Connectivity

Key to prosperity

Connectivity is the essence of life and integral to our survival and growth. It creates synergy and develops symbiotic relationships. In this competitive age, decision making remains the key for development. Connectivity through digitization has brought in speed, accuracy and adequacy of information to decision makers. It has also enabled people to make the right decisions for creating a sustainable future through innovation.

In this regard, technologically advanced nations such as USA, UK, France, Germany and Japan offer a fascinating glimpse to the fruits of connectivity. Be it digital, infrastructural (roads, rail, airports, and seaports), or service (electricity, water, cooking gas and health care), connectivity in all its forms bridges gaps and harmonizes developmental efforts.

Impact of digital connectivity
Everything surrounding us has a digital content in one form or another. This can be computers, laptops, mobile phones, internet, e-banking, e-commerce, or e-advertising to name a few. It has even further grown from just internet connectivity to the Internet of Things (IOT). Three core factors responsible for the digital revolution are: accessibility, affordability and quality. Infrastructural development plays an important role in taking the internet broadband everywhere. Availability leads to accessibility, which in turn needs affordability. With the increase in the user base, the cost of internet has come down drastically, making it affordable.

The economic impact of digital connectivity can be gauged by the fact that in 2016, at USD11.5 trillion, it contributed almost 15.5Pct of world GDP. This is expected to increase further to 25Pct in less than a decade. The United Nations Conference on Trade and Development (UNCTAD), in its 2019 report, states that global employment in the Information and Communication Technology sector increased from 34 million in 2010 to more than 39 million in 2015. According to McKinsey, in India alone, 65 million new jobs would be created by 2025 due to digitization.

At a global level, internet penetration is 48Pct of the total population. Region-wise, internet users are the highest (79.6Pct) in Europe but only 21.8Pct in Africa. Internet penetration rate in Ethiopia is only 15.4Pct. Among African countries, at the school level, it is highest in Mauritius (85Pct), whereas it is just 2Pct in Ethiopia. In a population of 108.8 million, mobile subscription in Ethiopia stands at 64.4 million while internet users has reached 17.87 million. In Africa, the contribution of internet to GDP is USD18 billion, which is poised to increase to USD300 billion by 2025. According to UNCTAD, the global value of e-commerce is estimated at USD29 trillion, equivalent to 36Pct of GDP.

In 2017, as many as 1.3 billion people shopped online, which is 12Pct higher than what was in 2016. Also 277 million people made cross border purchases in 2017. In Africa, e-commerce sales will touch USD75 billion in 2020. Ethiopia, with just one percent of internet penetration, needs to move faster to compete with other countries in this respect.

Other benefits of digitization include helping in minimizing wastage, like reduced paper consumption due to paperless offices. Also, communication through e-mail or in-home shopping through e-commerce saves time, money, and physical efforts. Digital connectivity has helped countries around the world in accelerating socio-economic development. It has also led to transparency and efficiency; thereby curbing corruption.

Infrastructural connectivity
For a holistic development of any economy, infrastructural development holds the key. A renowned economist, Robert Chambers, once said: “If I had money, I would use it to build roads, if I had more money, I would build more roads. If I had still more money, I would still build more roads.” This shows the significance of road networks in any national economy.

A road connecting a village may not necessarily bring prosperity unless villagers are made aware of the opportunities. In Ethiopia, under the Road Sector Development Program (RSDP), current all-weather road length was 120,171 kilometers (32Pct of the required road network) in 2017/18 and is targeted to reach 220,000 kilometers by the end of the current financial year (2019/20). Annual budget spent on road construction was ETB33.9 billion (USD1.24 billion) and is planned to reach as high as ETB50 billion in the current fiscal year. The benefits of road development and upgrades are an increase in traffic, reduction of commuting times, less waiting time for roadside passengers, less breakdowns, promotion of tourism, and land value appreciation, among others.

Rail connectivity from land-locked Ethiopia to the port town of Djibouti was planned to reduce the travel time from 84 hours to 10 hours, although this target wasn’t met for various reasons. This 656-kilometer railway network was created with an investment of USD3.4 billion. It has a carrying capacity of 6-7 million tons of cargo and envisages increasing it to 10 million tons in near future. The government of Ethiopia has a programme to increase the length of railway network to 1,545 kilometers in the coming years.

At a global level, transcontinental transport corridors and rail systems to carry cargo and passengers are being developed to reduce cost, time and increase market coverage. China’s Belt and Road Initiative (BRI), the China Pakistan Economic Corridor (CPEC), India’s Dedicated Freight Corridor (DFC), Delhi-Mumbai Industrial Corridor (DMIC), Trans European Transport Network (TEN-T) are few such examples. These participative and cooperative efforts involving all will unify concerted efforts to build stronger national and regional economies. Ethiopia should also adopt such initiatives and implement it in cooperation with its neighbors.

In doing so, it is possible to change the economy and trade relations in the Horn of Africa, a region mostly known for being fertile ground for internal and external conflicts and violence. Rail connectivity among the countries would also help Ethiopia and its neighbors achieve sustainable economic growth and access large markets without being challenged by transport hurdles. Improving transport would also help in creating new trade centers and towns. Creating new cities and towns would enable Ethiopian authorities to create job opportunities and reduce the rural-urban migration to Addis Ababa. In this regard, it is worth mentioning the town of Dire Dawa, whose economy significantly grew after being a center of trade to those travelling to Djibouti in the past.

Rural connectivity
Various studies conducted by the International Food Policy and Research Institute (IFPRI) in China, Vietnam, India and some African countries point to the same conclusion–rural roads do more for growth and poverty mitigation than anything else. In Ethiopia, agriculture constitutes 40Pct of the GDP, ensures 80Pct of exports and employs 75Pct of the nation’s workforce. Ethiopia’s working age population is projected to grow by two million per year over the next decade. More than 80Pct of the population lives in rural areas, resulting in a higher employment demand in rural areas. Agriculture-led growth can offer a sustainable solution to poverty reduction and food security. This can be achieved by connecting farmers living in rural areas to consumers in urban areas.

Equally, building agro-processing farms and industries near farmland would also be helpful in intensifying the economy of rural towns. Expanding rural road connectivity would also enable livestock farmers, usually challenged by droughts caused by changes in weather, to access markets any time they want. Additionally, it will considerably improve access to schools, health centres, hospitals, markets, urban centers, and jobs.

Be that as it may, providing quality telecom services in rural areas is very important. It is obvious that this is linked to electricity coverage. But as a solution, using off-grid electricity provision mechanisms would equally help in this regard. All in all, rural and remote areas must be given equal attention in the attempt to improve telecom services in Ethiopia. Otherwise, farmers won’t be able to make informed decisions as being disconnected means they’re unable to access important market information and learn new ways of improving productivity. Any plans targeted at improving telecom and electricity services across Ethiopia must account the interests of people living in rural areas.

Urban connectivity
Urban connectivity, on the other hand, has its own set of challenges. Growing populations, influxes from rural areas, water woes, traffic jams, difficult commutation, pollution, waste generation, higher stress levels, high price of living, inflation and crime. But services are much better than in rural areas. Even with problems, recreational, educational, banking, health care, shopping and faster internet connectivity facilities and job opportunities do compensate.

Social Connectivity
Social connectivity is another important aspect that determines prosperity. A united society offers synergy. They are awake, supportive, sharing, and respectful of each other. Swami Vivekananda, during his visit to Chicago, USA, observed a beggar crossing the street daily in a very bad shape, looking frail and broken. After few months, Swami again noticed and recognized the same beggar, who was then well-dressed and walking with natural pride. He attributed this transformation of the beggar to the American, which came forward to help and uplift one of them.

We can hardly find a better example of the benefits of connectivity than that of Ethiopia. Its worthy Prime Minister Abiy Ahmed (PhD), has just been honored with the Nobel Peace Prize. His unrelenting efforts to harmonize the strained relations with neighboring countries and the brokering of peace for regional parties towards a peaceful, progressive and prosperous future has earned him this honor. Nonetheless, a lot has to be done in helping Ethiopia manage its internal crises and violence, such as conflicts among ethnic groups. The administration of Abiy must come up with a lasting solution to stop proxy wars amongst political elites and officials of autonomous regional leaders.

Equally important is employing mechanisms to improve social connectivity amongst people living in different regions. In this regard, it is worth mentioning the experiences of India where strong social connectivity became instrumental in increasing the willing participation in nation building movements. Social movements have deeply impacted the social transformation of the Indian nation. This shows the immense contribution of connectivity in ensuring a better future for nations and its great importance in the path towards prosperity.

8th Year • Nov.16 – Dec.15 2019 • No. 80