Information Technology Can Develop Economies Through Social and Natural Capital

This is a continuation of an article about the importance of technology in the development sector; part one covered development through physical and financial capital with the help of different modes of technology.

Social Capital for Development and Information Technology

(Includes hints of physical capital)

Social capital covers networks, communities, and institutions that enrich the social fabric of individuals. Even though this form of capital is highly intangible, it is no less important than the others because social contracts and cultural contexts play a central role in the lives of people in developing countries. Because of the over-arching nature of technology, physical capital (technology, equipment, etc.) is vital in enhancing social capital, and hence, examples mentioned previously are applicable here as well.

Before we discuss how information technology enhances social capital, it is important to link social capital to the Millennium Development Goals of gender equality and global partnership for development. The latter MDG is vague and expansive, and can loosely be accomplished by creating a global knowledge sharing database/platform where individuals and groups come together to discuss specialized ideas. The former goal can be addressed less indirectly through information technology, and three renowned business models come to mind:

• Kopernik is a website that connects breakthrough technology providers with technology seekers (individuals in the field) with the support of generous donors around the world who finance the transactions.
• M-Pesa is a mobile banking platform that is slowly changing the way Kenya’s society handles cash and empowers entrepreneurs to take out loans and save money for rainy days.
• E-Chaupal is a network of computers with access to the internet, which farmers in rural India can use to get the latest agricultural marketing (prices of farm inputs, weather updates, affordable suppliers, etc.) and information from.

These examples not only serve to augment information sharing between groups and communities, but also have a spill-over effect on Millennium Development Goals previously mentioned. For instance, the elimination of intermediaries (through e-Chaupal) strengthens ties between farmers and improves their bargaining power, which impacts the MDG related to ending poverty and hunger. Similarly, the provision of new technology solutions, such as home solar panels and water purification systems (through Kopernik) impacts MDGs related to environmental sustainability and elimination of poverty and hunger.\

While gender equality may not be a direct result of these innovative solutions, it may, however, be an indirect result of strengthened communal ties and empowerment of end-consumers (both men and women). Additionally, new software solutions can be designed to improve literacy levels of girls and women and these programs can be delivered through mobile phones, and SMS campaigns can be launched to positively change public opinion about women rights.

Natural Capital for Development and Information Technology

Natural capital covers natural resources such as land, water, minerals, and anything else naturally available for man’s consumption. The relevant Millennium Development Goal is environmental sustainability, the lack of which is detrimental to the progress of the poor. Issues such as water sanitation and food security plague developing countries, especially those that have been inflicted by natural disasters and wars. Inadequate availability of natural resources also hinders economic progress of individuals because along with knowledge and skills, people need access to good quality raw materials to run their businesses.

There aren’t many examples to go by in this case, but here is a promising mobile phone application:

FLOW (Field Level Operations Watch) is an open-source, Android application that allows field workers to use mobile phones to document how well water pumps and sanitation points in the developing world are functioning, then transmit that data to create an online tagged map of target regions. (Source: Mobile Active)

Environmental sustainability also includes the use of renewable energy sources (solar and wind power, for instance) and reliance on other means to reduce the carbon footprint left on the ecosystem by man. Although the environment may not be the biggest priority of development professionals, who have more pressing issues to deal with (such as poverty, hunger, disease, etc.) its importance cannot be undermined because the poor are most vulnerable to environmental shocks, as recently witnessed by Pakistan and Brazil.

Information technology can step in by improving the distribution of low-cost alternative energy sources (such as Kopernik) and remote monitoring systems (similar to the one used in FLOW) can be used to curtail illegal mining, logging, fishing, poaching, etc. Lastly, disaster alert systems can be developed to alert inhabitants about approaching storms, floods, tsunamis and fires, and consequently, minimize damage to human property.

These ideas seem viable and appealing, to say the least, but it is vital to remember these solutions will fail if cultural contexts are not examined prior to implementation.

This post series drew inspiration from a UN Working Paper, Using Information and Communications Technology to Achieve the Millennium Development Goals.

Technology Important For Development Through Human and Financial Capital

This blog has previously defined the need for good information systems in the microfinance model and detailed the various roles technology can play in this regard, such as improving functional performance, managing credit risk and improving outreach through different tools, to name a few. This was followed by an article that explained why Cloud Computing, which includes the Software as a Service (SaaS) model, is an appropriate medium for the delivery of such an information system to microfinance institutions, as opposed to propriety and off-the-shelf software solutions. Following the same drift, this article explores the benefits cloud computing can offer to the development sector in general, and to the Millennium Development Goals, in particular.

There has been plenty of excitement over the role information and communication technology can play in the development sector – that it can reduce poverty by overcoming the digital divide. It may take several years before the benefits and drawbacks of this theory are tested, but the idea seems promising, despite the unreasonably high expectations. Technology can corroborate any efforts in the area of poverty eradication along the lines of the UN’s Millennium Development Goals (MDGs) and Amartya Sen’s five ‘capacities’ that can make a difference between poverty and welfare: human capital, social capital, physical capital, financial capital, and natural capital. These capacities, which loosely cover the MDGs, are assessed against current and potential technological contributions.

Human Capital for Development and Information Technology

(Includes hints of physical capital)

This includes education, skills, health and other such capacities can help achieve Millennium Development Goals related to universal education, child health, maternal health and HIV/AIDS. A few notable efforts in this area have recently emerged as the ubiquitous power of mobile phones became eminent. The safest way of achieving universal primary education is through capacity building of the education system (teachers, curriculum, school facilities, etc.) and here, information technology can deliver gains in the areas of training sessions for teachers in remote locations across the worlds, and enriching the course curriculum by creating knowledge-sharing hubs that offer access to quality educational resources related to academic and vocational education. The One Laptop Per Child (OLPC) program is also relevant here.

Mobile phone penetration has shot up in many developing countries during the last decade, such as India, Kenya, Brazil and Pakistan, and software developers are keen to explore the development potential of mobile phone applications. Mobile Health, commonly referred to as mHealth, is the practice of managing health service through the use of mobile phones. This field is gaining popularity in Sub-Saharan Africa, where a few mobile phone applications have been developed by different software vendors with a vision to help the masses.

These applications can send out text messages to villagers in remote areas to share information about medicine dosage and timings, medical appointments, HIV/AIDS, and offer basic health advice for common problems, such as headaches. If the symptoms get worse, patients are given directions to the nearest medical clinic. One mHealth application goes a step further by combining mobile banking elements into the service by helping customers save money for the desired delivery plan. The service has been successfully tested in Uganda with the help of MTN (the chosen cellular network provider). These applications not only improve patient monitoring over large distances, but can also implicitly train rural health workers by giving them access to a global knowledge base about specialized medical services, rare diagnosis and breakthrough medical practices.

The above ideas about improving human capital in developing countries also implicated physical capital, which covers equipments and technologies, such as software and hardware. Such services would require seamless integration between the software developers (to create these applications), cellular carrier (to transmit information via text message), cloud computing providers (to deliver relevant information to the masses), and third party players (such as hospitals and clinics).

Financial Capital for Development and Information Technology

Financial capital includes financial services such as savings, loans, insurance, and the list can go on. Even though formal financial services are scarce in developing countries, the poor have numerous financial needs that are covered by informal money lenders (ROSCAs, Susu collectors, etc.), which may offer convenience, but are fraught with risk of fraud and mismanagement. Microfinance helped establish the link financial services to economic and social development, which incidentally covers the Millennium Development Goal of eradicating extreme poverty and hunger. The significance of technology in microfinance has already been highlighted on this blog through a variety of articles, which you can read by clicking on the various links.

Leaving aside microfinance, information technology can assist other development programs aimed at tackling hunger and poverty by reducing transaction costs faced by individual low-income traders (consider use of mobile banking and informational mobile applications that reduce information asymmetry in markets for farmers in rural areas).