Rapid energy generation remains one of the most urgent tasks for Nepal as energy deficits at close to 1000 MW at peak hours leave thousands of households all around the country in the dark for over 12 hours on a typical day. But can the emphasis on hydroelectricity alone transform our economy, especially when the need is to create labour intensive industrial jobs that can absorb and employ our labour force which is well over 70 percent of the population?

Growth and productivity limitations of agriculture, which contributes less than a third in our overall output but employs over half the labour force, make it necessary to develop a labour intensive manufacturing industry. Globally, from Korea to now China and to a lesser extent India, manufacturing has been the key driver of economic development due its potential of rapid productivity rise, development of human capital and specialisation for comparative advantage in exports, which can bring in foreign exchange to finance imports and development.

But to enter into manufacturing processes, multiple sectors need to be identified and appropriate interventions made in cooperation with the private sector. Digital technologies and their rapid penetration can greatly facilitate our strides towards development.

Internet for development

According to the Digital Dividends: World Development Report 2016, firms and households connected to high-speed internet and other developments such as access to mobile phones are some of the key explanations of the rapid and sustained transformation of the Chinese economy. With over 600 million internet users, China has been able to leverage the digital technologies with e-commerce giants such as Alibaba, one of the biggest internet-based companies in the world.

Already with almost 90 percent penetration of mobile phones (which may not actually mean that 90 percent of the people have access to mobile phones), more people have cell phones than say potable drinking water at just over 80 percent and toilets at close to 60 percent. This is a not a Nepal-specific phenomenon and is true for our low-income counterparts in much of South Asia and Sub Saharan Africa. However, penetration of the internet, which requires larger capital investments, has not taken place to the same extent. Broadband internet is scarcer at less than five percent, which means that only an extremely elite section has access to broadband internet. This is where the digital divide becomes problematic.

The World Development Report suggests that the digital divide, which has mostly to do with low-cost access to high-speed internet rather than penetration of mobile phones (nearly universal with 70 percent of the poorest in developing economies having access to a mobile phone currently), impedes the potential of digital technologies to boost economic growth, improve delivery of services, increase job opportunities and even reduce corruption.

Bridging the gap

Imagine not having to go to government offices to get administrative jobs done, which will also reduce palm-greasing. Or the families of migrant workers making free calls via the internet and how that would save them precious resources for education and health. Moreover, less than a third of the population has access to financial services in Nepal. Penetration of high-speed digital connectivity will make establishment and transactions of financial institutions less costly.

We envisage a new Nepal to be more inclusive, broad-based and justly governed. With the digital divide, the inequalities will remain as an elite section will be almost at a par with information and knowledge of global standards while much of the population will continue to languish in ignorance. Much of the education and health services today can be transmitted via digital platforms but the need is of high-speed services and platforms. The true revolution will be when a sick person in Mugu or Mahottari, via videoconferencing, be able to consult a specialist in Kathmandu without having to travel. There must be a number of Nepali scientists, professors and entrepreneurs who might want to teach and educate their village and locality.

Digital technology today has the potential not just to boost economic growth but also expand governance capabilities. It is largely due to media that the government gets pressurised to do its job—after the earthquake, for example, it was because of media coverage that the state had to undertake relief measures. With the penetration of digital technologies, the voice of the people will also be stronger and governance more robust. The government—fairly limited in its reach—can actually penetrate far and wide into society, which would also enhance its legitimacy. Perhaps, the government and its institutions will be more accountable, leading to greater potential for rapid transformation.

But for greater internet penetration in Nepal, the state will have to subsidise infrastructure development and encourage multiple private sector players to run efficient services so as to promote competition. Along with this, the quality of schools and learning will have to be improved so that a large section can reap the benefits of digital connectivity.

Gupta is pursuing a MSc in Political Economy of Development at the University of London