Covid-19 has brought to the limelight the vast digital divide between the developed world and the Global South. As the developed world becomes even more interconnected with the rolling out of 5G networks, there is a risk that the developing world will be left farther behind.
Bridging the digital divide by improving infrastructure and facilitating digital payment will go a long way towards improving economic growth and resilience. It could hasten modernisation of the informal economy, and spur a gig economy that can offer income sources to millions of citizens.
Less than 10% of the adult population has access to credit cards in most African countries. By comparison, more than 60% of adults in emerging economies like Brazil and China have access to credit cards.
Many African countries, however, have a high usage of mobile money payment systems like M-Pesa, which do not require internet connectivity. IMF data shows that more than 60% of adults are active users of mobile money in countries like Botswana, Kenya, Namibia, Tanzania, Uganda, and Zambia.
Most successful digital payment services – such as WeChat Pay and Alipay in China, Apple Pay and Google Pay in the West – were developed by internet platforms. Platforms are well-positioned to launch successful digital payment services due to their network advantage, which offers a large pool of potential users who can be easily integrated within the existing platforms.
In conclusion, we can agree that the pandemic has been particularly unkind to developing countries in Africa and elsewhere, where stay-at-home restrictions in the absence of robust internet infrastructure have ended up causing a severe toll on livelihoods. Some developing nations that had imposed severe social distancing laws were forced to backtrack, in part because they lacked the digital connectivity to support teleworking and e-commerce.