic and sustainable development; and (v) ensuring digital inclusion.

What are key opportunities, challenges and risks?

While the digital economy is offering important unprecedented opportunities for economic and sustainable development many challenges and open questions remain: Here are a couple of critical issues we are working on:?

1)? Measuring data value creation: The socio-economic benefits of the data economy are often intangible and thus it is often very difficult to measure the positive impact on the economy, society and citizens. Thus it is key to unpack the effects of the data economy and to raise the question on how to measure the economic social & ecological value created through the data economy?

2)? Data Sovereignty: Due to the prominence of a relatively small number of large high-tech firms that tend to dominate the data markets, most partner countries are increasingly concerned about their data sovereignty and fear that the new digital economy will lead similarly to national resources curse, to the exploration of their resources and citizens. Thus, a key question is on how we can best support partner countries towards a pathway to reach data sovereignty and empower citizens to remain in control of their personal data?

3)? Data Governance- The need for a clear regulatory framework: To unleash the benefits of the data economy it is critical to develop comprehensive and innovation-friendly enabling environment for the data economy. Therefore, a key question is on how best to support governments to develop an enabling environment that fosters open innovations entrepreneurship, while protecting people’s digital rights, ensuring data protection, privacy and cybersecurity standards?

4)? Local Economic Development While there is a rapid growth of data-driven businesses and data centers also in developing countries, it is often not clear how the revenues generated by the data economy are distributed and to what extent this boom contributes to local economic development and job creation for local communities. A key issue is to what extent the use of data by large scale high-tech companies can lead to positive spillover effects and the growth of a data-driven innovations ecosystem. Often a large share of economic data value creation and its direct benefits remain with very few actors, in particular large scale high-tech companies and the economic benefits for developing countries and specifically local communities remain relatively limited.

Thus, a key challenge is the issue on how best to support partner countries and local communities to derive direct economic benefits from the data economy, particularly, in terms of supporting the job creation and strengthening people’s incomes, in particular of young people, who are most likely to fully participate in the data economy.

5)??Including the Excluded: To often marginalized groups, including women, disenfranchised youth and minorities are excluded from the benefits of the digital transformation. While important progress has been made in closing the digital divide important inequalities remain and there is the danger that the rapidly growing data economy is perpetuating existing economic and social inequalities within societies. For instance, the digital gender gap has even increased in recent years in many developing countries. Thus, this is a critical challenge, which needs urgent attention, to develop strategies and concrete actions that ensure that the benefits of the data economy are more equitably distributed between the global North and the Global South and within our partner countries. It is critical to ensure that no one is left behind and to support women and marginalized groups so that they can fully participate and derive significant economic and social benefits from the data economy and the digital transformation.

6) The Data Economy and Climate Action: Leveraging the use of data and digital innovations hold great potential in terms of supporting taking climate action. For instance, decentralized data platforms (enabled through blockchain technologies), the use of both official and citizen-generate data (enabled through open data spaces and platforms) and the use of AI (sensors and IoT devices) can have a significant positive impact in terms of climate mitigation. Specifically, the use of data and digital innovations contribute towards better tracking and tracing GHG emissions along entire value chains and support governments to better monitor and evaluate the progress made towards reaching the National Determined Contributions (NDCs). At the same time, it is critical to fully acknowledge the significant negative impact of the data economy, in particular of data centers and data/digital infrastructure on climate change and in terms of GHG emissions. Supporting the economic and societal digital transformation should not be dealt separately from reaching a sustainable model. Given that, digital innovations are increasingly indispensable as key enablers for the economy’s green transition, while the greening of digital technologies is a critical success factor for digital transformation. Therefore, it is key to assess both the risks as well as the opportunities of the data economy for climate change and to take concrete actions (i) to significantly enhance the sustainability of digital and data infrastructure, in particular by greening data centers and data infrastructure and (ii) to support innovators, entrepreneurs and government to leverage the power of data and digital innovations as a key enabler to climate action across multiple sectors of the economy, in particular in the energy (smart grid), transport (e-mobility), urban (smart cities) and agricultural sectors. ?

7) Towards long-term and sustainable transformational change: It is critical to design data economy programs in such a manner that they are based on real needs of policy makers, local communities, and citizens. Therefore, it is key that the projects that foster the use of data for local socio-economic and sustainable development are closely embedded within the existing local economic, social and political context and appropriately reflect also the cultural norms of local stakeholders and communities. The extent to which programs can have a long-term and sustainable positive impact on local communities and poor people often do not depend on the type of digital technologies or data sets that are being used, however on the level of trust among policymakers, local communities and citizens and the extent to which the data and digital innovations are being adopted by institutions, communities and people. Therefore, it is critical in the design and implementation of the data economy showcase projects and “use cases” to first gain a clear understanding of the specific local needs of policymakers and communities. Second, it is key to assess the “transformational” potential of the projects to evaluate to what extent the interventions are expected to have a meaningful positive impact that is sustainable over time. A key factor hereby is often to develop a highly participatory process that gradually builds trust and the needed ownership of all stakeholders involved, including policymakers, civil society, the private sector, local communities, and citizens.

The Data Economy Program

?This global program is part of the 德国国际合作机构 Global Digital Transformation program, supported by the Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) and the European Commission . In its first phase it focuses on implementing the following components together with Smart Africa and partner countries in Africa:

The program’s main objective is to support partner countries in deriving economic, social and ecological benefits from the data economy in a broad-based and inclusive manner.? Hence, it aims to reach multiple stakeholders, including policy makers, entrepreneurs, civil society, and marginalized groups—such as women, minorities and youth. Through a people-centered approach, the Data Economy Program, not only ensures inclusiveness while protecting digital citizen’s rights and privacy standards. In fact, it also supports partner countries to strengthen their data sovereignty by: (i) fostering enabling regulatory environments; (ii) developing national data economy strategies; and (iii) boosting the capacity of government policy-makers, civil society and the private sector to leverage data for sustainable development.

?The program focuses on the following key components:

i)??Inclusive Data Economy Policies: supports the development of continental and national data policies that contribute to an open, innovative and inclusive data economy framework at the regional and national levels together with the AUC, Smart Africa, and African partner countries.

ii)?Data Value Creation Showcase Projects: rolls-out innovative data-based use cases and implements showcase projects that enable data value creation, promote sustainable economic development, alleviate poverty and support a socio-ecological transformation across multiple sectors with a focus on inclusive rural development/agriculture, open banking/finance, climate action and financial inclusion of women and marginalized groups.? ??

iii)??Green Data Infrastructure Investments: provides partners with technical assistance to support the development of bankable and technically-sound projects (Digital Investment Facility) for sustainable and secure data infrastructures (e.g., green data centers), together with Multilateral Development Banks (MDBs), European Development Finance Institutions and other regional development banks.

iv)??? Data Economy Capacity-Building strengthens the capacity of stakeholders and institutions in topics focused on the data economy and the economic, social and ecological value creation through data. The program uses a hybrid approach (online and in-presence training programs) is open, inclusive and broadly accessible across different societal groups—policy makers, private sector, civil society, women, youth, minorities and other marginalized groups. The program works closely together with the Smart Africa Digital Academy - SADA .

Please share with us your comments and suggestions and get in touch with our team concerning the implementation of the program.

A special thanks to our great, highly motivated and committed Data Economy team: Modupeoluwa Oluokun Sarah Pankow Daniel SPOIALA Yassin Bendjebbour Bernard J M. Teresios Bundi Abdou Kader TOURE, Phd Juan-Carlos Guzman-Hidalgo Sebastian ?hmann Katharina Mengede Sandile Felicity Maseko MBA (GIBS), PGDiP (GIBS), BSc (UWC) Dr. Katharina Noussi Luísa Franco Machado Angelique Sanga