L 7 A Ak; : s 4A, s ...| 0 f tV ' Sr r-w 'lbS'As;S- 2 iX ~~/ S3 =0 K0 '. - ;7D' - 0 o, -< \- a. .- PQ~~~~~~~~~~~~~~~~~~~~~.r LMF 7~ % Information and Communication Technologies A WORLD BANK GROUP STRATEGY THE WORLD BANK GROUP. Washington, D.C. C) 2002 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved. 1 2 340403 02 The findings, interpretations, and conclusions expressed here are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries. 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Top left, Teacher and students in Brazil, courtesy of World Bank Photo Library/ Francis Dobbs. Top middle and middle right, Fish broker and woman on a hillside, the Philippines, courtesy of Tilak Hettige. Top right, Group of Berber women from the Tamar cooperative in Morocco, courtesy of Eva Rathgeber. Middle left, Maasai Moran warrior in Kenya, C Joseph Van Os! Getty Images/ The Image Bank. Bottom left, Communications satellite above Earth, © Eric Meola/ Getty Images/ The Image Bank. Bottom middle, Celebration of the first digital telecommunications switch in Lichinga, Niassa Province, Mozambique, courtesy of Monica Hencsey. Cover design by Joyce Petruzzelli. ISBN 0-8213-5105-2 Library of Congress Cataloging-in-Publication Data has been applied for. CONTENTS ACKNOWLEDGMENTS / V EXECUTIVE SUMMARY / vii ABBREVIATIONS / xiv INTRODUCTION: KNOWLEDGE, INFORMATION AND COMMUNICATION TECHNOLOGIES, AND THE SCOPE OF THE SECTOR STRATEGY PAPER / 1 CHAPTER ONE: INFORMATION INFRASTRUCTURE AND DEVELOPMENT / 5 The current state of the digital divide / 5 Is II relevant to poverty reduction? / 6 Is there a role for the public sector in improving access to II? / 9 Does the World Bank Group have a role to play? / 11 CHAPTER Two: PAST PERFORMANCE AND NEW CHALLENGES / 13 Operations / 13 Investment assistance / 14 Knowledge sharing / 17 CHAPTER THREE: STRATEGIC DIRECTIONS IN INFORMATION INFRASTRUCTURE I 18 Broadening and deepening sector and institutional reform / 18 Improving access to Il /21 Knowledge-sharing, research, and global public goods / 25 Priorities/ 25 CHAPTER FOUR: IMPLEMENTATION STRATEGY / 27 Division of responsibilities / 27 Organizational improvements / 27 Monitoring and evaluation / 31 Financial impact and resources / 32 Retiring OP 4.50 / 33 CHAPTER FIVE: INFORMATION AND COMMUNICATION TECHNOLOGIES AND SECTORAL APPLICATIONS / 34 Supporting ICT in education and training / 34 Supporting other ICT applications / 36 NOTES / 39 BoXES Definitions/ 3 Box 1.1: Posts and Radio as a Force for Development / 6 Box 1.2: IT in Rural Thailand / 8 Box 1.3: The Cost of Exclusion / 8 Box 1.4: The Internet as a Means of Political Participation / 9 Box 1.5: The New Realities of Telecommunication Sector Reform I 10 Box 1.6: Worldwide Climate for II Investment /I 11 Box 2.1: OED/OEG Recommendations, the SSP and Management Response I 15 Box 2.2: The Impact of Peru's Telecommunication Reform / 15 Box 2.3: Romanian Cellular Experience / 16 Box 3.1: Integrated II Reform in Morocco / 20 Box 3.2: infoDev and E-Readiness / 20 INFORMATION AND COMMUNICATION TECHNOLOGIES Box 3.3: Investing in IT in Developing Countries / 23 Box 3.4: infoDev Incubators / 23 Box 3.5: Energy for Rural Transformation Project in Uganda / 25 Box 5.1: Private Sector Investment in NIIT Student Loan Program in India /35 Box 5.2: ICT for Micro and Small Business Development / 36 FIGURES Figure 1.1: More Telephones Equals Faster Growth? / 7 Figure 2.1: Changing Composition of Bank Group II Portfolio during the 1990sf 16 TABLES Table 2.1: Overview of New Bank Group ICT Operations in the 1990s / 14 Table 3.1: What Will the Bank Group do Differently in II? / 19 Table 4.1: New Products and Services / 29 Table 4.2: Using the Menu of Bank Group Instruments for II Development / 29 Table 4.3: Key II Monitoring and Evaluation Indicators / 31 Table 4.4: Strategy Implementation: Costs per Annum for Three Years / 33 ANNEXES Annex 1: Good Practice on Information Infrastructure / 43 Annex 2: Framework for National Information and Communication Technologies Strategies /46 Annex 3: Options for Universal Access and Rural Telecommunication Development / 50 Annex 4: Putting Information and Communication Technologies to Work in Other Sectors I 53 Annex 5: World Bank Special Initiatives in Information and Communication Technologies I 69 Annex 6: Knowledge Development and Dissemination / 72 Annex 7: World Bank Group Instruments / 74 Annex 8: Proposed Training Courses / 77 Annex 9: Information and Communication Technologies Monitoring and Evaluation Indicators / 79 iv ACKNOWLEDGMENTS This report has been prepared with enthusiastic support and contributions from many persons throughout the World Bank Group. The work on this report was financed by the Finance, Private Sector and Infrastructure (FPSI) Network, and supported by Nemat Talaat Shafik, Vice President and Head of the FPSI Network, Assaad Jabre, Vice President, Operations, and Mohsen Khalil, Director, Global Information and Communica- tion Technologies Department. The core team comprised Robert Schware (Task Manager), Charles Kenny, Vivien Foster, Bjorn Wellenius, Anupama Dokeniya, David Wheeler, Bill Kerr-Smith, Christine Zhen-Wei Qiang, Kerry McNamara, Peter Smith, Sabine Durier, and Lizmara Kirchner. Valuable contributions and comments were received from World Bank Group colleagues including Mohsen Khalil, Emmanuel Forestier, Pierre Guislain, Kent Lupberger, Carlos Braga, Ravi Vish, Jill Armstrong, Paul Ballard, Alain Barbu, Lizabeth Bronder, Gillian Brown, Yann Burtin, Joanne Capper, Daniel Crisafulli, Lance Crist, John Daly, Jean-Pierre Djomalieu, Nabil Fawaz, Jim Hanna, Nagy Hanna, Robert Hawkins, Andrew Hook, Emma Hooper, Erik Johnson, Michel Kerf, Jeni Klugman, Alex Lepori, Jurgen Lohmeyer, Samia Mel- hem, Carsten Mueller, Marisela Montoliu Munoz, Mohammad Mustafa, Homira Nassery, Harry Patrinos, Miria Pigato, Cecilia Sager, David Satola, Geoffrey Shepherd, Eduardo Talero, Klaus Tilmes, Clemencia Torres, and Erich Vogt. We are grateful for the consulting services of Digital 4Sight and the editorial assistance pro- vided by Shampa Banerjee. v EXECUTIVE SUMMARY communication technologies are discussed in Annex leadership in extending the reach of information and 5, but will be considered in a broader review of the communication technologies through development of Bank's knowledge work being undertaken at the Man- information infrastructure. To this end, the World aging Director level. Bank Group will increasingly focus on mobilizing and Our vision leveraging private sector investments and finance. It will exploit the potential for complementarities among Our vision is for the World Bank Group to be a cata- existing World Bank, International Finance Corpora- lyst in improving access to information and commu- tion, and Multilateral Investment Guarantee Agency nication technologies and promoting their use for instruments, as well as apply them in innovative ways stimulating economic growth, increasing equality, and such as in incubators, joint privatization operations, reducing poverty. Realizing this vision involves broad- and universal access packages. The World Bank Group ening the Bank's established agenda, involving a shift will also support the development of soft infrastruc- in the approach to the sector. ture such as software development, enabling technol- ogies, encryption software, and delivery and payment A new strategic agenda systems, which are the foundation for transactions on The new agenda comprises action along four strategic the Internet. To ensure that the benefits of sector re- directions for World Bank Group lending, and knowl- form are widely distributed to rural and marginal ur- edge products related to information and communi- ban areas, the World Bank Group will provide cation technologies over the next three years. These technical and investment assistance to extend access directions clearly relate to poverty alleviation (as dis- beyond what commercial providers are prepared to do cussed in the Poverty Reduction Strategy Paper Sour- on their own. It will encourage a variety of mecha- cebook information and communication technologies nisms to do this, such as universal access objectives chapter), as well as to private-sector led growth, which and targets, specialized funds to provide onetime cap- has been clearly demonstrated to be an important el- ital subsidies to promote access in liberalized markets, ement of sustainable poverty reduction.2 and local participation in nonprofit communication and information facilities. Where possible, universal Broadeningand deepeningonalsectoaccess initiatives will exploit synergies with other ru- ral infrastructure projects and with special initiatives The scope of policy-based and technical assistance op- such as World Links for Development and the Global erations will be broadened from telecommunication Distance Learning Network. to cover the entire information infrastructure sector. First, to deal with increasing convergence among tech- upporting information and communication nologies, lines of business and enterprises, all elements technologies human capacity of the physical infrastructure-such as cable, wireless The World Bank Group will support the development and satellite networks, optical fiber rings, Internet of a human capital base for exploiting information and Service Providers, data storage centers, and broadcast- communication technologies through better-educat- ing facilities-will be addressed within an integrated ed population. The benefits of access to information policy framework. Second, legislative and regulatory infrastructure can only be realized when potential us- changes will be pursued as required to facilitate the ers possess the skills to apply these tools for economic commercial and social exploitation of the Internet and social purposes. The most important use of infor- through e-commerce and e-government applications. mation and communication technologies in education Third, policy reforms will include- traditionally over- is as a pedagogical tool, when properly integrated into looked sectors such as postal and distribution logis- a broader educational program. However, there is also tics (media and content), -which are particularly a need for information and communication technolo- relevant to the poor due to their low cost and wide gies to be used to develop sector-specific skills and reach. Fourth, support for regulatory development and capacity. The shortage of information and communi- capacity building will be extended -beyond initial re- cation technologies skills slows the process of devel- forms to ensure sustainability and effective develop- opment and exacerbates the lag that client countries ment of competitive markets. (Annex 2 suggests a are experiencing in joining the global knowledge econ- number of generic country issues to be addressed in omy. World Bank Group support for information and information infrastructure development policy). communication technologies human resources will be pursued at three levels. First, there will be support for the rollout of information and communication tech- The World Bank Group will promote private sector nologies (where appropriate) at the school, college, and ix INFORMATION AND COMMUNICATION TECHNOLOGIES adult education level. Second, private sector partner- the least developed regions of middle income coun- ships will be formed for technical skills training of the tries), for example, the focus will be on connectivity next generation of information and communication while exploring the potential use of information tech- technologies workers, such as network technicians, nology for economic and social development. In computer programmers, web developers, and database wealthier regions, support for policy reform, and in- managers. Third, advice and skills training will be pro- vestments covering convergence technologies and in- vided for entrepreneurs and government officials seek- formation technology services and applications will ing to develop knowledge economy applications and receive greater attention. industries. The World Bank Group will also take part in the generation of global public goods-through research Suppnortging inpforations andcommunicationand dissemination of knowledge about information technologies applications and communication technologies, mobilization of lo- World Bank Group investments in information and cal and international information technology communication technologies will support a wide range industries to focus more directly on poverty allevia- of business models and information technologies in tion based on information technology, and support operational projects. International Finance Corpora- for developing country participation in international tion investments will focus on the use of information institutions related to information and communica- and communication technologies as a platform in ap- tion technologies. In an area that is changing so rap- plications that would enhance public administration idly and where the World Bank Group is rolling out a and private sector development, as well as on those range of new products and instruments, monitoring with a significant social sector development impact. and evaluation must be central. The World Bank Additionally, information and communication tech- Group will track a range of indicators of sector devel- nologies will continue to be included as a component opment and project success, and ensure the rapid in- of World Bank projects in most other sectors, espe- tegration of lessons learned into new project design. cially in education, health, finance, small business de- velopment, and public sector management. It is Implementation strategy important to ensure that information infrastructure Successful implementation of the proposed informa- and information and communication technologies tion and communication technologies strategy requires applications are integrated into Sector Strategy Papers, a division of responsibilities across the World Bank Poverty Reduction Strategy Papers, and Country As- Group, and between the Global Information and sistance Strategy processes. In some cases, this will be Communication Technologies department and the rest as part of a knowledge economy strategy, in other cas- of the World Bank Group. Unlike most sectors, infor- es, the role of information and communication tech- mation and communication technologies have wide- nologies in helping to meet Country Assistance ranging implications for all areas of focus in the World Strategy goals should be explored. The Global Infor- Bank Group. Their pervasive nature makes a coordi- mation and Communication Technologies department nated approach throughout the World Bank Group will support this process through support for economic all the more important. Successful implementation also and sector work programs. This will ensure that the calls for organizational innovations needed to ensure development impact of the new technologies is fully that the Global Information and Communication harnessed. Technologies department is well equipped to deliver on its mandate. And some issues affecting informa- tion and communication technologies human resource In order to maximize our development impact, the development and obtaining maximum value from in- World Bank Group will concentrate its information formation and communication technologies applica- infrastructure activities where discussion with coun- tions in other sectors need to be addressed. try and regional teams suggest that information infra- structure is acting as a bottleneck to development. Two Division of responsibilities sets of countries are suggested where this might be the The Global Information and Communication Tech- case: those at maximum risk of falling further behind nologies department will assume primary responsibil- and those with the greatest potential to benefit from ity for the first two interrelated strategic directions: the new information infrastructure technologies. Se- helping to create the enabling environment and im- lectivity will also be exercised in terms of instru- proving access to information infrastructure. The Glo- ments-in International Finance Corporation bal Information and Communication Technologies "frontier" markets (the least developed countries and department together with the regions and sectors will x EXECUTIVE SUMMARY work to integrate broader information and communi- munication Technologies department is now in a cation technologies policy and institutional reform strong position to support other parts of the World work within country programs, as well as with activi- Bank Group in providing the range of services needed ties in areas such as fiscal, trade, competitiveness, and by our client countries. However, to competently meet financial sector policies. In some cases, the Global country demand requires attention to a number of or- Information and Communication Technologies de- ganizational innovations: partment will also build linkages or partnerships with * Management development: The Global Information other Bank departments that possess specialized skills and Communication Technologies department will to more effectively deliver on these strategic directions. improve its implementation approaches to respond For example, the Global Information and Communi- to development opportunities creatively, quickly, cation Technologies department will seek the assistance and efficiently. The Global Information and Com- of the Legal Operations department on the legal as- munication Technologies department will work pects of sector reform. To track World Bank Group closely with country and sector management units performance as it relates to development effectiveness, to integrate information infrastructure and infor- a set of internal and external indicators will be moni- mation and communication technologies more tored and evaluated jointly by the Global Informa- broadly into Country Assistance Strategies, eco- tion and Communication Technologies department nomic and sector work, and World Bank Group and the regions. lending programs. The Global Information and The Global Information and Communication Tech- Communication Technologies department region- nologies department will play a supporting role in al coordinators and economists will support ana- planning and executing the third and fourth strategic lytical work and country dialogue to assist country directions where necessary. Efforts to develop a hu- teams in developing information infrastructure, and man capital base to exploit information and commu- broader information and communication technol- nication technologies through training and education ogies strategies and projects. programs will remain the responsibility of the World * Products and services innovation: The urgency of sec- Bank Group education departments. The respective tor reform, rapid development of new technologies, sector units will develop information and communi- and tightening of capital markets demand an ex- cation technologies policies and applications in other panded role for World Bank Group product lines, sectors across the World Bank Group. While the Glo- a more proactive approach, and a rapid project roll- bal Information and Communication Technologies out capacity. Also, in order to respond quickly to department will provide support for such develop- client requests for technical assistance that have ment, when necessary, the primary responsibility for been supported by World Bank country teams to using information and communication technologies resolve investment bottlenecks, a limited technical to improve the development impact of sector-based support capability will be developed and launched programs lies with the sector units across the Bank through such existing vehicles as the infoDev pro- and International Finance Corporation. There is al- gram. Finally, World Bank Group synergies to sup- ready considerable enthusiasm for, and investment in, port a broader and deeper strategic approach will information and communication technologies appli- be enhanced by deploying new tools like e-readi- cations across the International Finance Corporation ness assessments, information and communication and the World Bank, and a few pockets of excellence technologies country strategies, and e-government are emerging, including ongoing application develop- toolkits. ments in Poverty Reduction and Economic Manage- Knowledge and skills development: The World Bank ment, Human Development, and Private Sector Group will enhance its skills and knowledge Development networks. However, more sector units through an expanded program of research on is- need to develop a greater capacity to incorporate in- sues of information and communication technolo- formation and communication technologies into gies and economic development, and through project design. systematic learning from its own operational expe- riences in the field. The Global Information and Tools and organizational innovations Communication Technologies department will also for the World Rank Group adjust the mix of staff skills to reflect the range of The demand by the client countries to harness infor- its activities from postal and distribution logistics mation and communication technologies for develop- and media to e-commerce, e-government, and busi- ment is accelerating and requires a Bankwide response. ness development. The Global Information and The recently created Global Information and Com- Communication Technologies department will give xi INFORMATION AND COMMUNICATION TECHNOLOGIES a high priority in its work program to knowledge sector (e-economy); and also in combined sector ex- sharing with the World Bank Group's regions, and pertise with information technology experience. This to facilitating stronger relationships with centers presents potentially serious risks in terms of the World of information and communication technologies Bank Group's reputation and project sustainability. expertise outside the World Bank Group. The A team of representatives from Poverty Reduction World Bank Group's information and communi- and Economic Management, Operational Policy and cation technologies sector strategy will also include Country Services, Information Solutions Group, and increased staff training for both the Global Infor- the Global Information and Communication Technol- mation and Communication Technologies depart- ogies department recently concluded that the long ment and other World Bank Group staff in such term solution for this skills gap would be to hire sec- areas as e-commerce, e-government, and e-learn- tor experts with considerable information technology ing. It will also introduce new techniques such as experience, as well as an active program of training staff exchanges and mentor programs. and sensitization among country directors, manage- Externalpartnerships: In line with Comprehensive ment, task managers, task team leaders, and procure- Development Framework principles, external part- ment specialists in the integration of information nerships will play an important role in the imple- technology in a process of institutional change man- mentation of the new strategy. The World Bank agement. This has significant implications for bud- Group is already cooperating on information and gets and strategic staffing throughout the World Bank communication technologies issues with United Group. Nations organizations such as the United Nations In the short term, as an interim solution, three pro- Development Program, the International Telecom- grams will be implemented: munication Union, the Universal Postal Union, the * Framed in the context of improving risk manage- United Nations Commission on International Trade ment at the operational level, the significant com- Law, and the World Trade Organization. Recently, plexity of information technology components will the interaction between the World Bank Group be made clear to all staff involved in project prepa- and the Inter-American Development Bank in this ration, along with suggestions for sources of assis- area has increased. The World Bank Group will tance, guidelines on thresholds for seeking such work on coordinating strategies with bilateral agen- assistance, and a recommendation to seek assistance cies in client country information and communi- as early in the project cycle as is feasible. Because cation technologies sectors. Multilateral and the information and communication technologies bilateral relationships will be strengthened. At the revolution may have a far-reaching impact on same time, the World Bank Group will work with emerging economies, and thereby on the way many nongovernmental organizations to move toward of our client governments do business, the broader community-driven development in the sector with strategic implications need to be considered dur- increasing focus on rural areas. The Development ing the Poverty Reduction Strategy Paper and Gateway Foundation and its work in creating Country Assistance Strategy discussions. knowledge resources and supporting initiatives to * A Task Manager's Toolkit on Information Technol- diminish the digital divide will be a priority for new ogy Components will be developed, covering issues partnerships. infoDev, for example, is already sup- such as procurement, risk identification and man- porting the development of country gateways agement, recurring problems in information tech- through grants. nology projects, and key concerns of information Information and communication technologies technology project management. The toolkit will provide recommendations to teams on when to seek applications assistance during project preparation and apprais- It has been widely documented (by various Internal al, including on the advice to provide borrowers Audit reports) that the World Bank Group's current contemplating substantial information technology process for designing and implementing information components, and sources for that assistance. The technology components of projects needs strengthen- toolkit should be widely disseminated within the ing. Despite these components accounting for a sig- World Bank Group and to the clients, and made nificant percentage of costs in a range of projects, the available on-line. skills base to judge their realism, efficacy, and institu- * A Quality Enhancement Team will be formed to tional sustainability is rare among task teams and provide advice on information technology compo- managers. Skills gaps are particularly serious in two nents when required, as judged by the managers areas: new applications in government and the private responsible for an operation as part of the World xii EXECUTIVE SUMMARY Bank Group's efforts to manage risks during project information and communication technologies in preparation and supervision. It will consist of staff public services. from Information Solutions Group, Operational Policy and Country Services, Poverty Reduction Conclusion and Economic Management, Human Develop- The digital divide concerns far more than access to ment, and Global Information and Communica- computers and networks. It includes training, educa- tion Technologies department with significant tion, and a range of legal, economic and social insti- experience in the use of information technology in tutions. A concerted effort will be needed from within World Bank projects. The team will provide early the World Bank Group to assist countries in overcom- reviews-Project Appraisal Document stage-of ing the digital divide. And it should be clear that even information technology components in projects. with this effort, the strategy presented here alone can- Reviews will be strongly advised for information not come close to overcoming the digital divide. technology components whose complexity, scope, At the same time, the strategy laid out in this pa- or size are such that their failure would compro- per is highly scalable. The tools outlined could be used mise the overall development objectives of the op- to dramatically increase access to and use of informa- erations. tion and communication technologies in the effort to reduce poverty. The World Bank Group is in a good Operational policy documents position to play a major role in an ambitious program A Good Practice Statement on World Bank Group in- with governments, the private sector, nongovernmen- formation infrastructure operations will be updated tal organizations, and donors worldwide that would from time to time. The recommendations in Opera- aim at universal access to basic information infrastruc- tional Policy 4.50, the World Bank's telecommunica- ture. Such a program would have significant social and tion sector policy statement of 1995, remain valid. economic benefits worldwide, benefits already repeat- However, the Operational Policy is in fact a collec- edly seen whenever such access has been provided in a tion of recommended good practices, instead of man- region previously lacking it. It would require coordi- datory policy measures. The Sector Strategy Paper nated effort bringing together many actors including proposes therefore that Operational Policy 4.50 be re- partnerships with other international organizations, tired and replaced by a Good Practice statement to be nongovernmental organizations, and the private sec- published by the Global Information and Communi- tor. For the World Bank Group it means taking an cation Technologies department. Annex 1 lays out innovative approach to our products and services and proposed language for this statement, which adapts refocusing some special initiatives relating to infor- Operational Policy 4.50 to the broader agenda for in- mation and communication technologies. Scaling up formation infrastructure laid out in this Sector Strat- the proposed strategy would also require effectively egy Paper. The most significant changes are: bringing information and communication technolo- * The scope is expanded from telecommunication to gies to the forefront of our corporate development information infrastructure operations, and from the agenda and country assistance strategies, where appro- World Bank to the World Bank Group. priate. * The role of World Bank Group funding is explicit- ly expanded to include support for private provi- sion of universal access to voice communication and NOTES the Internet, investment in the postal and broad- 1. Strategic Framework Paper (OM2001-0007), January cast sectors, support for the broader policy, regula- 24, 2001. tory and educational environment for information 2. See http://www.worldbank.org/poverty/strategies/ and communication technologies, and the use of chapters/ict/ictO4O9.pdf xiii ABBREVIATIONS ANM Auxiliary Nurse Midwife IT Information Technology APL Adaptable Program Loan ITU International Telecommunication Union ASP Application Service Provider LAC Latin America and Caribbean ATM Asynchronous Transfer Mode LIL Learning and Innovation Loan AVU Africa Virtual University LEGOP Legal Operations Department B2B Business to Business LSMS Living Standard Measurement Survey B2C Business to Consumer MCT Multipurpose Community Telecenter BP Bank Procedures MD Managing Director CARD Computer-aided Administration of MENA Middle East and North Africa Registration Department MIGA Multilateral Investment Guarantee Agency CAS Country Assistance Strategy MIS Management Information System CDF Comprehensive Development Framework MOIT Ministry of Industry and Trade (Indonesia) CETESB Sao Paulo State Environmental Agency (Brazil) MONE Ministry of National Education (Turkey) CITPO Policy Division of the Global Information and MSB Micro and Small Businesses Communication Technologies Department M&E Monitoring and Evaluation DEC Development Economics NGO Non-governmental Organization DECRG Development Economics Research Group NIl National Information Infrastructure DSL Development Support Loan NPV Net Present Value ECA Europe and Central Asia OCSPR Procurement Policy and Services Group ECN Electronic Communication Network OECD Organization for Economic Co-Operation and ECOWAS Economic Community of West African States Development ESSD Environmentally and Socially Sustainable OECS Organization of Eastern Caribbean States Development OED Operations Evaluations Department ESW Economic and Sector Work OEG Operations Evaluation Group FAO Food and Agriculture Organization OP Operational Policy FPSI Finance, Private Sector and Infrastructure OPC Operations Policy Committee G-8 Group of 8 OPCS Operational Policy and Country Services GDLN Global Development Learning Network PAD Project Apraisal Document GDN Global Development Network PAS Privatization Advisory Services GDP Gross Domestic Product PCD Project Concept Document GICT Global Information and Communication PDA Personal Digital Assistant Technologies Department PPF Project Preparation Facility GIS Geographic Information System PPIAF Public-Private Infrastructure Advisory Facility GKP Global Knowledge Partnership PREM Poverty Reduction and Economic Management GPG Global Products Group PRSC Poverty Reduction Strategy Credit GSM Global System for Mobile Communications PRSP Poverty Reduction Strategy Paper HD Human Development PSAL Programmatic Structural Adjustment Loan IAD Internal Audit Department PSD Private Sector Development IBRD International Bank of Reconstruction and SAC Servifo de Atendimento ao Cidadao - Development Shopping Mall for Public Services ICANN Internet Corporation for Assigned Names and SAL Structural Adjustment Loan Numbers SAR South Asia Region ICSC Integrated Citizen Services Centers SBEM SoftBank Emerging Markets ICT Information and Communication Technologies SEAF Small Enterprise Assistance Funds IDA International Development Association SECAL Sector Adjustment Loan IFC International Finance Corporation SIL Specific Investment Loans II Information Infrastructure SME Small and Medium Enterprise InfoDev Information for Development Program SSP Sector Strategy Paper ILC Internet Learning Center TA Technical Assistance ISDN Integrated Services Digital Network TAL Technical Assistance Loan ISG Information Solutions Group TATF Technical Assistance Trust Fund ISP Internet Service Provider TATP Technical Assistance and Training Program xiv ABBREVIATIONS TWINS Twin Cities Network Services UNCITRAL United Nations Commission on International Trade Law UNDP United Nations Development Program VPU Vice Presidency Unit VSAT Very Small Aperture Terminal WB World Bank (IDA & IBRD) WBG World Bank Group WBI World Bank Institute WHO World Health Organization WorLD World Links for Development WTO World Trade Organization xv Introduction: Knowledge, Information and Communication Technologies, and the Scope of the Sector Strategy Paper 1(onowledge has always been central to development. It is necessary for markets and overnments to function, for the process of innovation, and for the application of _ Vgnoew ideas. The green revolution that has more than doubled yields of staple crops in Asia and South America over the last 50 years, is an example of the development and applica- tion of knowledge through a range of local, national, and international institutions making a dramatic impact on the incomes of the poor. Between 1973 and 1994, the average real in- come of small farmers in southern India increased by 90 percent, and that of the landless by 125 percent, largely because of the introduction of labor-intensive, high-yielding crop variet- ies. The successful use of knowledge lies behind much of the growth of the East Asian "miracle" countries over the past half century. Conversely, weaknesses in the application of knowledge are a major factor behind stagnation in income growth in Africa. The accumulation of physi- cal capital-machinery, roads, buildings-explains less than 30 percent of the variations in growth rates around the world over the past 40 years. Much of the rest is accounted for by differences in the growth of educational opportunities, and in the diffusion and application of knowledge. Forty years ago, Ghana and the Republic of Korea had virtually the same income per capita. Today, Korea is approximately six times richer, and more than half of that gap can be attributed to Korea's greater success in acquiring and using knowledge. Beyond income, knowledge can add greatly to the antibacterial drugs, vaccines and contraceptives; rap- quality of life of the economically disadvantaged. id increases in educational attainment (especially While per capita income remains a strong predictor among girls and women) that are highly correlated of health statistics, advances in biomedical and epide- with improvements in child health; and more rapid miological knowledge have contributed to improved dissemination of medical knowledge and the spread health at every economic level. For example, infant of health services; all of which have in turn benefited mortality in middle-income countries in 1999 was 31 from information technology (IT).' per thousand live births, compared with 55 per thou- The recent advances in information and commu- sand live births 20 years before. The improvements nication technologies (ICT) have strengthened fur- are due to a number of factors, including development ther the link between knowledge and broad-based de- and widespread use of new medical technologies such velopment. The "knowledge revolution" provides an INFORMATION AND COMMUNICATION TECHNOLOGIES opportunity to foster greater competitiveness, new eco- This SSP covers elements throughout the Knowledge nomic growth and job creation, better access to basic Economy Strategy, but its primary focus is on II. The services, improved health and education outcomes, and policy and investment environment for II rollout is greater empowerment of local communities. Some re- the key responsibility of this paper's sponsoring de- mote villages in developing countries are already be- partment. However, II involves more than the wires, ginning to use the Internet to sell commodities di- waves, and postal networks carrying information. It rectly to the global market, to improve educational involves software, institutions, and people; Internet opportunities, and to increase their participation in hosting services, design applications, and service pro- decision making. vision; regulatory institutions and e-economy legisla- At the same time, the majority of people in the tion; and the human resources necessary to ensure that developing world have no access to basic information networks, institutions, and software infrastructure and communications networks-let alone the new function. II is inextricably linked with policy and reg- technology of the Internet. In fact, the gap is worsen- ulatory support for a suitable economic and institu- ing, and the digital divide is a growing threat to the tional framework and ICT-related training for a skilled development prospects of the poorer countries of the population. This paper, therefore, discusses regulato- world. Chapter One of this Sector Strategy Paper (SSP) ry, investment, institutional, and educational elements discusses both the opportunities and challenges to of the knowledge strategy. It discusses the economic broad-based development presented by a range of ICT and institutional framework related to the rollout and including the Internet. general application of ICT, that is, not only policies, An agenda to foster the successful application of regulations, and investments in telecommunication, knowledge is central to any broad-based development or the Internet networks and postal and media sys- program. Such an agenda would focus not on indi- tems, but also the legislative agenda for e-commerce vidual applications (such as an Internet-enabled train- and e-governance. It discusses the need for training, ing program for midwives and doctors, or an to provide a workforce with the general skills required e-commerce application for a software company), but to use the new ICT. Finally, the paper touches upon on the environment that allows for more rapid acqui- the World Bank Group's role as a knowledge center sition, application, and communication of knowledge for ICT, collecting and disseminating best practices in general. Recognizing the importance of knowledge in the areas of II and ICT applications to help our as an underpinning for countries to become competi- clients learn more cheaply and efficiently. Special ini- tive in the new economy, the World Bank Group is tiatives are discussed in Annex 5, but will be consid- developing a knowledge economy strategy based on: ered in a broader review of the World bank Group's * A competitive and dynamic information infrastruc- knowledge work, currently being led by the office of ture (II) to facilitate effective communication, dis- the Managing Director for Human Development. The semination, and processing of information. review aims to better identify the scope, interrelation- * The regulatory and institutional framework to pro- ships, and value of the various elements of the "Knowl- vide incentives for the efficient use of existing edge Bank," and to develop a single strategic knowledge, the creation of knowledge, and the framework for the World Bank Group's knowledge flourishing of entrepreneurship. Such a framework work. The review will be completed during the sec- would include rules on trade, foreign investment, ond quarter of FY02. technology licensing, support for local research, Beyond the knowledge strategy outlined above falls company law, and support for small enterprise and the application of ICT in World Bank Group projects. venture capital. ICT can be divided into two parts. First comes the * An educated and skilled population. This highlights hard and soft infrastructure through which informa- the need for continued expansion in educational tion travels (II). A second component is the applica- opportunities for all in developing countries, espe- tions and content that rely on or travel through II-a cially those who have been previously disadvantaged health information web site or a radio program, for at all levels-girls, the poorest, adults who were example. In the World Bank Group's interaction with denied educational opportunities when young, and client countries, II has traditionally been under the the disabled. The speed of advance in ICT also em- telecommunication divisions of the International Fi- phasizes the importance of technical training to nance Corporation (IFC) and the World Bank, (now provide a workforce with the requisite skills. the Global Information and Communication Technol- * A network of knowledge communities to tap into ogies department or GICT). Applications have been the global stock of knowledge, create new knowl- implemented under the umbrella of sector-led projects edge, and adapt it to local needs. and special initiatives, accounting for approximately 2 INTRODUCTION $1 billion per year of World Bank lending. projects can only be accomplished after priorities for After an extensive consultation process, it was de- that sector have been agreed upon, and means to cided to focus this paper as a business strategy con- achieve them have been set. Such a process is clearly centrating on II. The ICT sector is dynamic-fre- the responsibility of each sector and country depart- quently changing at an exponential pace. Combined ment. It would be a Sisyphean endeavor to attempt to with this constant evolution is a span of applications construct a single detailed strategy for the World Bank that reaches across not just the Knowledge Economy Group's use and support of ICT applications across Strategy but also the Comprehensive Development sectors and regions. Thus, the SSP does not go into Framework (CDF), covering structural, human, phys- detail on sectoral applications of ICT, such as man- ical, and sectoral development. ICT applications have agement information systems (MIS) in the health sec- a role in improving government, facilitating better de- tor, or IT applications in transport or finance. Instead, velopment of health care, expanding access to infra- this paper provides a strategy covering II that can be structure, and promoting rural development, for ex- implemented and measured by GICT in close cooper- ample. Because IT is a tool, defining its role in sectoral ation with World Bank Group regions and sectors. Definitions The Information and Communication Technologies Sector covers the underlying technologies, knowhow, products, and services, as well as the companies (operators, suppliers, producers), consumers, policymakers, regulators, and other institutions and partners directly involved in or affected by the production, delivery, and regulation of ICT products and services. It includes the telecommunications and broadcasting sectors, as well as information technologies. For the pur- poses of this strategy paper, it also includes postal services. ICT sector reform involves changing the overall policy, legal, institutional, and regulatory framework with the objec- tive of opening markets to private investment and competition, thus fostering innovation, efficiency, and improved ser- vices. Sector reform involves the design and effective implementation of reforms, including change management and training. ICT sector reform is as much about stimulating growth, re-engineering business processes, or rethinking the delivery of public services, as about the application of technologies. Information and Communication Technologies consist of hardware, software, networks, and media for collection, storage, processing, transmission, and presentation of information (voice, data, text, images). Information infrastructure refers to the telecommunication and information networks through which information is transmitted, stored and delivered, as well as the embedded technologies and knowhow. Types of networks include cellu- lar, data, broadband, backbone, satellite, broadcasting, multimedia, the Internet, and other networks; they may be wireline, wireless, or a combination of both. Network components may include terrestrial wires, undersea cables, radio waves, satellites, towers, base stations, equipment (transmitters, repeaters, switches, routers), and related hardware and software. Networks may be independent, or interconnected and interoperable. They are "public" or "open" if they can transmit information from any source, or "private" or "closed" if they are restricted to members of a closed user group. Providers of 11 services include the operators of the various networks, as well as specialized network services such as Internet service providers (ISPs), web hosting companies, and data centers. In this paper, the term information infrastruc- ture also encompasses postal networks. 11 is the foundation of the information or knowledge economy. Information technology refers to the creation, storage and processing of data, including hardware (computer net- works, servers, storage devices, and desktop computers), system software (operating systems, middleware, programming languages), and software applications. Applications are created using software tools; they can be standardized ("off-the-shelf" or "shrink-wrapped"; downloadable; or hosted by application service providers or ASPs), customized (building on an existing off-the-shelf platform), or custom-designed. IT applications serve different purposes, such as knowledge sharing (portals, search en- gines), public administration (tax, customs, social security administration, public expenditure systems), social services (health management, educational software), and business solutions (corporate back office systems, including payroll, accounting and billing; e-commerce applications). Content refers to the actual information and knowledge created by individuals and groups that may be processed, transformed and presented by information technology and carried through the information infrastructure (material on web sites or online library systems, news, video, etc.). The availability of information technologies and infrastructure are powerful tools contributing to the creation, transmission and sharing of content (including local content). Convergence in communications, computer and media technologies, and markets is increasingly blurring the lines between these categories and creating new challenges for policymakers and industry players. 3 INFORMATION AND COMMUNICATION TECHNOLOGIES Nonetheless, there is some discussion (in a stand- alone Chapter Five) of broader ICT issues facing the World Bank Group, and the paper does map out a plan for expanding the institutional development ca- pacity in order to successfully implement the strategy. It is therefore expected that this SSP will trigger fur- ther discussion on how to use ICT as an enabling plat- form to improve the effective delivery of World Bank Group services. Special initiatives related to ICT are discussed in Annex 5, but proposals for change in this area are being discussed in the context of the broader Knowledge Strategy being put together at the Manag- ing Director level. The Strategy is founded not only on a vision of what the World Bank Group should and can accom- plish, but also a realistic assessment of how and what we need to change to be effective in this new environ- ment. We are suggesting new approaches, and new in- struments, that continue to position the World Bank Group as a leader in this field, so that we can make a real difference in the lives of people in our borrowing countries. The SSP is organized as follows. The first four chap- ters deal primarily with the World Bank Group's ra- tionale, role, and strategy in the II sector. Chapter One presents the rationale for World Bank Group involve- ment in the II sector. Chapter Two reviews the World Bank Group's past activities in this sector. Chapter Three, which forms the core of the strategy, identifies the priorities for future World Bank Group operations. Chapter Four considers the institutional changes that will be required to support the successful implemen- tation of the strategy, and discusses a proposed Good Practice replacement for Operational Policy 4.50. Fi- nally, Chapter Five broadens the discussion to ICT applications, education and the World Bank's knowl- edge initiatives, discussing elements related to quality assurance processes. 4 Chapter One: Information Infrastructure and Development T his SSP sets out a significant role for the World Bank Group in the II sector. Our vision is for the World Bank Group to be a catalyst in improving access to II and promoting its use for stimulating development and reducing poverty. Before this vision and the new strategic directions can be explored, however, four key questions need to be answered about ICT, development, and the role of the World Bank Group: *What is the current state of the digital divide in Asian country, it has 40 times as many computers, 146 developing countries? times as many mobile phones, and 1,036 times as many * Is II really relevant to poverty reduction? Internet hosts (Pyramid Research, 2000). The situation * Is inequitable access to II a public policy issue? is even worse in relation to Africa. In 1999 there were * Why should the World Bank Group be involved? only 1 million Internet subscribers on the entire The chapter takes up these questions and concludes African continent compared with 15 million in the that II is important to economic development and that U.K. Excluding South Africa, Africa generates a mere there is, after all, a broad agenda for World Bank 0.02 percent of global Internet hosts. A similar divide Group action in the II sector. affects more traditional forms of II such as the posts, with more than 700 letters sent per person per year in The current state of the digital divide the U.S., compared to less than one letter per person The oft-cited opportunity for the developing world is per year in Chad. Access to broadcasting services, such to harness the power of information and communica- as radio and television, is more egalitarian, although tion technologies to leapfrog ahead economically by still very unequal. Residents of low income countries developing its capaciry to compete in the global knowl- own 1.5 radios for every 10 people, compared to 13 edge economy. The stark reality is that access to the radios per 10 people in high-income countries. tools for knowledge and wealth creation is still highly Inequitable patterns of access to II are also visible inequitable. In many cases, developing countries lack within countries. In Panama and South Africa, house- the legal and policy frameworks, II and ICT applica- holds in the wealthiest quintile are respectively 43 and tions that have enabled Organization for Economic 125 times more likely to have private telephones than Cooperation and Development (OECD) countries to those in the poorest quintile. In Ethiopia, where over exploit emerging technologies. 60 percent of the population is illiterate, 98 percent Given the formidable challenges, the growth of II of Internet users have a university degree. There are in developing countries has been impressive. From also significant access gaps between men and women 1995 to 1998, developing countries connected more and between rural and urban populations. In China, than 171 million fixed telephone lines, 238 million for instance, 75 percent of Internet users are men, and mobile subscribers, and 8 million leased lines. The in India female participation in computer sciences number of fixed and mobile phones per capita in low- courses in the country is around 25 percent. Having and middle-income countries has increased more than said that, the ICT sector is in many countries con- fourfold over the past decade.2 tributing to increased employment and economic op- This encouraging picture obscures the chasm portunities for women. For instance, in the Kerala between rich and poor nations in advanced II-the Technopark in India, women form nearly 40 percent digital divide. Although the average OECD country of the computing work force. has roughly 11 times the per capita income of a South 5 INFORMATION AND COMMUNICATION TECHNOLOGIES Is 11 relevant to poverty reduction? reduce poverty in the developing world, ll offers the following key benefits: The existence of gross inequities between the rich and * major opportunities for development and global the poor is by no means confined to 11. Poor people in integration in ways that need not run counter to developing countries not only have less access to II, the social identity of traditional communities; they also have fewer schools and teachers, fewer doc- * increased economic and social well-being of the tors and nurses, and a lower calorie intake per capita poor and empowerment of individuals and com- than people in wealthy countries. Are these concerns munities; and more relevant to the fight against poverty than access * enhanced effectiveness, efficiency, and transparen- to a telephone or the Internet?3 In fact, the debate cy of the public sector (including the delivery of cannot be framed in these terms. II, and the ICT ap- social services). plications that rely on II to function, are increasingly important in the delivery of services such as health Economic opportunities and education, in the creation of economic opportu- It is already widely recognized that traditional tele- nities for poor people, and in amplifying the voices of communication infrastructure has a positive and sig- the poor. It is not a matter of choosing between II and nificant impact on economic growth, an important health, II and education, but instead that of choosing factor in poverty reduction. the most effective way for II to help in the delivery of At the microlevel, telecom investments in low and health, education, and small business development middle-income countries tend to generate internal services. rates of return of approximately 20 percent, and eco- Both traditional and emerging II offer a whole new nomic rates of return that are even higher. At the cross- avenue for development with particular relevance to country level, a graph that looks at countries with more poor people. On the one hand, the relatively low cost or fewer telephones than one would expect given their and wide reach of traditional II like radio, TV, and income in 1980, and gross domestic product (GDP) posts make these communication services vital to the growth rates over the next 18 years suggests a poten- lives of the poor (Box 1.1). The 2001-02 World tial link from telecommunication rollout to econom- Development Report will emphasize the evident ic growth (Figure 1.1). Countries that had more importance of the broadcast and print media in telephones-or a higher teledensity-than one would promoting transparency and improving the quality of expect given their 1980 income level, saw higher government services. On the other hand, widespread growth rates between 1980 and 1998 than those with adoption of new II like the Internet for knowledge relatively low teledensity. The median growth is about dissemination and sharing, delivery of business and a doubling of income per capita over the period. Only public services, and wealth creation and collaboration 29 percent of countries had fewer telephones than in OECD countries, suggests that greater Internet expected and faster than median growth, or more tele- adoption in the developing world will also be critical. phones than expected and slower than median growth. In the context of the World Bank Group's mission to A large number of econometric studies support this Box I . 1: Posts and Radio as a Force for Development There are more than 650,000 post offices worldwide. For many of the poorest, postal services are the most important means of communication, as is made clear in the joint World Bank and Universal Postal Union discussion of The Postal Industry in an Information Age.4 It is frequently the only method to transfer funds over distances, for example. Mail services have an important social role as well, particularly for families of migrant workers. In the new economy, e- business is actually generating additional mail as people and businesses buy goods online from distant suppliers- thereby increasing the importance of a strong postal network. Radio as an information delivery mechanism has several advantages. First, it is among the cheapest forms of mass media. This is one reason why radio density in a developing country is usually a factor of 10 greater than teledensity, and radio accessibility is also far higher. Second, radio signals can penetrate remote geographic regions and any indi- vidual within listening distance of a radio set can receive information, regardless of literacy, visual impairment, or educational level. Finally, rural radio provides region-specific information, easily incorporates local concerns and feed- back, and can operate in local languages. Radio programs have been used widely in education, to promote a range of health issues and practices, and to support activities such as gender training or drought mitigation programs. The Internet can also be used to leverage the power of the radio, as a tool to transfer programming between stations, and to provide an information source for broadcast programming. 6 11 AND DEVELOPMENT linkage between telecommunication and growth5 (it Cross-country evidence on the impact of the should be noted though, that these results have been Internet on economic growth is sparse to nonexistent disputed,6 and it is empirically very difficult to esti- given the fact that the technology is so young. mate with any certainty the size of an ICT-growth re- However, there is some evidence that IT might be lationship based on cross-country analysis);7 other behind the strong growth in the U.S. economy in the studies, such as the U.S. Department of Commerce's late 1990s. Between 1995 and 1998 IT industries The EmergingDigital Economy II, highlight the strong might have contributed as much as 35 percent of U.S. correlation between IT and national prosperity.8 real economic growth, and there is some evidence that With the advent of the Internet, it is likely that the IT investment has been a factor in the recent uptick economic benefits of networking will be even greater in U.S. productivity figures.'° in the future. Companies in the developing world can Poor people can benefit from increased access to more easily access global markets and, in some cases, information as much as the rich. The poor have a num- integrate themselves into global supply chains. Re- ber of information needs that can be met using ICT, mote, small communities can begin to sell output di- as was revealed by a recent needs assessment study of rectly to buyers without having to go through the use of ICT in four villages in northeastern Thai- middlemen. And many services have become "trad- land. Participants said that, among other things, ICT able commodities" for the first time. While the soft- could be used to: ware development industry that has sprung up in - regularly update information on the best prices of southern India is perhaps the best-known case, there rice offered by various rice mills; is an increasing number of examples of this phenom- * access news of ways to improve yields, including enon. Examples from India include processing of in- information on crop disease, fertilizers, and expe- surance claims for General Electric, back-office work riences of other rural communities; for HSBC, digitization of handwritten airline tickets * enhance computer skills for young people seeking for British Airways, dictation of patient medical employment; records from U.S. doctors, and keeping accounts for * interact with neighboring communities to promote the World Bank Group. IT-enabled services in India peaceful coexistence, prevent thefts, and fight in 1999 had a turnover of $5.7 billion.' While still in against drugs; their infancy, these "teleservices" promise to create em- * air grievances directly with public officials; and ployment opportunities for people in developing coun- * communicate with relatives working or studying in tries that previously would have been available only other provinces. through migration. Because of these largely unmet information needs, Figure I . I: More Telephones Equals Faster Growth?' 8 y = 2.037s°296 7 | R = 0.2126 oh6 o 4 0 ' '~~~~~~~-If 0 0.5 1 1.5 2 2.5 3 3.5 4 Actual/ Expected Telephones/ Capita 7 INFORMATION AND COMMUNICATION TECHNOLOGIES the impact of network access in poor rural areas can be very significant. In Bangladesh, the installation of Box 1.3: The Cost of Exclusion a rural telephone line generated revenue savings to local Kisiizi Hospital is located in Kigezi District in businesses worth 13 times the cost of service. Look- southwest Uganda, some 400 kilometers from ing at the Internet, a number of studies suggest that Kampala. After repeated fruitless attempts to se- even poorly-educated rural poor in places such as cure a telephone connection from the national Bangladesh, Guyana, India, Peru, and Thailand use e- provider, the hospital resorted to installing its own mail and Internet-based information services to their satellite telephone. However, satellite charges are advantage where such services are available (Box 1.2) di2 high at $ 2.50 per minute, or more than 10 times the rate offered by the public telephone company. Costs of exclusion Given that a round-trip bus fare to Kampala costs However, just as poor households that lack access to $1 2.50, it becomes cheaper to travel to the capi- modern water and electricity services pay more to meet tal than to make a five-minute phone call. Thus, their basic needs for hygiene and energy, those that for example, a nurse who needed to know the date lack access to a telephone (particularly in rural areas) and duration of a training course she was going often pay more to communicate. The poor have many to attend, gave up trying to telephone for the in- information needs-crop prices, information on mar- formation after being put on hold for 10 min- kets and weather, health and education resources, on utes. Instead, she took the next 4 a.m. bus ser- local development projects, and communication with vice, which, after an uncomfortable six-hour ride, family and friends. Without modern ICT, poor peo- delivered her to Kampala where she was able to ple pay more in terms of time and money to get that register for the course. information (Box 1.3). Even more important is the cost of exclusion in missed opportunities from com- munication that fails to take place without access to impact of these problems. The regression analysis sug- II. Rural areas without access to telephony in Botswa- gests that, allowing for income, countries with one na and Zimbabwe generate significantly less off-farm standard deviation higher teledensity than average at income than areas with a telephone.'4 decade start will see a 6.5 percent increase in inequal- Historically, a cross-country regression analysis ity over the decade. Splitting the sample by teledensi- undertaken by GICT suggests that the combined fea- ty does indeed suggest that this relationship is due to tures of relative scarcity among the poor, and the po- limited access among the poor at low levels of per cap- tential to increase income has, in fact, made telephone ita GDP. Growth in teledensity was negatively (al- network rollout a force for growing inequality. While though insignificantly) related to inequality growth poverty has its roots in lack of opportunity, empower- in the high teledensity sample (where access to the ment, and security (emphasized in the 2000-01 World network was ubiquitous). In the low teledensity sam- Development Report on poverty), econometric analysis ple, where telephone lines are concentrated among the suggests that inequality in access to II can amplify the wealthy minority, the link between teledensity and inequality remained strong."5 While historically the Box 1.2: IT in Rural Thailand poor have benefited from telecommunication rollout Sanit "Nanoi" Thipnangrong had only four years of school- through its impact on broad economic growth, they . , , ~~~~~~~~~~~~~~have received little benefit in terms of direct impact ing as a child, but she took just three months to learn how to hro cess to a telephone. work a computer. Four kilometers down a dirt road in the through access to a telephone. outskirts of Buriram province in Thailand's impoverished ere is also some evidence that IT rollout m de- Northeast, Nanoi's computer is kept in her house, not far veloped economies might have benefited skilled (com- Noromheast, Nanoi's computensro isml keptsin house,t facr uparatively wealthy) workers far more than the from where her chickens roam. A small shoe factory up the less-skilled, once again leading to growing inequality. road pays her electricity costs in exchange for keeping their This might suggest that the diffusion of the Internet accounting records in her spreadsheets. in developing countries, if it is allowed to occur in a Nanoi keeps her own spreadsheets to track vegetable prices similar manner to that historically true for telecom- to decide what to plant and when in the small field surround- a rollout, will also be a force for both growth ing her home. She monitors her expenses and at the end of and growing inequality. In fact, without ameliorating each season, calculates her costs and makes adjustments to actions, the Internet might be an even stronger force use cheaper fertilizers, or alternative farming crops for the for inequality than has been the case for the telephone next planting. And she uses the Internet to ask university historically because: professors for agricultural advice.'" * it is more expensive than telephone access; 8 11 AND DEVELOPMENT * it requires a higher level of education and skill to * II development is contingent on reform and a strong operate; regulatory environment. * the dominant languages of the Internet are not * Market failures and equity considerations suggest those spoken by the poor; and a role for international donor support of private * it requires access to skilled personnel, electricity, investment, and a role for market-based subsidies and a critical mass of users to make it sustainable- to promote rural access. these are especially lacking in the rural areas of developing countries, where most of the poor live. Reform and regulation Both economic growth and equity considerations There is enough evidence that private, competitive suggest the importance of ICT to the development provision of 11 services in developing nations has a process and to implementing the Comprehensive De- dramatic impact on service rollout, including services velopment Framework. Increasing access among the to the poorest. poor will have a twofold impact: increasing country For example, a recent study suggests that privatiza- growth rates to the benefit of all, and limiting growth tion, good regulation, and a competitive mobile mar- in inequality within countries. ket (with at least three mobile companies) could Improving government and public services double the number of lines per capita in some of the poorer markets in Africa.'7 through ICT applications However, private sector investment will only ma- The Internet is also a powerful tool for improving the terialize to the extent that governments take the nec- efficiency and quality of a wide range of public ser- essary reform measures by passing (and subsequently vices that are important for poverty reduction, espe- enforcing) enabling legislation, restructuring markets cially education and health. For instance, learning and institutions, and conducting the necessary divest- through satellite broadcasting or the Internet can dra- ments. While there has been substantial progress to- matically increase the range and quality of teaching ward sector reform around the world-especially in materials in isolated schools, or those with poor re- cellular, where approximately 60 percent of the global sources; while telemedicine techniques enable doctors markets are open to competition-a great deal still in developing countries to consult with national or remains to be done. A recent global survey found that international specialists over the Internet. A more about half the world's countries have yet to privatize complete description of potential ICT applications to their state-owned telephone company, while two thirds public service delivery together with a range of exam- have yet to introduce some form of fixed competi- ples is provided in Annex 4. tion."8 Even in countries that have begun the reform ICT applications also have the power to transform process, weak regulatory institutions and strong vest- government and the processes of governance at many ed interests often hinder the growth of active compe- levels (e-government), such as: tition. The reform agenda has become increasingly * the automation/digirization of administrative func- complex and pressing over time. Countries that are tions-procurement, tax returns, and registration behind cannot afford to implement reform in the same procedures to gain efficiencies and cost savings; gradual way as the early reformers, lest they continue * electronic delivery of all "citizen-facing" services to fall behind and lose competitiveness. Furthermore, through a convenient one-stop web portal to im- the rapid growth of mobile communication has re- prove the accessibility and "user-friendliness" of duced the investors' appetite for incumbent fixed line government; and operators. Thus, the developing country governments * the ability of the Internet to greatly increase the that have yet to begin the reform agenda face a more transparency and openness of government by mak- ing it easier for citizens to access information, and more importantly, to participate in the political Box I.4: The Internet as a Means of Political Participation process (Box 1.4).i6 The Indian NGO, Sakshi, had faced difficulties in lobbying Is there a role for the public sector in for sexual harassment legislation. With help from interna- tional women's networks through the Internet, Sakshi was improving access to 11? able to receive advice and technical assistance on legal is- Despite the remarkable dynamism of the private sec- sues relating to sexual harassment. The group succeeded in tor in promoting and implementing II, there are two convincing the Supreme Court of India to establish sexual important reasons why the public sector must be in- harassment guidelines in workplaces and brought the issue volved, in order to help close the digital divide: within the purview of human rights violations. INFORMATION AND COMMUNICATION TECHNOLOGIES demanding task than their predecessors (Box 1.5). from international standards setting bodies such as Beyond sector reform, a knowledge economy can Internet Corporation for Assigned Names and Num- flourish only when supported by a robust public pol- bers and the International Telecommunication Union icy and legal framework. (ITU), and there is a role for donors to support devel- Electronic commerce, for example, requires sup- oping country participation in such ventures. porting policies and legislation to assure the security and legality of transactions conducted over the Inter- Market failures and equity considerations net. A country's ability to benefit from the economic Although sector reform is the first and most impor- opportunities offered by the Internet depends on the tant step in extending access, there are a number of availability of suitably skilled labor, which is in turn a reasons to believe that the market alone will not pro- matter for national education policy. Finally, the in- vide a sufficient level of connectivity. Foreign invest- centive to connect to the Internet depends on the avail- ment flows to developing countries respond to a ability of locally relevant content, which is subject to number of factors beyond policy environments. Small, substantial scale economies. The government is po- isolated countries without a tradition of attracting such tentially a large provider of locally relevant content, investment are at a disadvantage regardless of their and its use of the Internet for public administration policy regime. Weak infrastructure is also a deterrent functions can be a powerful catalyst to wider adop- to investment flows, suggesting the potential for a vi- tion of the medium. There is a role for international cious circle of foreign investment in infrastructure ser- donor support here, to bring global best practices to vices in particular.2" Evidence regarding private bear. (Annex 2 suggests some generic country issues investment in telecommunication in developing coun- to be addressed in information infrastructure devel- tries suggests that it is concentrated in relatively few opment policy.) markets. Over the 1990-00 period, 10 low and mid- Finally, many important aspects of II, such as sat- dle-income countries attracted 67 percent of all pri- ellites and transoceanic cables, are international in na- vate investment in telecommunication in that country ture, and require global cooperation. The cross-border grouping, despite accounting for 37 percent of gross flow of information, vital to global e-commerce, rais- national income. In large part, this concentration of es the need for international harmonization of e-econ- investment will be the result of differing policy envi- omy regulations and technical standards. Governments ronments, but it might also reflect discrimination by therefore have an important role to play in securing foreign investors against small, isolated and relatively the necessary international agreements. These efforts unknown economies. have required, and will continue to, require support In addition, there is lower interest in investing in developing countries after the substantial increase in the cost of capital and the sharp correction in equity Box 1.5: The New Realities of Telecommunication markets, which affected the II industry in particular Sector Reform (Box 1.6). Huge capital expenses for main players in In September 2000, the auction of 40 percent of Nicaragua's home markets are leading to general retrenchment state-owned telephone company Enitel failed. Four previous from emerging markets. Large telecom players are over- attempts to sell the company had also failed since 1995. In leveraged, while international banks are overexposed October 2000, the auction of 5 1 percent of Honduras' state- to the telecom sector, and suppliers have become more owned telephone company Hondutel also failed. In both cases, risk averse. This has resulted in negative sentiment for the only bidder in the auction failed to match the government's the entire II industry, forcing main players to focus minimum bid price. Sale of 20 percent of Egypt's telecommu- on their core markets (mainly OECD countries) and nicationscompany, originally slatedforOtober2000 as well, on cutting investments as well as debt, and it is has been postponed due to fears that the initial public offerl affecting fund-raising also for second and third tier was overpriced. Iu9 A range of other countries, including players. Most of the financing options for II projects ing as Turkey, rave o other cunties, increas in developing countries have effectively been shut off. Bulgaria and Turkey, have also faced difficulties. The increas- The financial volatility of the sector, combined with ingly complex environment for fixed-line telecommunications the rapid pace of technological change, puts signifi- privatization, combined with the growing urgency of sector t pace on polcy calechanguts agn- reform in order to expand access to the tools of the informa- cant pressure on policymakers and regulatory agen- tion revolution, suggest the importance of a new approach cies to be flexible. The financial and technological to fixed-line privatizations based on rapid movement toward solatirty suggest the need for not only international full competition and expanded access, combined with realism support to leverage private investment funds, but also over potential proceeds?20 support for ongoing policy and regulatory develop- ment. It should be noted that the nature of the sector 10 11 AND DEVELOPMENT Box 1.6: Worldwide Climate for 11 Investment The funding difficulties for Internet companies are well known. Yahoo, for example, has seen its stock price fall from $250 in January 2000 to $ 16.25 in March 2001, and the new-technology-heavy U.S. NASDAQ has seen market capitalization over the same period fall from $6.7 trillion to $3.2 trillion. Telecommunications operators have seen similar funding difficulties. Large telecom operators (viewed as traditional IFC project sponsors) have been involved in heavy spending on third generation mobile (so-called "3G") cellular licenses and networks. In Germany and the U.K. alone, 3G license auctions brought in $8 1.2 billion, and just two recent major acquisitions (France Telecom's purchase of Orange PLC and Deutsche Telekom's purchase of Voicestream) totaled $88 billion. As a result, many major telecom- munications companies have been put on credit watch with negative implications or downgraded altogether by the major rating agencies, some several times in the last couple of years (British Telecom was downgraded to AA+ by SUP in May 1999 and then again to A in August 2000; France Telecom to AA in December 2000, down to A. in February 2001; and Deutsche Telekom to A- in October 2000 for example). Telecom suppliers have also been hurt by increased competition and reduced loan quality due to increasing default rates among their clients. The result has been a down- grading of their credit ratings (Lucent is now rated at BBB- by S&P). These actions have directly contributed to the increasing cost of borrowing for telecommunications companies, with spreads rising from between 0.5 percent to 0.75 percent in April 1999, to over 2.0 percent in March 2001 for lead international operators, and below 1.0 percent in March 1999, to over 2.5 percent in March 2001 for major telecom suppliers." At the same time, eroding investor confidence, fuelled in part by increasing debt burdens to finance 3G license and network costs, growing competition in domestic markets, as well as overall negativity about the technology sector in general, have caused stock prices to plunge (in some cases by more than 9 1 percent in the last year alone). This has effectively closed off the equity markets as an alternative source of financing for these companies. The combination of rising borrowing costs and difficulties accessing the equity markets have resulted in a curtail- ment of noncritical investment plans for many of these companies. As a consequence, many of them have scaled back their international expansion plans, especially in the emerging markets, where most are unwilling to take on the addi- tional risk given their current situations. demands flexibility from donor agencies involved in of Internet-enabled community centers, content rele- providing advice and assistance, a point returned to vant to low income groups and people who speak lan- in Chapter Four. guages that are not well represented on the web, and Given the economic importance of II for poor and community postal and radio facilities. isolated communities, and the high cost of rural pro- Finally, the capacity to use technologies to provide vision, there will often be a case for public interven- skilled labor to the local ICT industry, as well as to tion to promote universal access (at a level appropriate foster a domestic entrepreneurial base are all crucial. to a country's development), as well as the provision Foreign investment or employment will go where the of local public good ICT content. best low-cost, highly skilled labor is available. While There are a number of regulatory mechanisms that the market is providing solutions to the need for skills can help extend access to II. These include coverage development through private sector training institutes, requirements, or rollout targets with a geographic com- in many developing countries skills shortages continue ponent. Some 20 countries around the world have to be a crucial bottleneck. The market failures introduced, or are in the process of introducing uni- connected with education are well known, and the need versal access funds. One model is for private opera- for government involvement is widely accepted. tors to be invited to bid for service provision in areas Government support backed by donors can effectively that are not commercially viable, in return for a sub- provide ICT human capacity in developing countries. sidy financed from the universal service fund. A con- cession contract is awarded to the company requesting Does the World Bank Group have a role the smallest subsidy. In Chile, for example, this mech- to play? anism has been used to leverage $40 million in pri- vate investment on the basis of just over $2 million of The opportunity costs of not developing proper legal, public subsidy. As a result 1,000 public telephones have regulatory, and technological infrastructures for the been installed in rural towns, at around 10 percent of knowledge economy are very high for developing coun- the cost of direct public provision. Subsidies of this tries. The majority in the developing world has been kind could also be used to support the development effectively shut out of the economic and social gains l l INFORMATION AND COMMUNICATION TECHNOLOGIES that new technologies have afforded the rich. Devel- to forge new partnerships with donor agencies, tech- oping countries are increasingly looking to the inter- nology companies, and civil society organizations, and national donor community for more sophisticated to play the coordinator to help ensure that resources products and services to help them develop a robust are used to maximum effect. The Development Gate- II sector. World Bank Group investments in II are way Foundation illustrates such an opportunity. needed now more than ever to counterbalance the de- With the creation of the ICT Global Products clining financing options in the debt and equity mar- Group, the World Bank Group's tools and knowledge kets for telecommunication operators in developing and extensive II portfolio are now all housed in one countries. central department. Although organizational deficien- While these issues have already attracted substan- cies remain, including the need to clarify sector oper- tial international attention and private sector invest- ational responsibilities, GICT is in a strong position ments in the developing world are growing, the World to provide the range of services needed by our client Bank Group has a unique and significant role to play countries to improve access to II. While the World in improving II. Its broad range of skills, knowledge, Bank Group needs to build its skills base in commu- experience, and tools gives it unique strengths that dif- nity access programs, e-commerce, e-government, and ferentiate it from other donor bodies and make it an supporting the local development of content (includ- attractive partner to the private sector. Our compara- ing website construction), this process has already be- tive advantages include: gun. Recognizing its potential, the donor community * A unique ability to influence policy and support believes that the World Bank Group should play a ma- the kind of systemic government reforms and leg- jor role in II for development, as evidenced by the islative changes needed to take full advantage of conclusion of the G-8 Okinawa charter on the global ICT across a wide range of economic and social information society.24 sectors. Turning to education and applications of ICT, the * The ability to draw together different constituen- World Bank Group has developed a significant port- cies spanning government, private sector, and non- folio and expertise here as well. On the human re- governmental organizations (NGOs) to work sources side, it has already undertaken a number of together toward a common purpose. projects that use ICT from the radio to the Internet * A substantial accumulation of expertise in the ICT to deliver education, especially to remote areas. On field combined with a rare degree of country spe- the applications side, the World Bank has a large port- cific knowledge. Through its project portfolio dur- folio of projects with IT components, as well as a his- ing the 1990s, the World Bank Group has tory of using ICT to deliver information on issues developed a detailed understanding of II in 76 including health and the environment. With the re- countries around the world. cent investment in TV Africa, the IFC has also be- * A wide range of assistance tools-from equity in- come involved in content and broadcasting with a vestment to private and public loans to grants- significant development dimension. with global reach. Critically, these include a wide The World Bank Group's activities can, and will, range of risk-mitigation measures that provide a be only a small part of efforts required to overcome level of comfort to private sector operators and co- the digital divide. The scale of the problem and the financiers in little-known markets. World Bank Group's available resources suggest that * A proven record of highly successful investments- we can only be one of many actors. Having said that, IFC investments in the II sector attract $8.7 of the World Bank Group's catalytic role, combined with outside private financing for each dollar of IFC its experience and expertise, should allow it to lever- funding, for example, while World Bank telecom- age these resources. In coordination with its develop- munication projects have scored very highly in ment partners the World Bank Group can make a rankings of projects meeting CDF targets and in significant impact in this area. Operations Evaluations Department (OED) re- views.23 Recent initiatives like the joint United Nations Development Programme (UNDP)-World Bank host- ing of the G-8 DOTForce initiative reinforce the im- portance of partnerships in leveraging the resources and competencies of a wide range of players that are working to extend the reach of II. Given its unique strengths, the World Bank Group is well positioned 12 Chapter Two: Past Performance and New Challenges T he World Bank Group has a strong record in the telecommunication field. To date, the Group has a portfolio of 60 stand-alone telecommunication and IT projects in the public sector, totaling $4.5 billion.25 In addition, at the end of FY01, 97 private sector projects have been approved by IFC, with a total IFC funding of about $4.0 billion, including $1.8 billion from IFC's own account. The recent OED/Operations Evaluation Group (OEG) review of activities in the ICT sector identified it as one of the best performing sectors in the Bank's portfolio.26 In the 1990s, the World Bank Group moved successfully from lending to state owned enterprises to providing policy and regulatory advice to the public sector, and investing in private telecommunication providers. Nonetheless, the OED/ OEG report pointed out, too little management attention has hampered the World Bank Group's ability to maximize sector impact (Box 2.1 summarizing the main OED/OEG rec- ommendations, management's response and how this SSP deals specifically with the recom- mendations).27 The report also noted the need to move beyond the agenda of the last few years to offer client countries a wider range of tools to improve access to II. Operations 63 countries relied on World Bank Group support (grants, lending or TA) for some part of a sector re- Policy and technical assistance form program.29 Nonetheless, many developing and The World Bank has seen a significant change of fo- transition countries still have to embark on privatiza- cus in telecommunication activities in recent years. tion, suggesting the agenda is far from finished. Following Operations Policy 4.50 (OP 4.50) in 1995, This change of emphasis led to a substantial reduc- World Bank Group telecommunication projects shifted tion in the overall volume of lending to governments. away from investment lending to state owned enter- Comparing World Bank Group projects approved in prises, and toward technical assistance (TA) and poli- the years before (1992-95) and after (1996-99) OP cy-based lending for sector reforms designed to 4.50, the average annual value of new lending fell by encourage private investment flows. about 85 percent from $578 million to $79 million, Sector reform policy specified a three-pronged ap- while the size of the average loan shrank from $66 proach comprising privatization, to bring in additional million to $13 million (Table 2.1). Investment in post- capital and management skills; competition, to expand 1995 loans has by and large been limited to spectrum services and encourage efficiency; and regulation, to management equipment and rural access. ensure fair competition, reasonable prices, and uni- While the dollar value of World Bank Group lend- versal access. The scope of World Bank Group activity ing has declined, there is accumulating evidence that in supporting sector reform has been impressive. Ac- the development impact per dollar spent has dramat- cording to a recent International Telecommunication ically increased. Union (ITU) survey,28 more than 88 countries around Compared to lending to state owned enterprises, the world have privatized the incumbent operator-a World Bank Group resources invested in sector reform measure of reform progress. It is estimated that around have the power to leverage a much greater volume of 13 INFORMATION AND COMMUNICATION TECHNOLOGIES Table 2. 1: Overview of New Bank Group ICT Operations in the 1 990s Period Total Value Total Average Average (US$m) Number Annual Project/invest. of Projects Value Approval Value LOANS WB 1130 1992-95 2,312 35 578 66 1996-99 315 24 79 13 IFC FY 1993-95 788 21 263 38 FY 1996-01 2,613 63 435 42 WB IT Applications Recent I ,000 I ,500 _ + pa. GUARANTEES MIGA 2000 l l l - I I I GRANTS InfoDev 1998-00 53 240 17.7 0.22 PTF 1994-98 0.3 11 0.1 0.03 PHRD 1991-96 2.8 14 0.5 0.2 TATF 1991-99 1.9 27 0.2 0.1 PPIAF 2000 0.9 8 0.9 0.1 investment, due to the opportunities created by priva- significantly different from other infrastructure sec- tization and liberalization, as well as the confidence tors. This makes the combination of II reform with afforded by a sound regulatory regime. A recent re- broader infrastructure reform a cumbersome instru- view of Latin American experience found that coun- ment. Thus, among ongoing stand alone projects eval- tries that privatized saw telephone penetration grow uated by the OED/OEG report, 7 percent were 40 percent faster than otherwise, while full liberaliza- deemed to be at risk but with no actual problem cas- tion increased this differential to 160 percent. Peru, es, while among multisector loans 18 percent were at in particular, has seen impressive results due to a World risk and 15 percent had become problem cases. It is Bank Group-backed reform program (Box 2.2).31 Nor also a matter of concern that there is a trend toward have these results been confined to Latin America. increasing the number of multisector TA projects. Some of the poorest African countries have witnessed Other important success factors identified by the an explosion in telephone penetration following the OED/OEG report include World Bank Group staff licensing of mobile operators. In Uganda, for exam- continuity, sequencing of sector assistance, and the ple, the licensing of a second national operator in 1998 World Bank Group's long-term presence. led to 120,000 new mobile lines in two years-more Investment assistance than twice the number of previously existing fixed lines. Telecommunication reform has set the pace in Catalyzing private investment World Bank Group client countries, establishing pre- Given the shift toward private sector financing of tele- cedents and acting as catalyst for broader reform in communication infrastructure in recent years, the IFC various other infrastructure sectors such as energy and has increasingly played the lead role in the World Bank transport. . Group in new but selective investment activity (Table The OED/OEG report identified a number of fac- 2.1 and Figure 2.1). Average annual IFC investment tors under World Bank Group control that contribut- approvals in the sector grew from $262.6 million in ed to project success. In particular, the study found the years leading up to OP 4.50 (FY93-95) to $435.52 that single sector loans tend to perform better than million in the years thereafter (FY96-0 1). Of projects multisector loans packaging reforms across a number that reached the desk review stage (after a preliminary of public services. The faster pace of change in an in- screening), the estimated ratio of rejections to approv- novative telecommunication sector, which has only als (for GICT's investment unit) was five to one. increased with the advent of the Internet, makes it To ensure its continued catalytic role in the sector, 14 PAST PERFORMANCE, NEW CHALLENGES Box 2.1: OED/OEG Recommendations, the SSP and Management Response OED/OEG Recommendation Management/SSP Response The Bank should address outstanding policy gaps and dif- Management believes that the recent integration of Bank ferences in regulatory reform strategy regarding the sequenc- and IFC activities reduces policy gaps and differences; a ing of liberalization, universal access, and links to the Bank common approach is being encouraged by active cross-in- Group poverty-reduction agenda. volvement of Bank/IFC staff on projects. The SSP proposes guidelines on speeding the liberalization process and uni- versal access programs. The Bank should promote the use of a broad range of in- Management notes the budget rationale of multisector struments in the sector and differentiate product offerings projects, but concurs with quality concerns. SSP proposes by type of borrower, moving away from the use of expanded use of stand-alone 11 instruments including grant multisector TA loans. programs for small-scale TA and a range of investment lend- ing instruments. Regional and country strategies for ICT should be devel- Management agrees with the need to expand regional and oped. country strategies. SSP proposes increased level of GICT support for CAS and ESW work. In addition, infoDev is sup- porting country e-readiness studies. Partnerships and special initiatives should be streamlined, Management agrees with the need for streamlining and a overall strategic responsibility for the 11 sector should reside central role for GICT in II. SSP clarifies GICT role in II. The with ICT Global Products Group. issue of special initiatives is to be addressed as part of the World Bank Group Knowledge Strategy being developed at the MD level. Staff skills in the sector should be upgraded. Management agrees with the need for staff skills upgrad- ing. SSP proposes expansion of staff numbers and of staff training in order to ensure skills are available for an expanded program of project offerings. Monitoring and evaluation of projects should be strength- Management concurs with the need for improved M&E, notes ened. that stand-alone 11 projects include monitorable indicators. SSP proposes list of indicators to be monitored to deter- mine project and strategy success. Box 2.2: The Impact of Peru's Telecommunication Reform In 1993, the Peruvian government embarked on a major reform of its telecommunication sector, supported by Bank lending of approximately $50 million (as part of multisector technical assistance and policy-based support). New laws enacted in 1993 and 1994 provided for the privatization of CPT and ENTEL (the two state-owned utilities) and the establishment of an independent regulator (OSIPTEL). The mobile telephone market was partially liberalized right away and is now fully competitive; 172 companies are currently active. The privatization contracts included substantial obliga- tions to install public telephones in rural areas, and following market liberalization in 1 999 a Universal Service Levy of I percent was introduced to finance the Telecommunication Fund (FITEL) dedicated to meeting universal service objectives. The results are impressive: 1993 1998 Sector Investments ($ million) 28 2,099 Fixed lines (penetration rate per 100 pop) 660,000 (2.9) 1,850,000 (7.6) Mobile telephone lines (penetration rate per 100 pop) 50,000 (0.2) 600,000 (2.4) Public phones 8,000 50,000 Towns with phone service 1,450 3,000 Poor households in Lima with a telephone (%)32 1 2 1 Average waiting time for connection 1 8 months 45 days Connection fee $1,500 $ 15033 15 INFORMATION AND COMMUNICATION TECHNOLOGIES Figure 2. 1: Changing Composition of Bank Group ll Portfolio during the I 990s Number of Projects Value of Investments I 00 - 4500 - 4000 - o - 3500o 7 ~~~~~~~~3000V- 60 -2500 _ E 90 1 95 200 I990 1995 lOW2000 40V EMIGA 1500 20o a*IFC 1000. * WB(SAL) 500. 0 WB(SAL) 1990 1995 2000 oWTA)1990 1995 2000 o WB(SIL) IFC has progressively shifted investment activity to- companies become self-financing). A snapshot of each ward newer technologies and lower income countries project taken three years after the IFC investment over the past five years. On the technology front, IFC shows that each $1,000 invested by IFC created be- has shifted emphasis away from traditional fixed-line tween 7 to 28 new telephone lines, with an average of systems toward cellular networks, and has a small but 14 lines per $1,000 (Box 2.3).37 growing portfolio of broadband and other Internet Improving and expanding the network of a project infrastructure companies. As of end of FY01, IFC's company increases competition and stimulates total investments in cellular projects amounted to $887 mil- market growth. A snapshot of the cellular markets af- lion, or 64 percent of the total.34 As liberalization ter three years in the sample countries shows more than continues and incumbent monopolies expire, IFC is 9 million cellular lines had been built. This roughly also focusing more heavily on the support of alterna- equals the total number of existing fixed lines in the tive national, regional, and local service providers. On sample countries in 1995, and is triple their fixed-line a geographic basis, recent approvals show a shift away growth between 1995 and 1998. IFC's investment is, from Latin American countries, toward Sub-Saharan of course, not solely responsible for market growth; Africa. Within Latin America, IFC's efforts have shift- ed away from the larger, more advanced countries and Box 2.3: Romanian Cellular Experience toward lower income, less wealthy countries that are In 1997, IFC raised a $2 1 0 million financing pack. in greater need of investment. age to help fund the initial build-out and operation IFC investments in the sector can be considered a of Mobil Rom. Mobil Rom and its competitor had success on a number of grounds. IFC funding has a been awarded Global System for Mobile Communi- very high mobilization rate35-attracting $8.7 of out- cations (GSM) cellular licenses for the operation of side private financing for each dollar of IFC funding, nationwide cellular networks. Prior to these license compared to a $4.4 average for the total IFC portfo- awards, Romania had one cellular operator serving lio in FY99. Estimated equity returns are double the 20,000 cellular subscribers in Romania's major cit- IFC average, and 85 percent of net IFC commitments ies at very high price levels. sampled received a satisfactory or better rating on con- Today, Romania is estimated to have 2.7 million tribution to the growth of the economy. Mobile in- subscribers, and prices for cellular service are among vestments performed particularly well. the lowest in Europe. This extraordinary growth al- A sample of seven IFC cellular investments across lowed many Romanians to have access to telecom- regions from Bangladesh to Venezuela illustrates the munications services for the first time. significant impact cellular investments can have on Initially, the company tried to raise financing improving access to telecommunication.36 Besides hav- purely from commercial banks, but the banks indi- ing mobilized $8.7 from other sources for each IFC cated the need for a multilateral institution. IFC's dollar invested, IFC's catalytic role is even more sig- $50 million investment helped to successfully syn- nificant when looking at the new lines created through dicate $ 160 million from commercial banks and has, the IFC investments (IFC typically finances a three- so far, resulted in more than 24 new telephone lines year investment program after which most cellular for every $1,000 which IFC invested. 16 PAST PERFORMANCE, NEW CHALLENGES but total cellular line growth per each $1,000 invest- advantage to respond to special circumstances and ed by IFC is a proxy for IFC's catalytic impact. Using opportunities in a timely and flexible manner. The this proxy, each $1,000 invested by IFC contributed first three flagship areas, endorsed by the Donor's to market growth between 9 and 111 new lines, with Committee at the end of 1997, focused on regulatory an average 36 new lines per $1,000.38 issues for the information age; technology in educa- Factors responsible for this success include the abil- tion; and connectivity in Africa. Electronic commerce ity to react rapidly to market opportunities, strong was added in 1999. In FY01, infoDev also began to regulatory regimes, a good macro environment, and support the development of business plans and pro- the selection of strong management. The importance totypes of country gateways in developing countries of the regulatory regime suggests the presence of po- as part of the Development Gateway initiative. As of tentially powerful synergies with World Bank Group March 15, 2001 a total of 21 grants have been ap- TA, opportunities that can now be more readily pur- proved for $1.3 million, and an additional 4 or 5 grants sued in the context of the new Global Products Group. are expected within this fiscal year. infoDev has also launched a program to support e-readiness evaluations in developing countries (see Chapter Four and Annex As of June 30, 2000, the telecommunication portfolio 5 on the relationship between the Development Gate- gross exposure of Multilateral Investment Guarantee way Foundation and infoDev). Agency (MIGA) stood at $187 million, supporting in- A number of trust funds have provided an average vestments in eight countries.39 Contracts of guarantee of$ 1.7 million per year to finance World Bank Group signed totaled $111 million in 2000. MIGA's present II project preparation, as well as a range of TA and telecommunication project pipeline, which focuses on Economic Sector Work (ESW) activities. The Public- the construction and/or expansion of mobile telepho- Private Infrastructure Advisory Facility (PPIAF) grant ny networks, amounts to $100 million, two-thirds of program in particular has played a significant role in which will go to Africa. MIGA's telecommunication the telecommunication sector with PPIAF activities strategy for 2001 calls for an increase in its portfolio totaling $926,000 in the year 2000.4° PPIAF projects with regional concentration geared toward Africa, Asia, span over a half dozen projects in countries including and the Middle East where the sector's gross exposure Algeria, Bhutan, Cambodia, China, Economic Com- is lowest. munity of West African States (ECOWAS), Paraguay, Sao Tome, and Tanzania. In Algeria, for example, Grants PPIAF provided support to the government in design- The Information for Development (infoDev) program ing and implementing a liberalized telecommunica- is the largest and most visible of the grant programs tion policy statement and legal framework, including for the ICT sector. Since 1998, infoDev has funded a commitment to award a GSM license to a private over 250 projects, providing on average $17.7 million operator in 2001. each year in grants (Table 2.1). The projects involve policy research and innovative applications and knowl- Knowledge sharing edge sharing activities, and relate to a range of appli- In 2000, GICT devoted just under $0.5 million to cations in education, health, environment, govern- knowledge management activities, while the World ment, and e-commerce. The infoDev projects have Bank Institute (WBI) and Development Economics been particularly effective in: (DEC) were also active in ICT research. The OED/ * networks and communities ofinterest projects, intend- OEG report noted that while Economic and Sector ed to improve communication within sectors and Work (ESW) has generally had high policy relevance, support virtual communities with the help of web- there still needs to be a strengthening of links between sites, databases, or other information-sharing sys- research and practice. A new trend in ESW has been tems; to conduct country-level assessments of knowledge * policy-related projects, which foster a proper regu- economy strategies, for example in China, Korea, and latory environment for the- expansion of II; Thailand. Finally, the World Bank Group has been * capacity building projects, to develop necessary hu- proactive in using the Internet as a means of dissemi- man resources; and nating knowledge about ICT, with a number of web- * pilot and demonstration projects: small-scale mod- sites providing valuable information about the sector, els for testing ICT-based innovative approach to such as MIGA's IPANet, the Africa Connection On- development issues. line, and Technet, as well as the previously mentioned Flagship procedures are used to promote initiatives Development Gateway, Global Knowledge Partner- that correspond to infoDev's ability and comparative ship, and GICT's external website. 17 Chapter Three: Strategic Directions in Information Infrastructure T he World Bank Group has contributed substantially to telecommunication sector reform worldwide. However, rapid evolution in the sector, convergence among infor- mation and communications technologies and the rise of the Internet have led to dramatic changes since the policy was last revised in 1995. The World Bank Group must respond to these changes with a dynamic new approach. Table 3.1 lays out what the World Bank Group will do differently in the sector as the result of a new approach towards II devel- opment. There are four strategic directions for World Bank for a broad array of country and sector policy Group lending and investment operations as well as dialogues. This chapter also describes the ICT research, grant activities in the ICT sector for the next three knowledge-sharing, and global public good products years: needed to support these operations. Finally, it discusses * Broadening and deepening sector policy and insti- an approach to prioritizing lending projects in II. tutional reform to extend offerings beyond the tele- Developing and implementing ICT applications communication focus, to address postal and will be the responsibility of the units across the World distribution logistics and media services, technol- Bank and IFC that possess the sector knowledge to ogy convergence, and the need for an enabling le- identify appropriate uses for ICT, although infoDev gal environment for the commercial and social will continue to support innovative pilots in these ar- development of the Internet. eas, and GICT will provide support to sectors to in- * Improving access to modern II through a range of corporate ICT applications on an as-needed basis. instruments that encourage private sector invest- Using ICT in education and training, which will be ment, and provide smart subsidies where the mar- the primary responsibility of the World Bank Group ket will not reach universal access goals appropriate education departments, the WBI, and special initia- to a country's level of development on its own. tives, is discussed in Chapter Five. The issues involved * Supporting ICT human capacity building to en- in the provision of IT support are also discussed in sure there is a resident technical knowledge and skill Chapter Five. base for exploiting ICT and developing a knowl- edge economy. Broadening and deepening sector and * Supporting ICT applications for business, govern- institutional reform ment and citizens to harness technology for eco- nomic and social development in the developing The starting point for improving access to II is to de- world. velop robust legal and regulatory frameworks and in- This chapter will discuss GICT's role in supporting stitutions that address the profound changes in this the first two strategic directions, the core of the World sector. Traditional sector reform focused narrowly on Bank Group's II work. A new business strategy focused telephony services. Convergence and the overall im- around the first two strategic directions has important portance of II to economic and social development implications for both the GICT department and the require a broader scope of reform operations. Accord- Bank's regions in order to achieve its successful ingly, sector and institutional reform will occur in four implementation, given that the regions are responsible key areas: 18 STRATEGIC DIRECTIONS IN 11 * Ongoing telecommunication reform in countries have not yet liberalized the sector or privatized the that have not undergone basic market restructur- incumbent operator. ing and privatization of the incumbent operator. The World Bank Group will continue to assist This includes strengthening of regulatory institu- countries in their efforts to expand competition and tions to ensure they have the capacity and credi- strengthen regulatory regimes. Even in countries that bility to implement and oversee sector reform. have completed II sector reform, the absence of a reg- * New policy frameworks for technology convergence ulatory tradition and the scarcity of human resources and, in particular, regulatory support for the de- generate a need, in the initial phase, to set up or velopment of advanced Internet infrastructure. strengthen a regulatory agency and accompany it in * The creation of an enabling legal environment for the transition phase to competitive markets. Mount- e-commerce and e-government. ing evidence from post-reform countries shows regu- * Greater attention to previously overlooked sectors latory agencies often feel highly challenged in the such as postal and broadcast. discharge of their statutory duties, and without out- Successful reform in these interrelated areas will side support, they will not function well. The World have a dramatic impact on sector performance, boost- Bank Group will also give assistance to countries to ing private sector investment and ultimately extend- move from telecommunication regulatory institutions ing the reach of II to poor people around the world. to regulation for convergent information and com- munication industries as a whole (below). Continuing telecommunication reform While many countries have already enacted success- Technology convergence and the Internet ful telecommunication sector reform, worldwide this The development of Internet technology has driven process is far from complete. The World Bank Group the convergence of previously distinct information, will continue to support telecommunication reform media, and telecommunication technologies, requir- with particular emphasis on the many countries that ing a holistic view of reform. Indeed, the fact that voice Table 3.1 What Will the Bank Group Do Differently in 11? Current approach New approach Mission Expand and modernize telecommunication Extend access to a wider range of ICTs and related applications. Policy and technical Telecommunication reform: competition, Facilitate convergence. assistance privatization, and regulation. Develop e-commerce/e-governance. Use posts and media. Expand access beyond the market. Build institutional capacity. Infrastructure Fixed and mobile voice and data networks. Hard and soft information infrastructure, including Internet and Broadband networks. Regional solutions. Applications Strategic information systems. Sector-based applications. Project components. E-government/e-procurement. E-commerce. City-to-city knowledge networks. Instruments/vehicles Traditional application of WB Combining IFC/WB investments. and IFC instruments. New innovative instruments (venture capital, capital market facilities, local currency financing). Universal access funds. Public/private partnerships and cofinancing. Small technical assistance grants. Special purpose initiatives (IT incubators, e.readiness). 19 INFORMATION AND COMMUNICATION TECHNOLOGIES (telephony) and data (video, audio, images, text, etc.) can now travel seamless across the same networks, has Box 3.2: infoDev and E-Readiness forced regulators around the world to create coher- infoDev has launched the ICT Infrastructure and ent, sectorwide policy frameworks that permit consis- E-readiness Assessments Initiative that provides tency in the exercise of key regulatory functions grants to help developing countries evaluate their (competition, licensing, frequency management, in- 11. Grant funded activities are expected to result terconnection, etc.) across sectors. This suggests that, in an assessment using an appropriate methodol- in some cases, regulatory authorities for IT, telecom- ogy that is tailored to identify strategic opportu- munication and broadcasting services might be nities for progress, and develop an action plan merged. These institutions will need assistance in cre- which addresses the opportunities and bottlenecks ating an attractive investment and regulatory environ- identified, with special attention to the policy ment for building broadband and wireless networks framework and the availability of qualified hu- that will provide a platform for all forms of commu- man resources. As of July 20, 2001, a total of nication. For example, many countries will require 1 6 grants have been approved, and it is expected support in conducting 3G wireless spectrum licens- that an additional 1 5 to 20 more grants will be ing auctions similar to those that occurred in Europe approved this fiscal year. and the U.S. In particular, competition law and poli- cy will become increasingly important in a converg- ing communications sector. The World Bank Group creation and public service delivery, developing coun- will provide an ongoing program of support to assist tries need to assess their readiness to develop a knowl- client countries develop the institutional capacity to edge economy. The World Bank will therefore support respond rapidly to the challenges presented by the dy- country-specific e-readiness studies as the basis for namic and evolving nature of the II sector. defining a national ICT strategy (Annex 2). These Convergence activities will be supported primarily studies, which cover a wide range of sectors and activ- through policy-based and TA operations, although ities based around the use of ICT including educa- investment components may sometimes also be re- tion, intellectual property rights, e-commerce laws, quired. While TA is the primary vehicle for delivering and the environment for entrepreneurship, will be these activities, Morocco is a good example of a new funded by infoDev grants (Box 3.2), ESW, or as the generation project that integrates telecommunication, first part of a larger knowledge economy project. The IT, and postal sector reform (Box 3.1). recently completed OECD-World Bank report for the [nabling legal and regulatory environment Republic of Korea provides a model for such a review of a country's knowledge economy. Initiatives are also As the Internet becomes a primary platform for wealth occurring in Algeria, China, Tunisia, Turkey, Uganda, and others. These broader studies must be collabora- Box 3. 1: Integrated 11 Reform in Morocco tive, involving experts from sectoral and regional units The 11 Sector Development Loan in Morocco, approved by the in issues such as competition policy, financial systems, Board in May 2001, is an adjustment operation supporting and fiscal policy. Frequently, GICT will play only a the government's reform program to develop a modern and supporting role in these initiatives-for example, the extended 11, and an integrated approach to reform in the tele- Korea report was led by a group from WBI with input communications, IT, and postal sectors. The main reforms con- from GICT. templated in each sector are: For countries that have progressed beyond the def- * Telecommunications: pro-competitive reforms for market inition of strategy, the World Bank Group will pro- liberalization (including issuance of new fixed licenses), vide TA for the implementation of the necessary legal strengthening the regulatory environment of the sector, and regulatory changes that will enable a knowledge and privatization of the historical operator. economy to flourish. GICT will undertake legal and * Information technology. development of a legal framework regulatory reform in conjunction with the legal de- for e-commerce, and the creation of interministerial net- partment, regions, and sectors with specialized knowl- works at the local and central levels. edge-such as Poverty Reduction and Economic * Postal sector. introduction of greater competition and pri- Management (PREM) and other parts of Private Sec- vate participation in the sector, modernization and diver- tor Development (PSD). This includes the enactment sification of the public postal operator, and extension of of legislation and appropriate regulations to deal with postal and financial services to the poor, and to remote questions such as the legal status of electronic con- areas under a newly defined universal service policy. tracts and digital signatures; the privacy and security of data transmission; the protection of intellectual 20 STRATEGIC DIRECTIONS IN 11 property; the tax and duty treatment of electronic As with telecommunication, major institutional, transactions; the facilitation of electronic transactions legislative, and regulatory postal reforms will provide in an environment of low credit card penetration; and the means for revitalizing the II sector by increasing the policing of e-commerce as a means of building competition and private sector participation. Postal trust. Support for e-commerce legislation and frame- sector reform is only starting, and postal operators in works of "cyber law" oriented toward the Internet are member countries will require support during the tran- already being provided under the World Bank Infor- sition phase to adapt to a more competitive market mation Infrastructure Development Project in Indo- environment. Private sector participation is initially nesia, among others. more likely to come through new entry, as well as management contract and concession-type agree- Greater attention to postal and media ments, rather than full-scale privatization. World Bank Any strategy that seeks universal access to basic II can- investment and TA lending may be justified during not ignore postal services and mass communications this transition period to help state-owned postal en- media, such as radio and television. Postal and broad- terprises remain viable in a competitive environment cast services have often been overlooked in the pro- while they prepare for privatization. The World Bank cess of telecommunication sector reform. The World Group is already experiencing strong client interest in Bank Group will play a much more active role in these postal sector reform, with concrete projects or initial sectors for four reasons: discussions already underway in 19 countries.44 • First, the relatively low cost and wide reach of the Many countries need to overhaul their regulatory postal and broadcasting sectors make them par- regime covering broadcast media, either due to the ticularly relevant to the poor. Postal services and lack of coherence of existing regulations or to the com- radio broadcasts are often the only communication plete absence of any regulatory framework. The World services able to reach the most isolated rural com- Bank Group will support an increased range of oper- munities. While the Internet is accessible to about ations to prepare institutions, legislation, and regula- 4 percent of the world's population, radio is heard tions for the new technological environment. Reforms by as much as 80 percent of the people of many will include making the broadcast spectrum available developing countries.4' In South Africa, about 65 to a range of private and community stations, provid- percent of the country have access to television, and ing a regulatory structure that promotes broadcast ser- over 98-percent to radio.42 Post offices too are widely vices appropriate for the poor, and local languages accessible in developing countries (there are more subtitling. Expressions of interest for support in broad- than 154,000 in India alone), and play important casting sector reform have been received from Belize, roles as financial intermediaries and delivery sys- Kenya, Pakistan, Romania, Tanzania, and the Orga- tems for private and government services. nization of Eastern Caribbean States (OECS). * Second, the increasing volume of commercial trans- actions (B2B and B2C) on the Internet makes mod- Improving access to 1I ern postal services an essential infrastructure for the The core of the World Bank Group's II strategy is to customer fulfillment end of e-commerce. Post of- increase infrastructure coverage in underserved demo- fices can also provide a location for the provision graphic and geographic areas of the developing world. of public Internet access and e-mail. For example, While experience to date demonstrates that introduc- Jamaica's IT strategy calls for all Jamaicans to have tion of competition has a strong influence on increas- an e-mail account, accessible through their local ing access, other measures, such as public subsidies post office, by 2002. for community access centers, will also be necessary * Third, these "traditional" technologies are power- to make II an accessible resource for all of the world's ful development tools in their own right. Surveys poor. Accordingly, the strategy for improving access of education interventions find interactive radio to II is built around four key activities: instruction considerably more cost-effective in rais- * promoting new entry and competition through ing test scores than teacher training or books, for policy reform; example, and more than 50 percent of farmers sur- * stimulating private sector investment in hard and veyed in Zambia reported that farm radio forums soft II through IFC, MIGA, and infoDev; had helped them increase crop yields.43 * extending access beyond the market by supporting * Fourth, the media and postal sectors are lagging a range of innovative public access initiatives; and behind telecommunication in policy reform, sug- * exploiting cross-sectoral synergies with other rural gesting a significant need for policy and technical infrastructure projects. advice in these sectors. 21 INFORMATION AND COMMUNICATION TECHNOLOGIES Stimulating private sector investment of local connectivity, IFC will focus on applications in this market with greatest end-customer impact. With the convergence of IT and telecommunication, Software products and services: This segment com- IFC's investment strategy is shifting from basic tele- prises a broad range of firms. At one end of the phony networks to facilitating the rollout of low-cost spectrum are software service companies, which mobile services and broadband Internet connectivity provide contract programming services to external in client countries. The bulk of IFC's investments will clients. The other end consists of "shrink-wrapped" support new competitive operators providing cost-ef- product companies with proprietary intellectual fective services to consumers. A broad range of tech- capital in areas such as finance/accounting, logis- nology platforms and services will continue to be tics, operations, or language translation. IFC will supported by IFC, including fixed, wireless, satellite, invest in a range of software companies in view of cable, and fiber optics projects, with an increasing their role in the local 11 as well as offshore revenue emphasis on broadband (high capacity) connectivity. generation potential. In some cases, IFC will consider broadband regional . E-commerce: The fast-evolving experience of the networks, where economies of scale can be gained by Internet indicates that "brick and mortar" firms amalgamating the needs of several small countries. reap most of the benefits. Internet-only companies IFC will tailor its investment program to meet the face high barriers in establishing a purely online development needs of the client country. In more ad- presence. IFC will focus on building II to enable vanced markets, IFC will focus on reaching beyond all firms to participate in the new economy. None- the urban areas and on increasing competition. These theless, selected opportunities in e-commerce with countries will also provide opportunities for IFC to strong partnerships in the brick and mortar world explore more advanced technologies. In developing will be considered for IFC investment. countries the focus will be to increase the penetration Within IFC, GICT has taken the lead role in in- of basic services. IFC has already experimented with vestment in companies providing hard and soft infra- investing in rural telephony, including the Grameen structure related to the Internet, and has partnered Phone project that supported the cellular-based pub- with other regional and industry departments on in- lic telephones provided by microenterprises in rural vestments in companies that apply technology to an Bangladesh. IFC will also support multicountry economic and/or social activity. Examples include dis- projects for major II investments including backbones, tance learning (eGuruCool.com) and commercial ex- satellites, and transoceanic fiber optic cables. changes (AsianPaperMarkets.com). IFC will continue IFC will expand efforts to catalyze the rollout of to take a cautious view in entering new investments the Internet-enabled 11 in client countries. In most in this field (Box 3.3). IFC client countries, construction of this infrastruc- Incubator projects, which provide seed money pack- ture is currently in a nascent phase. The main II ser- aged with a range of support services to start-up com- vices that support the Internet are: panies, offer one means of stimulating different * ISP: As the first point of access for individuals and applications. The promising track record of private- business, these firms increasingly provide a range public, and in some cases purely private sector, incu- of integrated data services. IFC will focus on repli- bators indicate that they can play a key role in jump cating successful business models and in transfer- starting the local environment for entrepreneurship. ring cost-effective technical solutions. infoDev is positioning itself to play a leading role in * Web hosting: Companies typically outsource the promoting the development of private sector technol- physical hosting and maintenance of their websites ogy companies through incubators (Box 3.4). to improve service quality and allow users to share MIGA will play a growing role in supporting pri- the cost of skilled technical staff, hardware and soft- vate investment in the sector, expanding its support ware. As the quality of the Internet backbone im- for investments in cellular operations in particular. For proves in a country, IFC will consider investing in instance, in FY00 MIGA backed $230 million in po- this segment-the next level of infrastructure. In litical risk insurance to a loan syndicate to support addition, IFC will invest in selected Internet ap- investment in a cellular network in the Sao Paulo re- plications, software, and e-commerce providers. gion of Brazil, which is expected to add 2 million new * ASP: ASPs provide a software application to cus- subscribers over the next two years. tomers via the Internet. The application is hosted GICT will leverage the synergies of the joint IFC/ and maintained remotely, reducing the need for World Bank approach in addressing the tight correla- heavy in-house IT investment within companies. tion between sector reforms and improving access to Given current constraints in quality and bandwidth 11. For example, in Ghana, a joint approach to the 22 STRATEGIC DIRECTIONS IN 11 Box 3.3: Investing in IT in Developing Countries In order to help ensure that IT reaches developing countries, IFC created an Information Technologies Investments Group in April 2000, in GICT. This new investment unit was established to strengthen IFC's support for emerging technology companies in the developing world through transfer of the latest technologies from developed countries into developing countries, as well as support to the development of local entrepreneurs and technologies. Focus areas for investment include 11 services specifically connected with the Internet (such as Internet service providers, web hosting, and storage), as well as enabling technologies, software and services, IT enabled services (such as call centers and business process outsourcing), and applications (such as e-finance, health, and education). Some examples of recent investments include: Sigma-A leading Indonesian IT services firm, Sigma provides software and technology solutions for the financial services industry, Internet access to individuals and corporations, cabling and networking activities, and web site design and hosting. Sigma also operates BaliCamp, a software development outsourcing company. IFC support enabled the company to position for growth in local and overseas markets. Spryance-This company provides remote services in the health information services industry, enabling creation of large numbers of skilled jobs in India. The company is focused on the medical transcription market, using a web-enabled process to serve expanding markets overseas. Rubico-A South African developer of business software, Rubico develops open-source software primarily for the financial services industry. Their products and services include developing complete corporate-wide systems and e- enabling software programs, as well as system integration. IFC support is helping the company to expand, providing an important example of locally-developed technology with global applications. telecommunication sector greatly enhanced our devel- er revenue potential of low-income rural and periur- opment impact. The World Bank provided TA to im- ban communities, combined with the higher cost of prove the strength of the regulatory regime, while the servicing isolated rural locations, have tended to pre- IFC is investing in Ghana Telecom only after the com- vent these groups from sharing equally in the gains of pany complied with license agreements, which will lead reform and limit the extent to which the access gap to to expanded access for Ghanaians. Similarly, in Mo- a range of II can be narrowed on a purely commercial rocco, the IFC invested in the mobile sector after the basis. The World Bank Group will therefore pursue World Bank had supported the opening up of mobile five strategies to help extend access to rural and mar- competition. ginal urban areas: * support policymakers in setting suitable universal Extending access beyond the market access objectives (based on the level of service pro- While privatization and liberalization of the telecom- vision likely to be sustainable) and defining the munication sector have been highly successful in ex- scope of services; panding access, the benefits of reform have been * assist policymakers in identifying regulatory mech- concentrated in higher-income urban areas. The low- anisms for reaching access objectives; Box 3.4: infoDev Incubators Over an initial three-year period, the infoDev Incubator Initiative plans to establish a network of incubators to facilitate the emergence and development of small and medium ICT enterprises in developing countries that are expected to have a significant development impact. infoDev is to serve as the central hub of the incubators network, providing funding for studies to establish best practices, a comprehensive knowledge base, and practical networking assistance. Under the initiative, starting in FY02, infoDev expects to work with governments, corporations, research institutions, and other organizations in developing countries. Grants are planned to cover several activities for one or more incubator locations in a developing country and include some of the following: connectivity packages for incubator companies, including equipment, Internet access, applications and related facilities; technical assistance, including provision of legal, finan- cial, management, marketing and other expertise; promotion of ICT start-ups where front-end subsidies are justified; and a financial endowment to local incubators enabling incubators to use revolving funds to achieve financial sustainability and promote further expansion, and to provide microcredit on a case-by-case basis. 23 INFORMATION AND COMMUNICATION TECHNOLOGIES * support universal access funds; mechanism for cofinancing is a fund that allocates * facilitate public-private cofinancing of infrastruc- partial investment subsidies on a competitive basis to ture investments; and private sector operators who agree to build and oper- * promote local participation in community-based ate II services in commercially unattractive areas (An- access center initiatives. nex 3). This is an approach that employs the The World Bank Group will provide assistance to output-based aid methodology highlighted in the governments and regulators that are trying to define forthcoming Private Sector Development Strategy. In realistic universal access objectives, and to establish these arrangements, the World Bank will provide re- comprehensive frameworks for universal service that sources to cover a public subsidy, while in some cases, are consistent with a liberalized market, and can be IFC will provide financing for the private sector com- financed at affordable cost by national budgets or II ponent of these investments. World Bank funds will users at large. Particular attention must be paid to be provided to support onetime subsidies covering a potential risks of public investments, such as distort- portion of the capital costs of private sector rollout. ing market conditions with ill-conceived interventions, The World Bank Group will encourage local par- betting on the wrong technologies, or making invest- ticipation to enhance the chances of success of inno- ments that eventually fail to yield commensurate ben- vative communal facilities. efits. Experience in South Africa, for example, has shown The World Bank Group will provide TA for the that a self-financed (except for a limited subsidy for design and implementation of policies or regulatory initial investment and training) telecenter program can mechanisms that help countries meet their objectives be sustainable when focused on demand-driven initi- for universal access. Several different mechanisms to atives, and managed by local entrepreneurs or com- improve access are available to policymakers, such as munity organizations with a vested interest in success. service requirements, license conditions, and incen- There is considerable potential to replicate this kind tives for existing operators and new entrants to ser- of experience elsewhere. A planned project in Thai- vice commercially risky areas. A few examples: land will support the rollout of public Internet access * Service requirements can be presented in the form through local civil society organizations, using partic- of rollout targets for private lines, teledensity tar- ipatory project design techniques to ensure that such gets, targets for public facilities such as pay phones centers target information needs identified by the poor or telecenters, quality of service levels, targets to themselves. reduce waiting list, or minimum time to fulfill re- Special initiatives, including World Links for De- quests for connectivity. velopment (WorLD) and the Global Development * Licenses can be awarded to the bidder that offers Learning Network (GDLN), will also continue to play the largest build out plan, rather than the one of- an important role in extending infrastructure, both fering the highest license fee. through TA and pilot projects. The Information So- * Less profitable or unattractive areas can be bun- lutions Group (ISG) of the World Bank is already play- dled with lucrative areas within the same license ing a significant role in improving access to broadband area. technologies in country offices and, through them, to The World Bank Group will also help develop sev- government units working with the World Bank-a eral universal access funds and lending programs. capacity that is being exploited by the GDLN to pro- These funds could be used to finance public telephones vide global audio-video links. ISG will explore options and multipurpose community technology centers, to- to increase access to this bandwidth for local NGOs gether with related Internet promotion activities, and or academic institutions in an upcoming review of its community radio stations in isolated rural and semi- operations. urban areas. These universal access programs will ben- efit from the lessons and experience of ongoing support Exploiting cross-sector synergies to rural telecommunication development funds in Universal access projects fit well into the World Bank's Guatemala, Nepal, Nicaragua, and Peru through TA wider rural development agenda and, in line with the activities. Eight countries around the world have in- CDF, offer the possibility of exploiting cross-sectoral troduced a universal access fund for telecommunica- synergies with other rural infrastructure initiatives, for tion, and a further 11 are in the process of doing S0.45 example in the energy sector (Box 3.5). The World A number of small-scale telecenter initiatives are al- Bank, in its universal access lending operations, will ready underway with infoDev funding in Peru and push for a comprehensive ICT poverty survey as the Senegal. first stage in designing such programs. These surveys Based on existing experience, the most promising will use participatory techniques to ascertain the II 24 STRATEGIC DIRECTIONS IN 11 this end, GICT's external website will be designed as Box 3.5: Energy for Rural Transformation a one-stop-shop, allowing visitors to access quantita- Project in Uganda tive and qualitative information on the ICT sector by The Energy for Rural Transformation Project aims country and topic, as well as disseminating best prac- to go beyond the standard rural electrification tices including the good practice document proposed model by using energy as a catalyst for the devel- in Annex 1. In addition, it is expected that the devel- opment of a range of other rural activities with opment of a knowledge strategy will have substantial high social and economic value, including agricul- impact on knowledge sharing within the institution. ture, small business, telecommunications, health, Both knowledge sharing and research activities will and education. In the case of telecommunications, continue to be led by Development Economics Re- the project will provide both TA and investment search Group (DECRG) and WBI. finance for a rural telecommunications fund un- As well as knowledge activities, the World Bank der the auspices of the Uganda Communications Group has an important role to play in supporting Commission. The project will also use pilot client country participation in global institutions that telecenters to explore the potential for Internet use set rules governing II. Already, the World Bank is an in rural areas. observer to the United Nations Commission on In- ternational Trade Law (UNCITRAL) Working Group for drafting model e-commerce legislation. Through resources of poor people, their information needs, and infoDev, the World Bank has supported a number of perceived methods of meeting such needs. initiatives including assistance for developing coun- tries to participate in the World Trade Organization Knowledge-sharing, research, and global (WTO) telecommunication agreements, and ITU reg- public goods ulatory colloquia tackling issues such as reform of ac- counting rates regimes. The World Bank Group As with lending operations, there is a need to focus supports such participation to ensure that the needs the World Bank Group's knowledge sharing and re- of developing countries are reflected in the agreements search agenda on new economy issues. The novelty of reached. the Internet in developing countries means that much remains to be learned about how the new technolo- Priorities gies benefit poor communities, and how World Bank World Bank Group operations in II should focus on Group operations might best be designed to maximize countries and regions within countries where 1I has and enhance these benefits. Much of the existing evi- the greatest potential to contribute to poverty reduc- dence on ICT and poverty alleviation is still anecdot- tion, and where it can work most effectively with part- al and fragmentary in nature. A more comprehensive ner agencies. The overarching goal is to focus lending research initiative would incorporate the following el- and investments in projects where the World Bank ements: Group can make a difference. Bank services and in- * compiling case studies on experiences from pioneer- terventions will be matched to communities, coun- ing countries as an important vehicle for sharing tries, and regions only after a comprehensive needs best practices; assessment is completed, and our role vis-a-vis part- * performing a rigorous quantitative assessment of ner development agencies has been clarified. In this the costs and benefits of ICT interventions through context, it will be important to ensure that the role of household survey-based monitoring and evaluation II in helping to meet the goals set out in the Country exercises in pilot projects and larger scale opera- Assistance Strategy (CAS) is routinely considered dur- tions, such as adaptable program loans (APL) and ing the process of CAS formulation. GICT will offer learning and innovation loans (LIL); support to World Bank country teams that are in the * expanding and updating the relatively narrow ICT process of determining whether II is a binding con- content in the World Bank's living standard mea- straint to client country development, and thus where surement surveys (LSMS); and support for the development of II should be a priori- * creating databases that provide an overview of ICT ty. GICT has prepared a first stage screening method- infrastructure and capabilities in developing ology to illustrate the comparative development of II countries to provide a basis for benchmarks and across countries as a tool to use in this process. identifying new investment targets. Factors that might be relevant in such a decision The World Bank Group needs to disseminate the on prioritization for different types of assistance in- findings of the research activities identified above. To clude: 25 INFORMATION AND COMMUNICATION TECHNOLOGIES * Countries where there is a significant government * Minority ethnic groups, women, and the disabled commitment to reform and sector growth. should also be a focus of network access and appli- * Countries that have not made significant progress cations support. toward sector reform. These are potential priority * Countries that are best placed to benefit from the countries for World Bank Group policy based and Internet revolution, and the development of alter- TA projects. native II. For instance, this might be because of a * Countries that have started the reform process, but strong tradition in technical education that pro- face significant costs in reaching universal access vides the skilled labor needed for teleservices. These due to their large dispersed rural populations; and should be a target for the development and imple- countries that due to their small size, suffer from mentation of knowledge economy strategies, as well diseconomies of scale in infrastructure. These are as IFC and MIGA support. potential priorities for World Bank Group invest- Selectivity will also be exercised in terms of instru- ment support. ments. For example, in low income countries and re- * Countries that, while moving ahead in the reform gions, the focus will be on basic connectivity, while at process, are considered unattractive by institution- the same time exploring the potential of IT in pro- al investors, and may therefore find it harder to at- moting social and economic development. Support for tract private investment. These should be a priority policy reform, investments covering convergence tech- for IFC and MIGA support. nologies and their applications to business, and the * Rural and remote areas where II network provision delivery of public services such as broadband, will re- is complex should be a focus of access programs. ceive greater attention in wealthier regions. 26 Chapter Four: Implementation Strategy G iven the potential of ICT to reach all sectors and support all areas of World Bank Group focus, it is important to have a clear division of responsibilities and a coordi- nated approach across the World Bank Group. This chapter discusses GICT's role in reform and access to II, the first two strategic directions laid out in Chapter Three. It then turns to the organizational improvements required to better deliver on these strategic direc- tions. The chapter also proposes an approach for monitoring progress of the new strategy, examines the financial implications of the strategy, and outlines a new operational policy. Chapter Five will address some issues regarding the third and fourth strategic directions, namely education for ICT, and applications of ICT in other sectors. Division of responsibilities of proactive business development, we shall inno- vate in our offerings and customize our approach GICT will take the lead in World Bank Group opera- based on country need. We shall use a wider range tions that focus on sector policy reform and extend- of instruments more effectively combined in order ing access to II (the first two strategic directions), to support the broader strategic approach. although GICT will continue to collaborate closely K Knowledge and skills development: We shall enhance with the regions, as with the Legal Operations De- our skills and knowledge to engage in a more com- partment (LEGOP) on legal aspects. Responsibility plex environment, including an expanded program for broader e-economy reforms will be shared with the of learning from, and disseminating, our own ex- regions and other sectors including PREM. Responsi- perience. bility for ICT education programs, with the goal of . Externalpartnerships: We shall develop new part- increasing the ICT human capacity base of our client nerships to leverage the work of external players countries, will rest primarily with the education de- that complement our approach. partments of both the World Bank and the IFC, al- though GICT will work closely with them in a support Evolving our management approach capacity. ICT applications in other sectors will be the GICT will actively support World Bank country and responsibility of sector units and regions. Again, sector management units in integrating ICT in CAS. GICT will play a catalytic and supporting role when In order to ensure that II is discussed as a potential necessary. As noted in the introduction, this SSP is input to meet the goals elaborated in Poverty Reduc- firmly rooted in the World Bank Group's broader tion Strategy Papers (PRSP) and CAS, and (if appro- Knowledge Strategy, and is linked to the ongoing ef- priate) potential programs are elaborated, GICT fort to develop a Science and Technology Strategy.46 regional coordinators will collaborate with country Organizational improvemens . teams to support analytic work and program develop- ment. Beyond the CAS program, GICT will also pro- Organizational innovations will be undertaken along vide support for inputs into ESW. four lines to pursue the strategic directions set out in One goal of further integration with the CAS pro- Chapter Three: cess will be to expand the number of small, stand- * Management efficiencies: We shall streamline our alone TA loans, which have proven very effective in management and implementation approaches to supporting a continued presence and extended reform respond creatively, quickly, and efficiently, includ- in a number of countries (including Algeria, the Do- ing use of limited rapid technical support and an minican Republic, Mauritania, and the OECS). The evolving approach to Internet investments. OED recommendations included strong support for * Products and services innovation: Through a process expanding the number of such projects to replace the 27 INFORMATION AND COMMUNICATION TECHNOLOGIES current standard of an II component as part of a broad- enables risk sharing while recognizing that failure er, multisector package. rates may be higher than for traditional IFC Nonetheless, there remains no readily accessible projects. funding mechanism to provide small yet critical vol- * Active management: Given the high growth pro- umes of TA with potentially large development im- file and early stage of investee companies, IFC will pact through the leverage of an IFC investment in a play a more proactive role in overseeing firm man- timely and effective manner. agement. In many cases, this role will include an On a number of occasions (including in Ghana and IFC staff person taking a seat on the board of di- Jamaica), IFC projects have turned up regulatory and rectors. institutional issues that hamper competition and pri- * Investing in projects that leverage IFC strengths: vate investment in the sector. In some cases, this has IFC has the ability to add value to II companies in generated requests from country officials for World many ways, including via IFC's client network in Bank Group TA support to improve the regulatory en- traditional sectors (e.g., telecoms, banking, infra- vironment. These resources, needed in a timely man- structure) and the policy dialogue with government. ner, but of a scale significantly smaller than that * Coinvesting with others: IFC's traditional role as supported by World Bank Group projects, might be facilitator of private investment applies equally to provided by administrative budget funding used to the technology arena. Coinvestment reduces the risk support small amounts of TA by consultants on II re- for IFC, while increasing the value added to the lated projects ("rapid response" funds). company in terms of management advice and net- This would enable GICT and other units in the works. World Bank to address sector problems, accelerating Investment in these higher growth, higher risk com- mobilization of private investments in a manner con- panies requires a new approach within IFC, and a de- sistent with ongoing country dialogue. Assistance parture from traditional IFC project financing. For would be approved by and coordinated with the ap- example, coinvesting with other venture capital firms propriate World Bank country director. Resources and strategic investors requires increased responsive- available from existing World Bank Group facilities ness and streamlined investment procedures within and trust funds would support the capacity. infoDev IFC. A more active participation in overseeing man- would provide such TA in a manner similar to its Y2K agement implies a heavier supervision burden, and activities. The Bank will continue to seek support from greater continuity from investment processing to su- PPIAF, IFC Technical Assistance Trust Fund (TATF), pervision. IFC has been working to evolve in this di- special regional programs, and to provide reimburs- rection, and further strengthening of the program is able TA for this purpose. A "rapid response" TA ca- planned. pacity would be used to complement these resources where existing funds were not available or, for exam- Innovating our products and services ple, to cover the cost of World Bank Group staff time The World Bank Group will offer a wide range of ser- where this was not covered under the existing trust vices to support II development, will combine these fund (as is the case with TATF). Because the focus of to exploit IFC-World Bank Group synergies, and pro- assistance is narrowly defined, specific to situations actively present clients with potential development op- where World Bank Group activities have identified the portunities (Table 4.1). need for brief advisory support or uncovered bottle- All World Bank Group investments may be used to neck inadequacies, and of short duration, there will support this strategy. Table 4.2 and Annex 7 illustrate be little overlap with other multilateral or bilateral how the different instruments may be used in grant initiatives. implementing the II elements of the sector strategy. On the IFC side, given the emerging nature of the IFC and MIGA's II programs will continue to use the sector, the size of Internet investments is often very full range of investment and guarantee instruments small when compared with traditional IFC projects. available. On the World Bank side, it is expected that The typical deal involves $1 million to $5 million in the use ofTAinvestment loans will increase as we build IFC equity or quasi-equity investment. In order to on the positive experience of small TA loans dedicated address this target group of firms in line with IFC risk to the sector, and the projects begin to support and return objectives, a venture capital approach will universal access programs, postal modernization, e- be as follows: government reforms, and broadcasting initiatives. As * Portfolio approach: Venture capital return objec- these are new business areas for the World Bank, APLs tives are high for any given project because the risks and LILs may be particularly suitable. Grants, trust are commensurately large. The portfolio approach funds, and "rapid response" resources will be used to 28 IMPLEMENTATION STRATEGY Table 4.1 New Products and Services Sector and Institutional Reform: Human Capacity Building: Convergence policy, postal and broadcast reform Investments in private technical/vocational schools E-readiness assessments and E-economy reform E-economy training programs ICT country strategies Technical assistance Sectoral Applications: Joint World Bank/IFC privatization operations E-government and e-commerce toolkits Business portals and other e-business applications Improving Access: Scaling up infoDev projects Internet and broadband investments City-to-city networks for urban knowledge sharing Loans for universal access and telecenters and follow-up investment assistance WB/IFC universal access packages Broadcasting/postal Coordination and Internal Support: Venture capital funding for IT start-up Enhanced il donor aid coordination companies Increased input into CAS/SSP/PRSP IFC partial credit guarantees for local currency Expanded knowledge products financing support an increased range of TA, pilot projects, of II objectives. In this context, a key concern would research, and project preparation. be to ensure that such multisector instruments are suf- Programmatic lending instruments such as the Pov- ficiently flexible and modular so that progress in rela- erty Reduction Support Credit (PRSC) and adjust- tively fast-moving sectors such as II is not hampered ment lending will also be used for advancing a variety by blockages in other sectors. Table 4.2 Using the Menu of Bank Group Instruments for 11 Development Strategic Direction Policy Information Infrastructure Access Product Line Telecom Regulatory Postal & E-commerce/ Telecom Extending Reform Capacity Media E-government & IT Reach of ICTs Instrument Building IFC Equity/Loans IFC TA 4| . WB Investment . WB PRSC & Adj. Loans .- WB TA = WB SAL/SECAL WB ESW/ 4 l Nonlending TA MIGA Guarantees 4 4 InfoDev Gateway Foundation, i 4 4 4 o InfoDev .w Other Special 4 4 s Programs DEC/WBI 29 INFORMATION AND COMMUNICATION TECHNOLOGIES The GICT as a global products group will offer Group's own experience and develop new skills, will powerful combinations of instruments from different also require some net expansion of staff. segments of the World Bank Group: * fostering improved procompetitive policy and reg- Leveraging external partnerships ulatory environments through World Bank Group At the country level, the World Bank will seek to en- TA and sector adjustment operations, including sure that donors' consultative discussions review the "rapid response" assistance in countries where po- range of II donor-supported projects that are in pro- tential IFC investment programs have uncovered cess, and identify opportunities for improved coordi- regulatory inadequacies; nation to enhance impact and reduce wasteful * facilitating the privatization of state enterprises duplication. An II sector-specific approach toward co- through IFC preprivatization investments; ordination is already being used, for example, in In- * supporting rural access through World Bank sup- donesia. Bilateral cofinancing of World Bank projects port for government programs and IFC investments through either direct injection of donor resources into in the private companies that will build out the a project, or independent sponsoring of related activ- infrastructure; ities such as pilots, is another avenue being tried out. * developing innovative instruments and solutions GICT will take the lead in the development of other such as venture capital and risk guarantees for cap- coordination mechanisms that can help leverage the ital market facilities; and efforts and resources of external players. The World * scaling up infoDev projects through the use of IFC Bank is already partnering with a number of develop- or World Bank investment financing. ment agencies in the II sector through instruments The linkages among these instruments and between such as the infoDev donors committee, the PPIAF infoDev and GICT's policy and investment arms will grant facility, and the German Trust Fund for Posts. be strengthened. GICT will explore innovative project The World Bank Group also continues an active dia- ideas and review ongoing projects to develop project logue with the ITU, WTO, UNDP, as well as with proposals to be presented to World Bank Group cli- regional development banks. However, the II sector is ent countries and the private sector. In a sector as dy- attracting increasing donor interest, not only from namic as II, the need to evaluate new developments, bilateral and multilateral organizations, but also from foster innovation in both policy and investment de- a range of private sector players. Many NGOs are also sign, and follow a proactive strategy of implementa- active in this field, and are often at the forefront on tion is vital. The priority given by our client country social applications of ICTs. Most recently, following governments to sector reform and wider access to II, the G-8 Kyushu-Okinawa Summit, G-8 formed the the rapid pace of technological change and best prac- DOTForce that developed concrete recommendations tices, and the tightening of capital markets, all demand on bridging the digital divide. The World Bank Group an expanded role for World Bank Group product lines hosted the DOTForce secretariat in cooperation with and a greater capacity for rapid project rollout. UNDP, and, as a result, it is expected that greater part- nerships in this area will be developed by the donor Developing our skills and knowledge community. The human resources implications of the new ICT GICT will cooperate with the Development Gate- strategy are significant throughout the World Bank way Portal for tracking the activities of donors, pri- Group. Recruitment, training, and knowledge devel- vate companies, NGOs, and foundations with II focus opment programs will be adapted to the new strategy. and programs, and will identify partnership opportu- The mix of skills within GICT will be adjusted for nities. Identifying potential synergies with external broader scope. GICT will continue to maintain a players is an efficient and cost-effective way to scale- strong core staff of experts in policy, regulation, and up World Bank Group activities in the II sector. While economics as needed to support telecommunication still in the early stages of development, the Develop- reform, which will remain a key activity. The new strat- ment Gateway Portal is creating a multiagency project egy, however, also calls for a broadening of sector re- database that offers project information by country, form to encompass the Internet, e-economy issues, sector, or agency, eventually enabling GICT to see at convergence, and the postal and media sectors. This a glance the range of II activities occurring in devel- requires new expertise to be brought on board across oping countries. the World Bank Group, which is already underway in GICT (and particularly infoDev) will also work GICT for the postal sector and other areas. Finally, closely with the Gateway Foundation. Donors have delivery of an expanded program, while allowing in- requested a clarification of the respective roles of in- creased time for staff to learn from the World Bank foDev and the Gateway Foundation. The management 30 IMPLEMENTATION STRATEGY teams of both programs are working closely together Bank Group, and those which capture the impact of to clarify their functions and ensure complementari- World Bank Group activities in the countries con- ty. GICT will be an active partner in the Gateway cerned. Examples of such indicators are summarized Foundation's efforts to create knowledge resources, in Table 4.3. The internal indicators reflect directly and support research and training intended to dimin- actions by the World Bank Group, and are relatively ish the digital divide. easy to track on a common basis for all projects in The World Bank Group also will leverage external each class. Responsibility for reporting on their evo- interest in the digital divide. GICT will seek to con- lution will rest with GICT. The external indicators sult senior technology professionals in a more system- are more subject to exogenous influences, and are also atic manner in order to share experiences and plan significantly harder to measure. They are best tracked joint ventures. GICT will also sponsor conferences at the project level, and will be adapted to the context involving experts, companies, and client countries to of each operation on a case-by-case basis. discuss topics such as models for privatization and The ultimate success of World Bank Group projects extending access. in the II sector is dependent on their poverty-reduc- Monitoring and evaluation ing impact. However, as noted in Chapter One, this impact is spread across sectors-I1 is a tool for im- Given the range of new activities that will be under- proving earnings opportunities, or health outcomes, taken in the II sector, a monitoring and evaluation or education performance, or empowerment. A "full system will be set up. In line with OED/OEG rec- accounting" of the impact of a particular access project, ommendations, two levels of indicators will be used: for example, on poverty, would require working those relating to the internal processes of the World through all of these various indirect impacts. This is a Table 4.3 Key 11 Monitoring and Evaluation Indicators Internal Indicators External Indicators Strategy Activities (a) Policy Focus -Sector Reform *Number of countries with operations by -Overall level of sector development sub-sector (telecommunications, postal, -Cost and quality of service e-economy, media) -Foundations of -Number of country e-readiness *$million of e-commerce per capita New Economy assessments *Level of employment in high-tech industries *ICT elements in CAS/SSP/PRSP (b) Access Focus -ICT Infrastructure -$million invested in infrastructure 'Overall level of sector developmenta and profitability of investments 'Cost, quality and volume of service -$million in financing mobilized (B-loans) -Number of competitors in sector/extent of competition -Universal access to 11 *$million invested in rural access 'Service coverage in rural areas 'Participatory ICT-poverty surveys 'Service coverage among the poorest completed 'Number of (previously unserved) lines, users, subscribers added (c) Training Focus .$million invested in training *Cost of Internet skills 'Number of people trained Knowledge Sharing and Research 'Number of cases published 'Qualitative indicators of research output *Number of LSMSs incororating ICT and website content aFor example, payphones per rural locality, telephones and Internet users per capita, minutes of telecommunications traffic per capita, bandwidth per capita, value of e-commerce per capita, pieces of mail per capita, and number of independent and local radio stations per capita. 31 INFORMATION AND COMMUNICATION TECHNOLOGIES major undertaking, requiring detailed and extensive tion rollout, and it is projected that TA support for before and after surveys in both the newly served ar- first-stage sector reform will begin to decline. Con- eas and in control areas left without service. Such stud- versely, there will be increased TA for institutional ies should be done, but with costs running into the strengthening of regulatory agencies, e-commerce and many hundreds of thousands of dollars, they cannot e-governance readiness, the design of universal access be justified for every project, given that they would programs, and postal and broadcast sector reform. Not consume a significant percentage of total budget costs. included in these estimates are the full costs of sup- Especially for small TA projects focused on policy re- port for the implementation of knowledge economy form, working through the linkages from impact on strategies, and IT investments in sector applications. the quality and extent of reform, to impact on infra- IFC investment in II for its own account is expect- structure provision, to impact on the performance of ed to be around $400 million in FY02, and amounts various sectors, and finally to impact on poverty for of the same order in FY03 and FY04. This includes every project would be an excessively cumbersome lending, equity and quasi-equity funds, as well as in- evaluation exercise. Instead, a program of research to vestments in special funds. MIGA expects to provide demonstrate these impacts through case studies will guarantees for II valued at between $100 million to be combined with periodic use of detailed evaluation $135 million annually over the next three years. in selected projects. Macroeconomic indicators, in- infoDev will continue to fund innovative ICT come indicators, or quality of life indicators will be projects. Its grants are expected to total an average of used in project evaluation (a) on a case-by-case basis; $15 million annually over the next three years. A ma- (b) only in large projects and where the impact is ex- jor new funding focus of infoDev will be grants for e- pecred to be significant; and (c) only where resources readiness assessments. In 2001 it will provide about have been dedicated at the outset to carry out such an 20 to 30 grants, each for about $50,000. evaluation. It will be important to use the results of Implementation costs (Table 4.4) for the new strat- early evaluations to further evolve the World Bank egy will primarily consist of hiring new staff, staff train- Group's work in the sector. ing, and skills development, building up research and Further indicators, and some targets for implemen- knowledge resources, and increased monitoring and tation, are laid out in Annex 9. GICT will begin mon- evaluation. An expanded investment financing pro- itoring these indicators in FY02. At the end of this gram as outlined above, combined with an increased three-year strategy period, a review of ongoing experi- emphasis on learning and best-practice development, ence is proposed to be conducted by OED/OEG. will require additional staff. Further, the monitoring of IFC Internet projects, although they are small in Financial impact and resources absolute dollars invested, is time intensive because of The implementation of the proposed ICT strategy has the early stage of investment, and an emphasis of IFC budgetary implications for projects across the entire value added through management support and mar- World Bank Group. Implementation of the strategy ket knowledge. New staff will also need to be recruit- will result in increased staff needs to support legal and ed to fulfill specialist roles in areas like postal, regulatory reform across the II sector; developing reg- broadcast, e-commerce, and new technologies. ulatory institutions and capabilities; and systems to An annual training budget of $360,000 for GICT support universal access programs. There will also be will support managers and staff in remaining current new or expanded investment support for universal ac- with industry developments. A more detailed descrip- cess funds, postal reform programs, ICT training ini- tion and costing of proposed training programs is in tiatives, e-government programs; and IT applications Annex 8. Additionally, two staff-years are allocated to in other sectors, in areas such as e-governance, e-com- assist staff in learning from their own and colleagues' merce, e-health, and distance learning. In addition, it experience, and half a staff-year to support improved is expected that existing grant funds, the proposed monitoring and evaluation of ongoing GICT projects, "rapid response" resources, and trust funds for prepa- to ensure timely dissemination of new ideas and best ration will provide resources typically totaling between practices. An annual allocation of $90,000 will go to- $2 million and $3 million per year. ward developing databases directly relevant to the new World Bank Group lending for II, which averaged strategic directions and the World Bank Group's op- $330 million per year in the 1990s, is expected to re- erations in this area. This will be cosponsored by main at about this level for the next three years. The MIGA, internal trust funds, and external resources. goods and services financed with this lending budget DEC will provide a research budget of $215,000 per will continue to change, as laid out in this strategy. year under a low case scenario, and $770,000 per year There will be no direct lending for telecommunica- under a high case scenario. 32 IMPLEMENTATION STRATEGY Expanded TA capacity to allow for "rapid response" Retiring OP 4.50 to small requests for short-term assistance is estimat- ed to require $300,000 per year. These funds would good practie statem oWorld Bank Group II support the TA linked to IFC projects or very small- operations will be updated from time to time The scale stand-alone assistance to telecommunication reg- recommendations in OP 4.50, the World Bank Group's ulators requested by our client countries and approved telecommunication sector policy statement of 1995, by World Bank country directors. This is warranted remain valid. However, the operational policy is in fact given the expanding unmet demand for "rapid re- a collection of recommended good practices, instead sponse TA required to Support and complement the of mandatory policy measures. The SSP proposes regulAreasis ed pogram. therefore that OP 4.50 should be retired and replaced Resources must also be set aside to ensure that the by a good practice statement to be published by GICT. ICT perspective is adequately integrated into the CAS Annex 1 lays out the proposed language for this state- ICTperocess, dth thsadequacolyinteributionsta aduthe C ment, which adapts OP 4.50 to the broader agenda baced, up by pro se country asessments. here- for II laid out in this SSP. The most significant chang- backed up by prior w1C country assessments. There- fore, an amount of $175,000 per year has been ear- es are marked for this purpose. Additional costs (not * The scope is expanded from telecommunication to estimated here) should be anticipated if the s 's , information infrastructure operations. recoimmtendati)sfor a bad-bcpased iC tra ,tngy .po The role of World Bank Group funding is explicit- recomenatins or brad-bsedICTtranin pr- l expanded to include subsidy suppott for private gram within the World Bank Group, and the better ly expanded tof accles sinvestmet for prival monitoring of sector-based ICT projects are followed provision of access to II; investment in the postal moe nitorinex 8). sector-based ICTprojectsarefollowed and broadcast sectors; support for the broader pol- (see Annex 8). icy, regulatory, and educational environment for ICT; and the use of ICT in public services. Table 4.4: Strategy Implementation: Costs per Annum for Three Years* Budget Item Cost Justification Cost Formal training 3 60,000* * Knowledge Development (website) 2.5 staff years (@ 150k) total for staff to 375,000 spend increased time on best practice/ new project development and web site development (joint resources) WB New expertise 2 staff years e-economy, I staff year media/ 450,000 convergence (@ 150k) (Bank resources) Strategy staffing 3.3 staff years, (@ 150k) for monitoring, 550,000 evaluation, strategy, partnerships, and business development plus 55,000 for IFC round tables (joint resources) Enhanced small-scale TA capacity (Rapid Response Bank resources) 300,000 Creation of 11 Best Practice Document Dissemination of new Good Practice 125,000* * Document to replace OP 4.50 (Joint resources) l Country strategies ICT assessments of countries, early stage inputs and reviews into CAS (Bank resources) 175,000* * Total 2,335,000 IFC 672,500 World Bank 1,662,500 * A proposal for global public good incentive funding would support most of these activities for FY02. * *This number is subject to PSI allocation to GICT's earning budget. Cost per annum for two years only. 33 Chapter Five: Information and Communication Technologies and Sectoral Applications T he first two strategic directions described in Chapter Three (sector reform and ac- cess) aim to create the policy environment, infrastructure, and skills required for a developing country to build up an information economy. However, the ultimate value of these efforts depends on the possibility of harnessing ICT in a wide range of eco- nomic and social applications (see Annex 4 for examples). This will require an educated and trained workforce as well as support for the development and rollout of IT across sectors- the topic of this final chapter. Supporting ICT in education and necessary to use the tools of the new economy. A short- trainig .age of individuals trained in ICT slows down sector development and exacerbates the lag that developing A poor regulatory environment and inaccessibility of countries are experiencing in joining the global knowl- II are not the only barriers to using ICT and develop- edge economy-reducing employment, investment, ing a knowledge economy. Low education and litera- and income generating opportunities. The first step cy levels, lack of awareness about the capabilities of here is a needs assessment to identify the new skills the technology, and absence of skills to develop and required, the skills gap, and the existing training mech- use ICT applications also represent significant obsta- anisms, if any, on a country-by-country basis. Once cles to adoption, even when the physical and institu- country needs have been assessed, support for educa- tional infrastructure is available. The education and tion and training will be directed at two levels: ICT sectors are very closely linked. Most important- * Private sector partnerships for technical skills train- ly, ICT holds out the opportunity to revolutionize ped- ing of the next generation of ICT workers, includ- agogical methods, expand access to quality education, ing: rural telecommunication network technicians, and improve the management of education systems. software programmers, web developers, manage- A number of such technologies have roles as peda- ment of telecenters, and operation of government gogical tools, including interactive radio instruction, and community online services (through IFC distance education through television, and computer- projects, World Bank backed programs for IT train- aided teaching. As part of broader education efforts, ing, and special initiatives). and in response to identified educational needs, ICT * Advice and skills training for entrepreneurs and gov- has found a role in many World Bank Group educa- ernment officials seeking to develop knowledge tion projects, including the majority of World Bank economy applications and industries (through WBI distance education projects. Turkey is an example of a courses and special initiatives). country and World Bank partnership to improve the delivery of education services through IT provision, Private sector partnerships for based on a national policy designed to reform educa- technical skills training tion, transform learning, and use ICT appropriately. The private sector is generally at the forefront of all Also vital is education and training in the skills technological development, and most keenly aware of 34 ]CT AND SECTORAL APPLICATIONS the skills that are required to compete in the global Training for entrepreneurs and economy. Major North American IT companies are government officials not just addressing their domestic needs, but increas- ingly scaling up their training activities in the devel- In addition to skills training for ICT workers, there is oping world as well. In India, ror example, the a pronounced need to educate entrepreneurs and gov- Department of Information Technology in the state einent officials about how to exploit ICT. Entre- of Andhra Pradesh founded the Indian Institute of preneurs and government officials in the developing Information Technology at Hyderabad, and provided world should take the lead in building knowledge the physical facilities while drawing its core curricu- economies. Their knowledge will be essential to cre- lum from corporations such as IBM, Oracle, Motoro- ate and maintain an environment for public sector la, and Cisco. There are currently 400 students, with innovation and private sector wealth creation. enrollment expected to reach 1,200 on campus, and * Entrepreneurs in the developing world need a wide an additional 10,000 students via the Internet. range of advice and training to compete and suc- There is considerable potential for the World Bank ceed in the global economy. Some of the training Group to leverage private sector activities in ICT train- priorities include: understanding the ICT market, ing. It is well positioned to raise awareness about the raising investment capital, building an Internet skills shortage, convene interested private sector par- business, and using technology to reinvent or en- ticipants, and provide TA and funding where neces- hance existing business processes. sary to help expand and accelerate the training. The * For government officials, the training needs sur Global Information Technology/Telecommunication round efforts to improve the transparency, accessi- Technician Training Partnership is an example of the bility, and efficiency of the public service with new role that the World Bank Group can play in leverag- technologies. Their priorities include the acquisi- ing private sector initiatives. This partnership will draw tion of the knowledge to design IT business plans, together a consortium of IT/telecommunication com- automate administrative functions, deliver govern- panies to consider practical, country-based solutions ment services online, and increase citizen partici- to address skills development issues in the developing pation in the political process. world. For the private sector, the benefits of collabo- Workshops and seminars are appropriate mecha- ration are clear: standardized certification across in- nisms for training entrepreneurs and government of- dustries; shared costs of e-learning infrastructure, ficials, and here again, there is a large potential both content and delivery; and access to a larger pool of for World Bank Group programs through the WBI skilled workers. The World Bank Group benefits from (such as the Knowledge for Development learning pro- the expertise and resources of the private sector, while gram) and the GDLN, as well as for World Bank gaining greater leverage on its education and ICT Group funding to leverage private sector activities. In training investments, to ensure that they reach the poor some cases, carefully designed subsidy programs to and those left behind in the knowledge economy. An- support the private provision of training courses will other example of World Bank Group support in this maximize the development impact of investment fund- area is the NIIT student loan program (Box 5.1). ing. The education departments of the World Bank and IFC, along with WBI and the special initiatives, are expected to take the lead in rolling out education and training programs with ICT components with a focus Box 5. 1: Private Sector Investment in NIIT Student Loan Program in India IFC is helping to launch student.loans in India through the creation of the first large-scale private sector student loan program amounting to $9.0 million with Citibank and NIIT, one of India's largest and most reputable IT education firms. The NIIT student loan program will be the largest in India and will help fill an urgent need, since very few Indian financial institutions currently provide such loans. The loans will be offered to IT students following the three-year NIIT curriculum-NIIT's flagship graduate course-over the coming five years. Using Citibank's consumer lending standards, the program will be based on the student's future earning capacity, thereby making loans accessible to lower-income families that could not otherwise afford tuition fees. In the pilot program, which was launched by Citibank in January 2000, 50 percent of the students who took loans will be earning more than their parents after they graduate from NIIT, and 30 percent will be earning more than twice the income of their parents. 35 INFORMATION AND COMMUNICATION TECHNOLOGIES Box 5.2: ICT for Micro and Small Business Development ICT has a major potential to support micro and small businesses (MSBs) development in low-income commu- nities. MSBs' access to and use of ICT can have a profoundly positive impact on expanding customer mar- kets and improving service, on expanding employees' skill sets, on lowering operating costs, and on increas- ing profitability. Yet, numerous issues prevent them from taking full advantage of ICT opportunities. The most important issues directly facing MSBs are: (a) network infrastructure access costs, (b) MSBs' lack of awareness and knowledge about the potential uses of ICT, (c) the up-front cost of a personal computer and modem, (d) lack of training for skills development on ICT, and (e) lack of easy-to-use, sector specific soft- ware and available local content. At a broader level, the lack of a clear legal and regulatory framework also makes MSBs more vulnerable than large firms to problems linked to authentication/certification, and data security and confidentiality, especially for the firms targeting consumers through the Internet. Also, financial institutions' hesitation to take an active role in promoting e-commerce by developing smart cards or cash cards in environments where the use of credit cards is not common is an important barrier to their participation in e-commerce. Reaching the MSB market segment will require substantial innovation across digital divide issues, begin- ning with the access mode of ICT infrastructure and hardware, but quickly also leading to addressing how software, local content, and MSB skills can be built in an integral fashion. on improving the quality of teaching, and empower- small number of investments in this emerging field. ing learners. This will require using ICT in projects in On the World Bank side, the largest, yet least mon- ways that change the way in which learning is orga- itored, investments in ICT are IT components of nized, delivered, and received. GICT will play a sub- projects in other sectors. The latest inventory of World sidiary role, and will sometimes support adult Bank projects with IT components identifies more education and training components as part of a larger than 1,000 such projects in the portfolio47-75 per- ICT investment. cent of the total-cutting across different sectors, from health and education to public sector and financial Supporting other ICT applications management. Total funding for the IT component is Sector-based application development and implemen- estimated to have averaged more than $1.0 billion per tation will be the primary responsibility of the sec- year in recent years, 84 percent for the purchase of toral units in the World Bank and IFC, with support goods, and 16 percent for technical assistance and from GICT as needed. Regarding commercial appli- training. Such components have included: cations, IFC will proceed with caution in investments * Investments in sectorwide information systems for in e-commerce and content. In order to succeed, In- education, health, public financial management, ternet content and commerce companies need strong and transportation, as well as certain generic val- ties to the traditional economy. IFC will, therefore, ue-added information facilities, such as electronic undertake selected investments in firms with strong trade facilitation, disaster prevention and manage- partnerships in the brick and mortar world. One ex- ment, property and business registries, and national ample is AsiaPaperMarkets.com, a regional pulp and statistics, including hardware, off-the-shelf soft- paper exchange. In addition, IFC will work to "e-en- ware, and support services. able" existing clients through piloting and other advi- * TA to setup of institutional management systems sory work (Box 5.2). GICT is collaborating with for project operations (e.g., for health or educa- industry and regional departments to this end. tion projects) and financial management (e.g., for IFC will also initiate investments in a range of com- budget formulation). mercial media, spanning Internet, radio, and televi- * Related training in the process of developing, test- sion. Once again, Internet-only firms will be ing, implementing, and fine-tuning information approached with caution. These investments will be systems. selected with the development objective of improving Regarding the Internet, various sections within the the delivery of news, disseminating information to World Bank are aware of the emerging importance of broaden market access and increase competition, and e-government and other Internet applications in cli- strengthening of local cultures and society. One ex- ent countries. There are already several innovative ICT ample of this new approach is TV Africa, a pan-Afri- projects being led across the World Bank: can television content provider. IFC will undertake a * GICT is cooperating with the PREM network to 36 ICT AND SECTORAL APPLICATIONS support the deployment of ICT in state modern- * promote experimentation with IT in sector opera- ization programs, as a tool for improving the inter- tions supported by careful monitoring and evalua- nal operations of government as well as the interface tion; between government and the general public. One * facilitate collaboration among sector units, includ- project in Argentina aims to develop a one-stop ing GICT, on specific projects with IT components; Internet portal for all transactions between the gov- * undertake quality control of all major IT compo- ernment and the general public. nents in World Bank Group projects; * The HD network (with periodic GICT technical * work toward incorporating IT into the SSPs; and support) is already using the Internet in a number * enable cross-fertilization of IT applications and of education projects, including the Turkey Basic sharing of best practices across sectors and regions. Education project. Recommendations of the last (1998) IAD report, * There is also considerable scope for ICT applica- notably the establishment of an informatics sector tion in the PSD network, particularly in the small board, were discussed by Bank senior management but and medium enterprise (SME) sector. The Latin not implemented. American region, for example, is currently work- A team of representatives from PREM, Operational ing on a project to use the Internet as a business Policy and Country Services (OPCS), ISG, and GICT development tool for SMEs in rural Guatemala. recently concluded that the long-term solution for these problems would involve the hiring of sector ex- Managing risks perts with considerable IT experience, as well as an However, and notwithstanding numerous "pockets" of active program of training and sensitization among excellence,4" the-complex nature of IT procurement country directors, management, task managers, task as well as the design and implementation of strategic team leaders, and procurement specialists in the inte- information systems increases the risk of suboptimal gration of IT in a process of institutional change man- decisions and delayed implementation.4" Successful agement. This would create a body of staff with the systems require not just appropriate technology but needed "bridging skills"-expertise in IT issues com- that all other elements-policies, people, processes, bined with sectoral and country knowledge. This so- incentives, institutions, and infrastructure-are lution has significant implications for budgets and present and work well. strategic staffing throughout the World Bank. Two Internal Audit Department (IAD) reviews have Secondments and staff exchanges with private sec- found that, contrary to normal World Bank Group tor firms will be arranged for simultaneously foster- and industry practices in the design and supervision ing professional development and diversifying the of IT components, the World Bank does not employ World Bank Group's complement of ICT specialists. institutional standards, guidelines, quality control pro- For example, about 20 companies have already ex- cesses, and institutionalized evaluation and tracking pressed interest in training partnerships with the mechanisms. IT procurement documents are nor used World Bank Group in the areas of telecommunica- uniformly across the World Bank Group, and the OED tion and IT. Staff will also be encouraged to learn from does not evaluate IT as a separate element of projects. their own project experience, developing best prac- The new applications offered by the Internet suggest tices and models for dissemination within the World increasing opportunities for the use of IT components, Bank and beyond. The new World Bank website on but also increasing risks-as well as the need to con- e-government (www.worldbank.org/publicsector/ sider the rethinking of some program models. egov) is a recent example of collecting and dissemi- The World Bank Group's current process for de- nating lessons from experience to task team leader. signing and implementing IT components of projects Further, the development of social Internet appli- needs strengthening. Despite these components ac- cations currently lags behind commercial applications. counting for a significant percentage of costs in a range For this reason, it would be valuable for infoDev to of projects, the skills base to judge their realism, effi- experiment with social applications incubators that cacy, and institutional sustainability is rare among task could support the development of not-for-profit web- teams and managers. This presents the institution with sites, and Internet businesses with content and ser- potentially serious risks in terms of reputation and vices designed to improve the lives of the poor. If these project sustainability. As reflected in the 1998 IAD are successful, there will be a role for the World Bank recommendations, it will be necessary to: Group to scale up support for such projects. * maintain an overview of World Bank sectoral IT In the short term, as an interim solution to the applications, which account for about $1 billion of issue of IT quality assurance, three programs will be annual lending; implemented: 37 INFORMATION AND COMMUNICATION TECHNOLOGIES * Framed in the context of improving risk manage- judged by the managers responsible for an opera- ment at the operational level, the significant com- tion as part of the World Bank's efforts to manage plexity of IT components will be made clear to all risks during project preparation and supervision. staff involved in project preparation, along with It will consist of staff from ISG, OPCS, PREM, recommendations for sources of assistance, and Human Development (HD), and GICT with sig- guidelines on thresholds for seeking such assistance, nificant experience in the use of IT in World Bank and a recommendation to seek assistance as early projects. The team would provide early reviews- in the project cycle as is feasible. Because the ICT project appraisal documents (PAD) stage-of IT revolution may have a far-reaching impact on components in projects. Reviews would be strong- emerging economies, and thereby on the way many ly advised for IT components whose complexity, of our client governments do business, the broader scope, or size are such that their failure would com- strategic implications need to be considered dur- promise the overall development objectives of the ing PRSP and CAS discussions. operations. * A Task Manager's Toolkit on IT components will be developed, covering issues including procure- Internal applications ment, risk identification and management, recur- Finally, ICT is not only relevant to World Bank Group ring problems, and key issues of IT project clients, but also offers potential to improve the effec- management. The Toolkit will also provide recom- tiveness of the World Bank Group's operations. In par- mendations to teams on when during project prep- ticular, the World Bank has begun promoting aration and appraisal to seek assistance, including e-procurement through OCSPR, the procurements on the advice to borrowers contemplating substan- policy and services group, which is developing a strat- tial IT components, and sources for that assistance. egy paper and draft guidelines for borrower use of e- The toolkit should be widely disseminated within procurement. By allowing widespread tendering, the World Bank Group and to its clients, and made electronic document management, and electronic au- available online. thentication and logging of all transactions, e-procure- * A quality enhancement team will be formed to pro- ment can substantially reduce the opportunities for vide advice on IT components when required, as corruption through operational transparency. 38 NOTES 1. World Bank World Development Report 1998/9, Williams. "What Do Economists Know About Economic Washington, DC. Growth-Or Why Don't They Know Very Much?" World 2. This number is taken using ITU data for fixed an Development Vol. 29 No.1, 2001). There are also mobile lines per 100 people for 1990-98 and using dissenting voices on the presence of an impact in such average growth rates over that period for each to forecast studies. A number of studies point out that the results 1999 and 2000 data. The two numbers are then added to from many of the above studies appear to collapse once provide total teledensity numbers, which have increased more sophisticated econometric procedures are used, and from an average of 0.30 to 1.47 1990-00 in low- and that by introducing state-level fixed effects, the returns of middle-income countries. telecommunication are reduced dramatically (see cites in 3. This section draws heavily on Forestier, E. J. Grace Forestier, E., J. Grace and C. Kenny, "Can Information and C. Kenny, "Can Information and Telecommunication and Telecommunication Technologies be Pro-Poor?" Technologies be Pro-Poor?" Paper presented at the World Paper presented at the World Bank Economist's Forum, Bank Economist's Forum, May 3-4, 2001. May 3-4, 2001). 4. World Bank and Universal Postal Union (2001), 7. This becomes clear when we look at a range of The Postal Industry in an Information Age, Washington, estimates from just one paper, by Seth Norton of DC. See also R. Schware et al., "E-Business and E- Washington University. He used two different samples Government Opportunities Using the Post Office and a range of statistical tests within each sample to look Network in India: a SWOT Analysis," Draft paper, World at the impact of increasing teledensity on economic Bank, June 2001. growth. The range of estimates that the paper provides for 5. Canning, D., "A Database of World Infrastructure the growth impact of increasing the number of telephones Stocks 1950-1995," mimeo, Harvard Institute for per capita from Thailand's teledensity in 1975 to 1998- International Development, 1997. Canning, D., "Does from about 7 phones per 1,000 people to about 84 Infrastructure Cause Economic Growth? International phones per 1,000 people-is between an increase of 0.35 Evidence for Infrastructure Bottlenecks," mimeo, Harvard to 4.43 percentage points being added to the growth rate Institute for International Development, 1997. Canning, each year. The upper estimate appears unbelievably large, D. and Fay M., "The Effect of Transportation Networks and the range of estimates (again, just from one paper, on Economic Growth," Discussion Paper Series, Colum- and two samples) is very large as well. Why is this? All of bia University Department of Economics, 1993. Cohen the usual problems with cross-country regression analysis R, The Impact of Broadband Communication on the US apply here: telecommunication rollout is correlated with Economy and on Competitiveness, Washington DC: and almost certainly caused by a number of other Economic Strategy Institute, 1992; DRI, "The Contribu- variables that are related to growth-such as institutional tion of Telecommunication Infrastructure to Aggregate quality. Unless good measures of these variables have been and Sectoral Efficiency," New York: McGraw-Hill, 1991; put into the regression, the impact of telecommunication Analysis The Impact ofAdvanced Communications on on growth is likely to be overestimated (of course, if they European Growth and Trade, Final Report of the METIER are all put in, the direct impact of telecommunication Project for the European Commission, 1995; Easterly, W might be underestimated). and S. Rebelo, "Fiscal Policy and Economic Growth: An 8. U.S. Department of Commerce, The Emerging Empirical Investigation," Journal of Monetary Economics, Digital Economy 11, Washington, DC., June, 1999; N. Vol. 32, pp. 417-458, 1993. Easterly, W. and R. Levine, Bajpai, "Sustaining High Rates of Economic Growth in "Africa's Growth Tragedy: Policies and Ethnic Divisions," India," Center for International Development at Harvard Quarterly journal of Economics, pp. 1203-50, 1997; University, Working Paper No. 65, March 2001. See also Hardy, A., "The Role of the Telephone in Economic the indicators on average revenues per Internet economy Development," Telecommunication Policy 4: 278-86, worker at http://www.internetindicators.com. 1980. Madden G. and S. Savage, "CEE Telecommunica- 9. Forestier, E, J. Grace and C. Kenny, "Can Informa- tion Investment and Economic-Growth," Information tion and Telecommunication Technologies be Pro-Poor?" Economics and Policy, Number 10, 1998; Norton, S. Paper presented at the World Bank Economist's Forum, Transactions Costs, Telecommunication, and the May 3-4, 2001. Microeconomics of Macroeconomic Growth, Economic 10. National Association of Software and Service Development and Cultural Change 41, 1,175-96, 1992; Companies-http://www.nasscom.org. Roller and L. Waverman: Impact of Telecommunication 11. U.S. Department of Commerce, The Emerging Infrastructure on Economic Growth and Development, Digital Economy II, Washington, DC., June, 1999. ICCP Draft Working Paper, Paris, OECD 1994, World 12. Dasgupta, S. S. Lall, D. and D. Wheeler, "Policy Bank: World Development Report, 1994, New York: Reform, Economic Growth and the Digital Divide: An Oxford University Press, 1994. Econometric Analysis," mimeo, World Bank. 6. Many researchers are skeptical about the validity of 13. "Innovation: How Rural Thais are Connecting to a cross-country econometric studies (see Kenny, C. and D. World of Opportunity," World Bank Office, Bangkok, 39 INFORMATION AND COMMUNICATION TECHNOLOGIES Thailand, 2001. commitments; and (e) a strong legal and regulatory 14. Duncombe, R. and R. Heeks. 1999. "Informa- regime will reduce uncertainty, and so attract bidders. tion, ICTs and Small Enterprises: Findings from Bolivia might provide a model here. Bolivia's telecommu- Botswana," Development Informatics Working Paper Series, nication privatization plan was designed to be fiscally Paper No. 7, IDPM (Institute for Development Policy neutral, with companies bidding on the basis of invest- and Management), June. http://www.man.ac.uk. ment plans rather than payments to the treasury. 15. Forestier, E., J. Grace and C. Kenny, "Can 21. For evidence of concentration of foreign direct Information and Telecommunication Technologies be investment flows far beyond that which can be explained Pro-Poor?" Paper presented at the World Bank Economist's by policy variables, see: De Melo, L., "Foreign Direct Forum, May 3-4, 2001. Investment in Developing Countries and Growth: A 16. Schware, R., "IT and Public Sector Management Selective Survey," The Journal of Development Studies 34, in Developing Countries: Present Status and Future 1, 1-34, 1997; Lipsey, R., "The Location and Character- Prospects, "Indian Journal of Public Administration, Vol. istics of U.S. Affiliates in Asia," National Bureau of XLVI, No. 3, July-September, 2000. Economic Research Working Paper 6876, January 1997; 17. Calculated by GICT staff from data and coeffi- Overseas Development Institute, "Foreign Direct cients in Wallsten, S., "An Empirical Analysis of Compe- Investment Flows to Developing Countries: A Review of tition, Privatization and Regulation in Africa and Latin the Evidence," ODI Briefing Paper 1997(3) September; America," mimeo, Stanford Institute for Economic Policy Kinoshita, Y. and A. Mody, "The Usefulness of Private Research, 1999. and Public Information for Foreign Investment Deci- 18. Taken from Trends in Telecommunication Reform sions, World Bank Policy Research Working Paper 1733, 1999, ITU, Geneva. Refers to ITU member countries 1996; Singh, H. and K. Jun, "Some New Evidence on only. Determinants of Foreign Direct Investment in Develop- 19. A number of contributing factors for these ing Countries," World Bank Policy Research Working problems existed, including: (a) the continuing (in the Paper 153, 1995. case of Egypt and Nicaragua dominant) role of govern- 22. Source: Bloomberg. Data based on yield to ment as the majority share holder; (although the maturities of selected $-denominated bonds issued by the transactions were designed to give management control listed companies. Spreads were determined by subtracting to the Strategic Investor); (b) large investment obliga- yields from comparable U.S. Treasury bonds for the tions (in Honduras, a commitment to double the lines in shown time period. five years, in Nicaragua the same in three years) and 23. For rankings of sector success in implementing continued concern over debt (in Nicaragua, where the CDF principles, see Annex Two of the OED Annual company owed $120 million, of which $50 was to be Review of Development Effectiveness for 1999. transferred to the government before privatization); (c) 24. G-8 (2000) Okinawa Charter on Global Informa- lack of legal and regulatory clarity (an ongoing court case tion Society. over international teleports in Nicaragua, confusion over 25. Telecommunication work has also occurred in the granting of international satellite licenses for private implementation of multisector projects and reform circuit use in Honduras, and delay of a telecommunica- measures under structural or sectoral adjustments, but tion law in Egypt); (d) increasing competition from the volume of investment is difficult to quantify because cellular to local service and from international call back of the cross-sectoral or budget support nature of these and refiling to direct dial; and (e) labor conditions (in initiatives. Honduras) and/or restrictive labor laws (in Egypt) that 26. The Bank Group's Experience in Information will slow efficiency improvements. Both the Egyptian Infrastructure-A Joint OED/OEG Review (CODE2000- and Honduran privatizations failed despite guarantees of 36), World Bank, May 2000. five-year monopoly rights in basic services. 27. The Bank Group's Experience in Information 20. Broadly, a number of lessons are suggested by Infrastructure-A Joint OED/OEG Review (CODE2000- recent privatizations of fixed-line service: (a) as a rule, 36), May 2000, and Management Response to the OED/ privatizations should include transfer of management OEG Review (CODE2000-47). control and immediate competition-exclusivity does not 28. Trends in Telecommunication Reform 1999, ITU, ensure success of fixed-line privatization, but will hinder Geneva. Refers to ITU member countries only. the development of the sector; (b) new solutions should 29. The 88 countries are those that had private be employed to attract capital and management skills to operators according to the ITU's Trends in Telecommuni- these companies, such as capitalization of the companies cation Reform, 1999. The 63 countries assisted in the (used in Bolivia), and management incentive schemes; (c) reform process include 38 identified from OED's list of conditions regarding employment or provision of service telecommunication projects in the portfolio and 25 to groups other than the poor or excluded should be additional countries identified by GICT task managers as minimized (experience suggests telecommunication countries that the department has assisted through non- reform increases long-term employment both in the lending support (non-lending assistance includes PPIAF, sector and beyond); (d) as far as politically and fiscally infoDev and IFC technical assistance). The two numbers feasible, minimum prices for bids should be abandoned, are not completely comparable-the World Bank has and bids judged instead on investment and rollout been involved in liberalization support for countries with 40 NOTES private providers (for example, the OECS), and has Poverty Relief?" mimeo, World Bank, GICT Department, provided liberalization support for countries still to 2000. undergo full privatization, or which have privatized since 44. Argentina, Benin, Republic of Congo, Egypt, 1999 (for example, Morocco). Gabon, Guatemala, Honduras, India, Indonesia, Jordan, 30. Based on the assumption that, on average, a Fifth Kenya, Malawi, Mauritania, OECS, Sri Lanka, Togo, of multisector TA loans is assigned to telecommunication Trinidad & Tobago, Yemen, Zimbabwe. activities. This assumption had to be used in the absence 45. See the Rural Funds Update on the company's of a detailed inventory of the Bank funds assigned to the website: www.inteleconresearch.com. telecommunication components of these loans. 46. As noted, "Information and communication 31. Wellenius B., Telecoms Reform-How to Succeed, technologies are a sine qua non for successful knowledge Viewpoint Note No. 130, Finance, Private Sector and economies. These lower the cost of information dissemi- Infrastructure Network, The World Bank Group, 1997. nation, and provide new means of collaboration and 32. "Poor" households are those in the bottom 20 connection among various producers and users of percent of income distribution. knowledge. Effective use of ICT is helping to overcome 33. OSIPTEL (Peru) and World Bank project data. traditional barriers to collaboration, and is no doubt 34. When projects with combined fixed and mobile responsible for the increasing trend toward international investments are taken into account, the total volume of collaboration in research." (World Bank: Science and lending to the cellular sector rises to $298 million, or 32 Technology Strategy Concept Paper, Washington DC: World percent of the total ICT portfolio. Bank, 2001). 35. Project cost divided by net IFC investment 47. Included in the Environmentally and Socially commitments. Sustainable Development (ESSD) Vice Presidency's 36. Africa is not yet included, since the bulk of project database. African cellular investments occurred in the late 1990s for 48. Presently the availability of expertise is very which little empirical data is yet available. uneven across the regions. For example, the Europe and 37. A snapshot after five years yields between 22 and Central Asia (ECA) region has a well-consolidated team 30, though less data is yet available since the bulk of of some four or five IT specialists located in PREM, IFC's cellular investments were made in the late 1990s. which provides support to all sector units in the region. 38. Taking the same snapshot after five years, these At the other extreme, the Latin American and Caribbean numbers range between 40 to 60 new lines per $1,000 (LAC) region does not retain any IT specialists at all, and IFC investment, underscoring the impact that this South Asia Region (SAR) has recently redirected staff quickly deployable technology can have. working on project IT components to internal IT 39. Namely, Azerbaijan, Brazil, Colombia, Indonesia, support. Kazakhstan, Pakistan, the Slovak Republic, and Tanzania. 49 See World Bank Group, IAD Report On An Audit of 40. PPIAF Annual Report 2000. Informatics in Bank's Lending Operations, Report No. 41. World Bank, WDI, and www.rfd.freeuk.com. FY96-46, April 12, 1996 and IAD Report on a Follow-up 42. www.comminit.com/interviews-archives5.html. Review of Informatucs, Report No. FY99-40, December 8, 43. Kenny, C., "Is The Internet a Useful Tool for 1998. 41 ANNEX I GOOD PRACTICE STATEMENT ON INFORMATION INFRASTRUCTURE This good practice statement provides general guid- and is important for transparency and good gover- ance to World Bank Group staff and clients with re- nance. spect to World Bank Group operations supporting the The World Bank Group supports efforts of devel- development of II. In view of the fast evolving nature oping countries to accelerate 11 sector growth, intro- of this sector, this guidance will be updated from time duce new services, improve performance, and extend to time. It summarizes the main operational implica- services to more people. The form of these efforts may tions of the ICT Sector Strategy, approved by the vary with the diversity in the borrowing countries' eco- World Bank's Board of Directors on September 6, nomic structures and levels of development. 2001. It draws also on the former OP 4.50 (Telecom- munications Sector) of May 1995, which has been Role of the World Bank Group retired, and on The Bank Group's Experience in Infor- Each institution within the World Bank Group has a mation Infrastructure: A Joint OED/OEG Review (May specific role to play in achieving these objectives. The 2000). Unlike OP 4.50, this statement also covers: (a) World Bank focuses largely on providing support to IFC and MIGA, in addition to the World Bank; and governments in the development of a procomperirive (b) II beyond telecommunications. policy and regulatory environment for the sector, and For the purposes of this statement, information in- in extending the boundaries of service provision. The frastructure refers to the networks through which'in- World Bank uses a range of instruments (primarily formation (voice, as well as data or multimedia) travels; loans/credits, grants, learning and analytical work) to, it includes telecommunications, the Internet, broad- among others: casting, and other information networks. Other seg- . contribute to national ICT strategies and their im- ments of the ICT sector, in particular information plementation; technologies and their multiple applications (includ- . support policy reform, including competition and ing e-government and e-commerce), are not directly private participation; addressed by this statement. Postal networks are also . strengthen the capacity of regulatory institutions; part of II; they provide a range of services from basic . financc, on a limited basis, subsidies leveraging pri- communications and financial services to the delivery vate investment to extend access to ICT services; mechanism for e-commerce. In many countries, post- and promote the use of ICT in the provision of al systems are among the few public services accessi- public services, including health and education. ble to the poor. IFC supports private II investment (through equi- Importance of 11 ty, quasi-equity, loans, guarantees, risk management products, and other instruments), while MIGA pro- Strong, widespread, and efficient.11 networks are the vides guarantees to private investors covering specific underpinning of any knowledge economy and play an economic and political events. IFC and MIGA sup- important role in economic development and poverty port is especially important to accompany the transi- reduction. To name only a few of-its contributions to tion from monopolistic public sector markets to national welfare: competitive private sector-led II markets. * II is essential to growth, and necessary for the de- The World Bank, IFC and MIGA work together velopment of a country's productive capacity in all to formulate joint assistance packages, making flexi- sectors of the economy. ble and innovative use of their broad range of instru- * It links a country to the global economy, and en- ments to help member countries develop II and bridge sures competitiveness. the digital divide. They also coordinate their II assis- * It contributes to poverty reduction by increasing tance with that of other multilateral and bilateral de- productivity and providing new opportunities. velopment institutions. They are careful to avoid * It is a vehicle for the efficient delivery of public situations of conflict between their respective inter- administration, social, and other public services, ests, and supporting sector reform programs that are 43 INFORMATION AND COMMUNICATION TECHNOLOGIES not compatible with a country's international com- budget process, typically through levies on operators. mitments, in particular in the context of WTO. Operational autonomy implies protection from polit- ical interference, rules governing conflicts of interest, Competition and private sector participation as well as measures to ensure that the regulatory agen- The World Bank provides assistance to client coun- cy is able to attract and retain staff with the requisite tries in developing and implementing II strategies, expertise. including the establishment of a sound legal and reg- Regulatory entities typically have a significant role ulatory environment, as well as capacity building. in the areas of licensing, numbering, interconnection Competition and private sector investment are a and access (ensuring fair competition), protection of cornerstone of successful II strategies worldwide, and consumers, monitoring of operators, and settlement have fueled the fast growth of II over the last two de- of disputes, to name just a few. Where markets are not cades. Evidence suggests that private, competitive pro- yet competitive, regulators may also have an impor- vision under an effective regulatory regime provides tant tariff or price control function. The World Bank better, cheaper service to more people than other re- Group supports the establishment and enforcement gimes. of clear, stable, and transparent regulatory rules and The World Bank Group promotes increased com- procedures, and encourages openness and public con- petition and private participation in the II sector by sultation. supporting the entry of new service providers, priva- Telecommunications regulators are often also en- tization of state enterprises, and more generally, by trusted with commercial frequency allocation and creating conditions that attract direct, private invest- management, as well as regulation of broadcast trans- ment, and facilitate access to domestic and foreign cap- mission and, in some instances, postal services. This iral markets. broader scope, as well as the use of technology-neu- The World Bank Group supports the privatization tral regulation, greatly facilitate the synergies between of incumbent operators, mostly through advice and converging II segments and services. assistance in planning and implementing the process. The World Bank Group supports regulatory capac- When a state enterprise has been earmarked for priva- ity building through policy advice, training, technical tization, significant new investment by the state or assistance, and other means. the incumbent prior to privatization is usually discour- aged, as new owners will generally be better equipped Access to make major investment decisions.' The market alone may, however, not be able to meet The specific objectives and constraints of privati- all socially and economically desirable access objec- zation programs vary widely. For many governments, tives. The Bank is increasingly involved in advising privatization (or license) proceeds are an important governments on extending ICT services beyond the source of fiscal revenue. Governments should, how- market. Services that are deemed necessary for social, ever, not underestimate the considerable direct and development or security reasons, but that are unprof- indirect revenues generated by increased competition itable even under liberal entry and pricing policies, in the sector. The fiscal benefits of increased competi- can be provided to low-income (including rural) pop- tion will indeed normally exceed the possible loss of ulation groups through communal facilities (such as revenue that may result from the absence of protec- telecenters) and/or rendered viable through limited, tion or exclusivity granted at privatization. targeted subsidies.2 Community involvement provides one of the ave- Regulatory environment nues for reaching poor or excluded customers. Com- There is no single model of regulation that can be munities are increasingly involved in the design of applied to all II segments in all countries. Regulatory public access programs (through surveys and partici- design depends in part on the degree of current and patory design techniques), as well as in the monitor- possible competition in the market, and on political ing of such programs, and in some instances, even in and legal traditions, among other factors. There are, the provision of public access through local nonprofit however, some basic and common principles. One of organizations. them is the effective separation of policy and regula- The World Bank Group also supports increasing tory functions: regulators should be independent from involvement of the traditional (for-profit) private sec- the operators they will regulate. The World Bank also tor in the delivery of access services to excluded groups encourages the autonomy of regulators vis-Zi-vis gov- or communities. The main channel for such schemes, ernment and policymakers. Financial autonomy im- which are sometimes referred to as output-based aid, plies resources independent from the vagaries of the is the award of licenses for service delivery (which could 44 ANNEX I: GOOD PRACTICE STATEMENT include telecommunications, Internet, broadcasting, and overall performance of the sector. or postal services) to the bidder asking for the lowest Financial support to public sector entities for II subsidy. These tenders have proven to be a cost effec- investments should remain the exception and be lim- tive way to provide coverage beyond the market. The ited to the following main situations: successful roll out of such schemes would normally * where a preprivatization IFC loan may facilitate and require that the market has already been effectively accelerate a privatization process, in particular by liberalized and that no operators have offered to pro- assisting an incumbent state-owned operator in re- vide the services on commercial terms. structuring its operations to cope with increased competition; and Investment in 11 in the postal sector, where World Bank Group Large amounts of investment will continue to be need- support to open the sector to competition may be ed to accelerate and sustain II development. The pri- accompanied by transitional support to the vate sector has shown its ability and effectiveness in incumbent postal operator, including, where mobilizing resources and expertise in this area. The relevant, to fund the cost of redundancies.3 World Bank Group, therefore, usually advises against World Bank Group financial support to public sec- the use of scarce public funds for investment in this tor entities should be tied to a clear, time-bound re- sector. form program and sustainable strategy to open the World Bank Group financing may be used as cata- sector to private participation and competition, in- lyst and comfort for private investment in the sector. cluding specific benchmarks to assess progress in re- World Bank Group institutions may finance direct in- form. Support may include, for example: vestments in the II sector in countries where an ap- * transforming the operator into a corporation gov- propriate policy and regulatory framework is in place, erned by company law (corporatization); or where the country is committed to or in the pro- * rebalancing tariffs to phase out cross-subsidies; cess of developing such a framework. The bulk of such * refocusing on core business; financing will continue to be provided by IFC and * removing barriers to entry and to competition; MIGA to private companies. * making equitable arrangements to interconnect new IFC supports the development of private II by fo- entrants; cusing its efforts on three areas: access infrastructure; * providing assistance for the transfer of ownership software, and IT products and services; and content control to the private sector; and e-commerce. The core of IFC's II strategy is to * and ensuring effective regulation of the sector by promote competition and extend telecommunications an empowered regulator. access by facilitating the roll out of cost-effective con- Increased scrutiny is required of II investments in nectivity in client countries. This is accomplished public entities outside the ICT sector, such as power through IFC's mobilization of capital for private sec- or water utilities and railways. Private networks (i.e., tor-led projects utilizing various technologies such as for the sole use of the public entity) should not be fixed, wireless, satellite, cable, and fiber optics. Simi- dealt with differently from other investments in such larly, IFC encourages the development of knowledge public entities. In view of the great interest of alterna- economies through its support of IT (software appli- tive telecommunications networks, in particular for cations, enabling platforms, consulting services, etc.) the rapid and cost-effective deployment of new pri- and related applications, broadcasting, content, and vate service providers, the case for World Bank fund- e-commerce. IFC aims to complement, rather than ing of public or shared infrastructure would need to displace, private flows of capital -tfo private sector be made on the basis that: the private sector has been projects with high development impact, where IFC's given the opportunity but is not interested in invest- participation plays a critical role in catalyzing projects, ing in such projects; and the provision of telecommu- mobilizing additional sources of funding, promoting nications services to third parties would be done on a foreign direct investment and transfer of technology/ level playing field, without cross-subsidies, tax advan- knowhow, as well as enhancing the competitiveness tages, preferred procurement, or other privileges. This statement and future updates thereof can be found at http://www.worldbank.org/ict/. Comments or questions on this statement may be addressed to the Global Information and Communication Technologies Department through the link provided on the-website. 45 ANNEX 2 FRAMEWORK FOR NATIONAL INFORMATION AND COMMUNICATION TECHNOLOGIES STRATEGIES This Annex identifies and discusses actions needed in governments must implement detailed policies, ac- the key dimensions of national ICT strategies-those tions, and initiatives. This framework can be appli- sectors and areas crucial to the knowledge economy. It cable across countries, and there is sufficient room to accords special emphasis to the role governments play tailor it to the specific needs of individual countries. in each of these areas. The focus is on those areas where governments have a direct role, or a policy and pro- Access infrastructure-policy and regulation motional role, to support private and civil society ini- A robust, well-functioning, and competitive telecom tiatives. This does not imply that a government will infrastructure is key to efforts to develop the ICT undertake a controlled planning process to create an sector. Efforts to make a transition to a knowledge- information society. Rather, in most instances, it will based economy will be largely unsuccessful without create the necessary institutional and policy precondi- access to telecom infrastructure facilitated by market- tions for the private sector to invest in the develop- based mechanisms. Creating a strategy in this sphere ment of the knowledge economy. is difficult, because direct government provision of Creating an information society can be supply- infrastructure has become unsustainable. But driven only to a limited extent. Eventually invest- governments do have a significant responsibility to ment-in infrastructure, in technology, and in promote appropriate policies. Moreover, official services-will depend on market demand characteris- institutions will continue to play an important role in tics. Strategies for "creating" an information society providing independent regulation of the affected cannot be analogous to large-scale development sectors. A comprehensive sector reform process projects and planning that characterized many devel- includes the following key elements: oping countries' transition to industrial societies, be- * Independent regulatory agencies: One of the most cause altered global realities have left governments with difficult issues countries have historically faced has fewer resources and capacities. Inasmuch as govern- been the establishment of an appropriate functional ments can adopt a strategy, its main principles must and institutional approach to ensure the indepen- be to remove the policy and institutional barriers that dent exercise of regulatory functions applicable in prevent the private sector from responding to market the sectors. Institutional reform and delineating the demands, and to some extent, to create markets by respective roles and functions of the various stake- encouraging the adoption of technology. holders in the sectors are critical to credible and The strategy, while outlining the different areas of sustainable regulatory reform. emphasis for a given country, and the respective roles * Procompetitive policies: In an age characterized by of the public and private sectors, will focus on gov- blurred distinctions among the technologies by ernment actions. This is partly because private sector which a variety of services are provided, and in actions cannot be dictated by strategy, but will follow which traditional notions of "natural monopoly" the imperatives of the market. The six crucial areas have been largely proved erroneous, close attention where governments need to take action are: must be paid to the role, if any, of granting exclu- * general competition policy and legal framework; sive rights. Indeed, international experience has * access infrastructure-policy, legal and regulatory shown that where market entry is unimpeded, effi- framework for telecommunication, broadcast, and ciencies increase. Accordingly, preference is given postal; to competition, but where resources are scarce or * e-commerce, content, and convergence legislation; for other compelling public policy interests, restric- * industrial policy for the IT industry; tions on entry can be justified. Moreover, due to * promoting ICT applications in the government, the phenomenon of convergence, competition poli- private, and social sectors; and cies and legal frameworks responsive to a dynamic * human resources skills base. sector have become increasingly necessary to en- These six areas form a basic framework within which sure certainty for both investors and users. 46 ANNEX 2: NATIONAL ICT STRATEGIES Licensing: Rules for licensing new enrrants are im- Therefore governments need to devise a variety of portant to ensure parity in market entry and the mechanisms to promote universal access. viability of operation. While careful selection cri- * Privatization: Incumbent public monopolies, often teria are important to ensure that accredited, fi- with government departmental status, have proven nancially sustainable operators are granted licenses, inept at expanding the telecom network and initi- aggrandizement in the form of very high license ating or adapting technological innovation. There- fees will prove ruinous to private investment and fore, privatizing the existing monopoly to infuse a sector development prospects. The selection crite- market-oriented incentive structure is seen as a fun- ria must be based on the actual merits of different damental tenet of the reform process. proposals in terms of value added to long-term sec- tor development. E-commerce and convergence: * Interconnection: Clear, transparent interconnection legal framework rules enable new entrants to (a) reach customers Promotin e-commerce and other aplications of new connected only to incumbent, dominant operators g and (b) choose between developing their own in- technologies is the linchpin of the new economy. Glo- frastructures or using those of others, priced to re- bal communication networks increase the country's fe costs. The principle of nondiscrimination will trade prospects, open new markets, and promote de- flectncots.r that d inctiplmeofnondiscrimination will velopment by enabling leading primary, Industrial, and ensure that dominant incumbents do not subsidize services sectors, as well as small scale enterprises to their affiliates by offering interconnection on terms trade with larger markets. Transactions over the more favorable than to other operators. Internet, however, open up a host of difficult legal is- Tariff rebalancing: Procompetitive tariffs perform sues. Assuming that under the basic access provisions a central role in the functioning of the telecommu- there are already in place adequate telecommunication nication sector and the economy. Tariffs that are legal frameworks, competition law of general applica- out of line with costs result in wrong decisions on tion, and laws regarding licensing and use offrequency investment and use, distorted market development, (if separate from the telecom law) and broadcasting and economic inefficiency. Cross-subsidies among will also feed into the legislative portion to bridge the services or companies are on these grounds unde- di ital divide. Some of the other key legal issues that sirable. Tariffs that do not allow for cost recovery ngeto ddeSse in order y legal busi- even under efficient management are a significant ness envi dressed in order to create a viable busi- impediment to the prospects of successful privati- ing areas: zation. Spectrum regulation: Clear, fair, and transparent * Digital contract and signatures: Recognition and rules for the allocation and assignment of scarce enforceability of electronic contracts, provisions to specrules forthesalourca and reuassingnemento aras ensure that digital signatures can be authenticated spectrum resources, and regulating new entrants adrelgal bnig, n eeto feetoi through appropriate licensing mechanisms are im- and are legally binding, and retention of electronc portant for the development and responsiveness of data. the wireless segment of the market to fast-chang- * Security, public/private key infrastructure: Develop- ing technologies, applications, and global demand ment of an information security architecture, cer- for bandwidth. Spectrum becomes more valuable tification processes, and regulations thereof to with convergence, but attempts (such as those in ensure confidentiality and security of electronic Europe) to maximize the government's share of that transactions and financial data, including National value through auctions may limit the speed with Certificate Authorities. which services are expanded, create high entry bar- * Encryption: Ensuring that necessary technologies riers only large multinationals can overcome, and (including the underlying software) are permitted limit the extent to which spectrum may be allo- to be imported and deployed, to provide the secu- cated to lower-revenue generating services or poor rity and certainty that electronic commerce users segments of society. will require to confidently conduct electronic com- * Universal access: Even putting a procompetitive merce. regulatory regime in place might not ensure the de- * Personal data privacy protection: Legal provisions for velopment of the telecom infrastructure sector. Pri- protecting the privacy of personal data. vate investment is always constrained by demand, * Banking/financial services: Ensuring that electronic and providing telecom services to the large percent- payments systems are permitted and have key age of residential and rural subscribers is not usu- functionality for the security and certainty necessary ally commercially viable in developing countries. for electronic payments transactions. 47 INFORMATION AND COMMUNICATION TECHNOLOGIES * Exchangecontrols:Ensurethatexchangecontrolsdo incentives through exemption from partial or not impair the development of e-commerce. specific tax liabilities has proved a powerful * Copyright and intellectualproperty rights: World-class incentive to bring more investment; however, the protection of intellectual property rights, which trade-offs involved in terms of losses of revenue to exist (sometimes exclusively) in electronic form.5 the industry measured against actual investment * Liability: Limitations on liability of ISPs and net- inflow and profit reinvestment need to be carefully work operators for content of users. assessed. * Electronicpayments: Taxes, and tariffs on electronic * Approval procedures: Easing up and speeding up transactions. bureaucratic procedures and clearance mechanisms * Duties and import tariffis: Reduction of import bar- are key to supporting and promoting investment. riers to high-tech hardware and software necessary * Establishing high-technology parks: There is consid- for e-commerce to flourish. erable debate regarding the value of establishing * Computer crimes and electronic fraud: Regulations concentrated high technology cluster areas versus a covering computer break-ins, launch of viruses, more diffuse development of the IT sector. Gov- theft of credit card codes, theft or destruction of ernments need to assess carefully the pros and cons information, and electronic impersonation of a pro- of the different models, the appropriateness of each fessional, business, or government official. model to country conditions, and the government's * Telemedicine: Limitations of liability, health insur- role in creating technology parks. ance adaptation, validation of credentials, rural ac- * Identijying leading sectors: Since all countries can- cess. not gain competitive advantage in the cutting edge * Consumer rights: Provisions to protect the rights of global IT industry, leveraging information technol- consumers of multimedia, especially in disputes ogy to increase the efficiency and value-added of with content providers and e-merchants whose competitive sectors, and expand their market reach products or services may not be physically tangible. would be an attractive strategy. Government could * Others as required by local circumstances. take various initiatives to promote the diffusion of IT in these industries and sectors. The promotional role of the government in both the IT industries In addition to telecommunication networks, strategic and IT-enabled industries will require a strategy that information systems and IT hardware and software are raises awareness, and provides incentives. the other key components of a country's II. Some countries have created a global competitive edge for [-governance their IT, especially in the software sector, with a series Governments can promote the widespread diffusion of measures across different areas, including provid- of ICT applications and promote the idea of a knowl- ing infrastructure and investing in technical educa- edge economy only if their own operations are stream- tion. While most developing countries will not lined and technology-enabled. Therefore, they should necessarily be able to compete in the cutting edge of assign top priority to making the governance struc- the global IT sector, they need to develop their do- ture technology-compatible; and should do so by in- mestic IT sectors regardless. A robust domestic IT in- troducing a series of measures to streamline procedures dustry is important for sustainability in an information and operations at different levels of the bureaucratic economy, and for reducing the dependence of the maze. The key elements of implementing e-governance country on outsourced technology. Efforts in this area will be: need to focus on attracting foreign investment as a Developing a web presence by building a single source of much-needed capital, to diffuse technologi- government portal that is customer oriented, crosses cal innovation and learning, and also to support the ministerial and agency boundaries, and is e-com- domestic entrepreneurial base. The main areas that merce enabled with links to all other public gov- government need to focus on when trying to develop ernment websites. their local IT industry are: * Setting up local content production in key minis- * Investment policies: rules governing foreign direct tries that can be used by the public, businesses, the investment in the IT sectors, the conditionalities government and potential investors. Processes tied to allowing foreign investment, etc. should also be established to ensure that content is * Taxation: Tax incentives are the traditional means regularly updated and new content is created. of promoting an industry that has the potential to * Identifying the most burdensome processes, and generate growth for the entire economy, as well as streamlining and reducing duplication where prac- to attract foreign investment. Providing tax tical. 48 ANNEX 2: NATIONAL [CT STRATEGIES * Redirecting government IT spending to focus on economy, and hence measures to combat the brain computerizing and web-enabling key processes and drain have to be integral to public funding for tech- encouraging redirection of IT spending with seed nical education. funds to additional equipment and networks for * Promoting ICT use skills in the general population: civil servants who are active in the redesigned pro- Special technical training schools and institutes cesses. might also be required to offer a more basic level * Building capacity within the government by un- of education to the general adult population in the dertaking training for civil servants to facilitate e- use of the new technologies to ensure their wide- government and to develop computer based spread diffusion. training packages for government employees. Organizational and implementation issues Human resources and capacity building Given the broad-based and cross-sectoral nature of the Education is another key area where governments need conditions necessary for instituting an ICT economy, to adopt a proactive and concerted strategy both for different governmental organizations and agencies will providing the technical labor necessary for a robust be involved in adopting these measures-ministries IT industry, as well as for creating the capacities for of telecommunication, electronics, trade and com- the adoption, use, and diffusion of the technology. merce, education, and others. Most countries have in- Governments need to take action especially in the fol- stituted coordinating mechanisms such as task forces, lowing areas: interministerial councils, and working groups to en- * Promoting access to ICTs in primary and secondary sure that different organizations work in tandem. The schools: The use of technology at the primary and relative merits of these mechanisms rather than set- secondary levels is a necessary foundation for a tech- ting up a separate ministry would need to be assessed. nologically-literate population. The government Setting up a separate ministry might even prove can ensure that IT is part of primary and second- harmful if bureaucratic oversight is extended to areas ary school curriculum, and make resources avail- in which entrepreneurial autonomy is more valuable. able for diffusion. The private sector would also At the same time, proliferating organizations such as potentially be a willing participant in this as a means coordinating bodies and committees should be un- of creating potential future markets for technology. dertaken only with a clear and specific mandate that * Promoting technical IT skills: Depending on the will add value to the development of the II. Separate structure of higher education in different countries, organizational structures that oversee different com- governments can promote technical skills-pro- ponents of the national ICT strategy, with a coordi- gramming, engineering etc.-in the labor force as nating mechanism for information sharing, and an input to the IT industry. Government invest- providing overall guidance, might be more useful. ment in this must yield benefits to the local 49 ANNEX 3 OPTIONS FOR UNIVERSAL ACCESS AND RURAL TELECOMMUNICATION DEVELOPMENT Slow growth and high costs have made extending ac- businesses in cities and along main roads, the concept cess to rural areas a particularly difficult issue, reflected of public-private partnerships to design and fund com- in high urban-rural disparities in telecom penetration. munity telecenters has emerged as a quick and attrac- Recent technological advances, rapid cost reductions, tive means of making tools of the information society as well as market innovations, however, have created widely available. MCTs can be commercial, not-for- opportunities for increasing access to ICTs for remote profit, or hybrid operations. They can extend the reach and poor areas. Lower-cost equipment, wireless sys- of basic services such as education, health, and skills tems, new methods for retailing, and the concept of training. They can transfer agricultural and other ex- community points of access, have all made communi- pertise, and give local producers access to informa- cations more accessible. At the same time, regulatory tion on the market, thus reducing the need for frameworks are being structured to offer incentives, intermediaries and increasing rural incomes. In some and impose requirements, to extend service coverage cases, such centers cooperate with postal services to to high-cost and peripheral areas. The sections below exploit e-mail in connection with mail delivery ser- discuss the issues involved in a strategy to extend ru- vices, and can provide access to infrastructure for the ral access, such as community access through rural development of business (virtual offices, banking, e- telecenters, regulatory incentives to extend access, and commerce, customer care). In designing rural the creation of universal access funds to subsidize ru- telecenter projects, three principles should be empha- ral network expansion. The chapter will also discuss sized: the example of Chile, which has had considerable suc- * a bottom-up approach, in which small businesses cess in extending rural access through a reverse-auc- such as phone and office service shops are encour- tion bidding mechanism. aged to develop an ICT component in response to market opportunities, perhaps with the inducement Community access of microloans for computers and Internet access; In addition to low income levels in rural areas, line business-community partnerships, with donor or installation costs can be so high that private lines are NGO assistance, to complement rather than com- financially nonviable. From the operator's point of pete with successful small phone shop and telecenter view, public ICT access points provide higher revenues businesses;6 and compared to residential lines and, when strategically policy initiatives to encourage both the rollout of situated, can be commercially viable. affordable and suitable quality Internet service out- Community access points can take different forms, side the main urban centers, and the permission depending primarily on the kind of technology de- and licensing of the use of appropriate technolo- ployed, and services provided. At the very basic level gies such as wireless, or very small aperture termi- is the simple payphone. Phone shops are usually phys- nals (VSATs) by access providers. ically manned, and in addition to the basic phone ser- vice may also provide fax and even computer facilities. Regulatory interentions Multipurpose community telecenters (MCTs) are more Regulatory interventions are also important in efforts sophisticated and provide a range of communication to close the access gap. Specific mechanisms can be services. MCTs typically are equipped with a combi- used by regulators to bridge the access gap such as ser- nation of services such as telephony, fax, e-mail and vice requirements and incentives for operators, and cre- the Internet (via dial-up or ISDN); office equipment ating subsidy mechanisms to attract investments. such as computers, modems, CD-ROM, printers and Access requirements can be presented in the form of photocopiers; and media services, including radio, TV, rollout targets for private lines, teledensity targets, tar- audio and video devices, and multimedia hardware and gets for public facilities such as payphones or phone software. shops, or minimum time to fulfill requests for a main- While "cyber cafes" are usually purely commercial line. In addition to the number of lines or payphones 50 ANNEX 3: RURAL TELECOMMUNICATION DEVELOPMENT installed, delivery time and areas to be covered may network build-out in unprofitable areas, with the sub- be specified. In many cases, rural service requirements sidy being awarded to the operator with the lowest are specified as targeting service to all villages or re- required subsidy or the highest service rollout com- gional centers of a certain size, e.g., villages with more mitment, or a combination of both. than 500 inhabitants. An alternative financing method is special low in- By setting targets for mobile operators, and ideally terest loans to encourage operators' network build- allowing them to also provide fixed wireless service, out in the most challenging regions, provided by rural access can be accelerated, since mobile networks governments or bilateral and multilateral aid agencies. can be installed more rapidly than fixed lines, and are Rural service providers face large up-front costs for less vulnerable to vandalism and theft. Access is also infrastructure rollout, and thus institutional loans to better improved by awarding licenses based on build- help finance initial capital investment costs would be out plans as well as license payments. useful, especially where domestic capital markets are There are a number of techniques to further sup- weak. port rapid rollout of services. Packaging lucrative ar- Chile-pioneering telecommunication eas with less profitable ones within a same license area, is one way to ensure balanced network expansion be- expansion to rural areas tween regions. Also, allowing bidders to tender for Privatization of telecommunication in Chile in 1988 several adjacent territories, or as many areas as they has proved to be a success: with fast growth, new ser- want, increases the possibility that all the regions are vices, technological innovation, high productivity, and tendered. Multiple services may also be bundled un- prices that are among the world's lowest. By 2000, der one license, and mobile licenses for rural areas the number of fixed and mobile phone connections could be made more lucrative by allowing operators had multiplied tenfold from their 1988 level, and more to provide international service. than 70 percent households today have a telephone.7 This rapid rollout and increase in access were largely Promoting universal access to ICT due to the introduction of a competitive market. But, Even with these incentives, private expansion of tele- for the 15 percent of households with no access in communication service to rural areas might not be 1994, the Chilean government created an access fund. commercially viable, and a range of special financing To increase access to public telephones in rural and mechanisms and investment subsidy schemes has been low-income areas, the government created a special devised. In a competitive environment, where other fund within the national budget, administered by a operators in addition to the incumbent share the uni- council chaired by the telecommunication minister. versal access responsibility, the costs of provision of Requests for payphones were collected annually from universal access can be financed through special funds. regional and local authorities, neighborhood associa- Universal access funds award subsidies to operators, tions, and the general public. Projects, each typically usually in a competitive manner, to make access pro- comprising 20 to 50 localities forecast to have a posi- vision financially viable. The fund can be adminis- tive social net present value (NPV), but unlikely to tered by the national regulator or by an independent be commercially viable on their own, were ranked by body. Sources for such a fund can vary: for example, a social NPV per unit of subsidy needed to make them government budget allocation, license or radio fre- viable. The highest ranking projects were chosen to quency fees, an operator revenue contribution, seed receive subsidies. finance by a development bank or agency, intercon- Bids were invited, and projects were awarded to nection levies, or virtual fund transfers. The most fre- bidders requiring the lowest onetime subsidy. A win- quently used fund collection mechanism is to impose ning bidder was granted a nonexclusive operating li- a levy on telecommunication operators, usually a cer- cense, and any necessary radio licenses within 60 days, tain percentage of their annual revenues. This gener- to provide at least one payphone in each locality for ally varies between 1 and 2 percent. The operators 10 years available to the public 24 hours a day. Bids imposed with the levy are usually basic service pro- could propose additional services (such as individual viders, but sometimes include mobile operators. business or residential telephone lines), and these were The introduction of competition through a bid- included in the licenses, but not taken into account ding process for the use of universal access funds en- in bid evaluation. Access charges and payphone call courages operators to look for the best technology and charges remained regulated. Licensees were free to se- other cost-savings practices, often minimizing the sub- lect the technology, network structure, and payphone sidies, if they are required at all. New entrants and location within each locality, subject only to rules that sometimes existing operators compete for subsidies for are applicable to all telecommunication operators. 5! INFORMATION AND COMMUNICATION TECHNOLOGIES From 1995 to 2000, the fund undertook seven less accessible locations, and as companies initially rounds of licensing. Sixty-one hundred rural locali- competing for market positions became more con- ties with about 2.2 million inhabitants were provided cerned about commercial sustainability. The last round with payphones and about 24,000 individual tele- of licensing, which benefited only 2 percent of the phone lines. Total investment reached $160 million, initial targeted population (about 40,000 people), cost of which about $50 million went into installing $45 in subsidy per inhabitant, or $10,000 per loca- payphones supported by $21 million in subsidies. For tion. every dollar of subsidy, the private operating compa- Including payphones to be installed in 2002, the nies thus invested an average of seven dollars of their fund extended payphones to virtually all Chileans. The own money. total cost to the government was less than 0.5 percent The average subsidy of $3,400 per payphone fell of total telecommunication turnover during the five far below $ 10,000 to $20,000 paid by the government years of the program. Administration of the fund cost earlier under similar programs for rural areas. The sav- less than three percent of the subsidies granted. Re- ing was achieved by paying the companies only for sponsibility for the remaining one percent (some the expected losses from these phones, rather than the 150,000 inhabitants countrywide, mostly in clusters full investment cost, using competition among opera- of less than 60 people) has been passed on to the re- tors to determine how much subsidy was really needed. gional authorities, who are better equipped than a cen- Reaching the first half of the targeted rural popu- tral program to deal with the needs of scattered lation (about one million people) cost the fund only populations in conjunction with other development $3 per person or $1,200 per locality. The cost increased initiatives. as the program reached out to smaller communities in 52 ANNEX 4 PUTTING INFORMATION AND COMMUNICATION TECHNOLOGIES TO WORK IN OTHER SECTORS The World Bank has significant informatics compo- information management projects such as tax nents in most of its projects, comprised mostly of stra- administration. tegic information systems for financial management, There are, however, significant challenges specifi- tax, customs, accounting, personnel management, and cally related to the ICT sector in the proposed efforts other processes, as well as establishing IT classrooms to scale up the use and deployment of ICT in sector in the education sector. Limiting project-related in- projects. For instance, providing health information terventions to stand-alone IT solutions is inadequate online will not be useful unless people have the means to meet the demands of the new economy. New tech- to actually access the information, that is, they are nologies, especially Internet-based information and connected to the Internet. In a similar way, providing service delivery, offer immense possibilities to meet a the technology to pay taxes online, or allow citizens range of sectoral objectives, and IT components need to communicate with the government online will be to be upgraded to reflect the realities of a new econo- of limited use until citizens are able to access the my. If appropriately deployed, ICT can help facilitate Internet. Solutions to these problems through sector crucial economic and social development objectives reform and public access projects must be addressed in all sectors: in parallel with sectoral IT initiatives. Sectoral projects * Efficiency gains: ICT reduces the unit cost of in- will also have to tackle complex institutional and train- formation by increasing the speed with which it ing reforms required to maximize the benefits of the can be collected, maintained, and disseminated. new ICT. Finally, sectoral programs to encourage the * Linking to the global economy: ICT applications expansion of ICT use in government and other ser- enable even very small-scale operations to link to vices are also connected to the legal and policy envi- global markets, groups, and organizations. ronment related to Internet content, such as validity * Bridging information gaps: The rapidly decreasing of electronic records and digital signatures, authenti- cost of technology makes access more widespread. cation standards and certification authorities, legal At the same time, the nonproprietary nature of the protection of intellectual property rights, and legal Internet makes more information available to ev- rights of interception and review. erybody. This Annex discusses how ICT in general, and new * Empowerment: Because it makes information freely technologies in particular, are transforming sectoral available to all, ICT is potentially empowering and operations, and how they can be deployed to further democratizing. secroral goals. For each of the sectors, some general * Transparency/ accountability: The speedier infor- points are made about the application of ICT, and il- mation flow and its public availability combine to lustrative examples are provided. create greater transparency and accountability in the functioning of organizations. Public sector management * Extending the reach of services: New ICT applica- The impact of ICT on public sector management is tions, especially using mobile technology, can de- central to two processes: the first relates to the inter- liver services to remote, otherwise unreachable nal operations of governments, and the second to the locations. government's interface with the public at large. First, Moving towards the networking of projects implies ICT increases administrative efficiency by making the greater emphasis on both networking and connectivity collection, maintenance, flow, and management of in- in existing project types, and the development of new, formation faster and easier, and thus reduces the unit more innovative projects that can take advantage of cost of information. This effects areas such as tax ad- the new capabilities created by the Internet. For ministration, land registry, public finance manage- instance, in public sector management this would ment, pensions, and social security administration. mean developing e-governance projects that enable Second, ICT makes governments more transparent and government-citizen interface as well as the existing accountable, and thus reduces corruption by making 53 INFORMATION AND COMMUNICATION TECHNOLOGIES information more easily available to the public. Inter- Information Technology Exhibition. With a territory active technologies also enable better government-citi- of 567,295 square kilometers, Bahia has a population zen interface, allowing, for instance filling of forms or of around 12.5 million. Of the 20 SAC units created, registering concerns online, increasing both efficiency eight are in the capital, Salvador, and the remaining and transparency. 14 spread throughout the state, with six mobile units While public sector management comprises the serving remote areas. SAC units compete with largest component of the World Bank's IT portfolio traditional organizations in service delivery. They have (42 percent), most of these projects are concerned with the same range of services but their rationale is to increasing the efficiency of the internal operations of provide better quality of public service, and within a governments. ICTs have an enhanced potential in gov- shorter period of time. SAC allows citizens to get any ernance today-in fulfilling the strategic objectives of official document they might need in the same place. decentralization, accountability and combating cor- The units are open from 9 a.m. up to 10 p.m. and, on ruption, and in improved service delivery and dispute Saturdays, up to 9 p.m. A SAC unit covers 14 sectors resolution. While governments the world over are go- and has the capacity to serve 600 citizens per day. It ing online, putting information on publicly available offers a range of services, from ID cards, company websites, usually with an interactive feedback compo- registration, job offers, and public housing requests, nent, this has not to date been a significant part of the to telecommunication services, legal assistance, labor World Bank's work in the sector. complaints, voter registration, and passport issuance. Bridging the gap between purely technical solutions Mobile SAC units visit remote areas, and allow and purely organizational ones requires expertise on geographically isolated populations access to essential how the two are linked. Successful technology appli- services, such as the issuance of birth certificates, ID cation requires at least two preconditions: institu- cards, and labor ID cards. tional-policy, legal, and organizational-changes that SAC is managed by SESAC, or the General Board make the institutional environment receptive to tech- for the Development of Public Services and Public nology solutions; and skills upgrading and training to Service Delivery, a body with a special status within enable organizations to use new technologies. Policy the Secretariat of Administration. SESAC has a cer- mentoring is necessary to obtain the first precondi- tain level of autonomy and an annual allocated bud- tion, to identify where the potential blocks to ICT get. However, this does not allow it to produce its own diffusion are, and how they might be overcome. For resources, and the collected funds must go to the state instance, both apathy and active resistance on the part treasury. SESAC is in direct charge of planning, pro- of administrative officials who fear a loss of discre- moting, coordinating, following up, assessing, and su- tionary power might scuttle the program. These ob- pervising public service delivery. It also looks after the stacles need to be identified and resolved through maintenance and expansion of individual SAC units. changes in the incentive structure for instance. Given Each SAC unit has a manager in charge of service qual- the Bank's focus on increasing transparency and fight- ity maintenance, teamwork promotion, facility and ing corruption, ICT could be a crucial instrument to equipment maintenance, personnel, material, and achieve this. Projects such as Servifo de Atendimento property management, statistics on performance, and ao Cidadao serve as useful models for a future World suggestions for improvements in the unit. The per- Bank Group agenda, one that uses the civic governance sonnel report to the supervisor in their own depart- potential of ICT. ment, while they report functionally to the unit The SAC Project manager. Servifo deAtendimento ao Cidaddo (SAC), also known Improving citizen-government interface: the TWINS as the "Shopping Mall for Public Services," is a sys- project in India tem of public service assistance created by the State Andhra Pradesh is the first state in India to design a Government of Bahia in Brazil. It gathers in one place statewide computerization program covering all levels different public services delivered to citizens by na- of the administrative spectrum, from the smallest- tional, subnational and local institutions. In doing so, the village level Mandal Revenue Offices-to the top- SAC gives the users the impression of a single system, most, largest, and most powerful. For example, land although each service has a specific administrative pro- registration offices throughout the state are now com- cedure. The coordination of the different services is puterized under the Computer aided Administration done only at the point of delivery to the public. of Registration Department (CARD) project. The The idea germinated from the success of an Mandal Revenue Office Computerization Project has integrated public service stand set up for Bahia's followed the CARD, with several applications being 54 ANNEX 4: ICT IN OTHER SECTORS planned and implemented, such as the delivery of stat- contributor to the anticorruption campaigns of gov- utory certificates for caste, birth, and a hazard mitiga- ernments worldwide. By allowing widespread tender- tion information system. ing, electronic document management, electronic Another high profile IT initiative, the Twin Cities authentication and logging of all transactions, it can Network Services (TWINS) pilot project, was substantially reduce the opportunities for corrupt prac- launched at the end of December 1999. It is designed tices, and increase the likelihood of their detection and to provide citizens of Hyderabad and Secunderabad prosecution. E-procurement can be strategically used computerized one-stop Integrated Citizen Services as a driver for e-government (the conversion of gov- Centers (ICSC) to handle a variety of services. These ernment services and functions from the physical to would include payment of utility bills and property the online realm), because: taxes; issuing certificates (birth, death, caste, and in- * Benefits are clear. Economies comparable to those come); issuing permits and licenses; providing infor- driving the explosive growth of e-commerce in the mation (building permits, transport procedures and private sector should be available to governments. property registration); and facilitating common trans- * Adoption can be rapid. For example, it took less actions such as change of addresses, transfer of vehicle than three years for Compranet, the e-procurement ownership, etc. More services may be added later to system of Mexico,9 to expand and process virtually the ICSC. The project will procure and install neces- all of the competitive procurement transactions of sary hardware and software at 15 centers; provide com- the public sector (25,000 per year). puter training and use of the integrated services for * It requires low level of public investment and can seconded department staff; and test whether recurrent be self-sustaining through participation of the pri- electricity and telephone costs can be reduced by pass- vate sector. Profit oriented firms in the U.S. have ing on a small amount of the charge to the customer. teamed to develop e-procurement portals for gov- Implementing the ICSC required changes in the ernment without any form of government invest- systems and procedures of six government depart- ment or subsidy. The same might happen in ments. Some forms were simplified, and all had to be developing countries where government is often the made accessible through the ICSC. The interface soft- largest buyer in the economy. ware between the ICSC and the departments took al- * It is not severely constrained by poor ICT infra- most six months to develop and implement. ICSC staff structure, since it operates at the level of govern- at the counters had to be trained to provide a variety ment agencies and businesses that are frequently of computerized services. The software applications connected even in the poorest countries. and interfaces with the various departments are now Through its potential impact on legal reform and stabilized. The initial start-up costs of about Rs. 90 government efficiency, e-procurement presents a clear lakhs ($214,000) include civil construction, hardware, opportunity for the World Bank to embrace the net- software and peripherals, and integrated services dig- working revolution within its core assistance strategy. ital network (ISDN) lines. There is currently no elec- In so doing, the Bank would also develop expertise tronic payment system or electronic filing, nor is the for broader utilization of electronic digital network- system fully web-enabled, which would eventually re- ing as an essential component of most of its future duce the need to commute by citizens who have ac- operations. The World Bank can adopt an ambitious, cess to the Internet. When the ISDN line fails, services yet low cost support strategy for e-procurement, ' con- are provided manually. But none of this seems to de- sisting of: crease the credibility of the project among the public. * Partnering with client countries for pilot e-procure- The pilot is part of an overall state government IT ment projects. This has started already through the strategy, and it is too early to judge its efficacy. But by September, 2000 agreement with the Government all appearances TWINS seems likely to improve in- of Mexico to pilot test Compranet with transac- teraction between citizens and government depart- tions financed by the World Bank for over a year, ments dramatically through quick and convenient starting with national competitive bidding procure- access to automated services. ments and following with international ones.'I Using institutional clout to encourage the forma- E-procurement tion of private e-procurement services and systems. The shift to electronic procurement (e-procurement),S OCSPR has already started on this path by identi- is an inevitable trend among governments worldwide fying major e-procurement systems suppliers and that can be turned into a strategic driver of public pol- their offerings; drafting the World Bank Strategy icy, legal, and performance improvements in the pub- and Borrower Guidelines for e-procurement; and lic sector. For example, e-procurement can be a major organizing a workshop on this subject (December 55 INFORMATION AND COMMUNICATION TECHNOLOGIES 2000) to start the development of a project pipe- exploit the opportunities than the poor. Approaching line. ICT skill acquisition as a process of lifelong learning Developing internal capacity for rapid financing of can help overcome some of these inequities. Women e-procurement projects, through model loan instru- who have moved out of the labor market, whose skills ments, mobilization of TA, and guidance on financ- are outmoded, and who wish to return to work should ing schemes. be assisted through specialist retraining courses that Education will target the new job market. To increase alterna- tives available to poor and vulnerable groups, parallel Education is an area where the World Bank has a num- initiatives will need to be undertaken in the areas of ber of initiatives to connect schools worldwide and SME development, access to credit, service and tour- provide learning centers and content, such as World- ist industries, and cottage industry development and Links, the Global Development Learning Network marketing. Opportunities from computer technology (GDLN), the African Virtual University (AVU), and for bringing additional services to the poor should also EdTech, and projects such as the Turkey Basic Educa- be examined. tion project. These programs have targeted specifical- Governments can support lifelong learning initia- ly the twin objectives of deployment of ICT to achieve tives by restructuring the education system to create sectoral goals, while at the same time addressing the new opportunities for citizens of all ages. Those who need for these countries to get connected to the Inter- wish to return to school as adults should be provided net. with the opportunity to do so through night classes, On the one hand, education is a crucial input into part-time study, or as full-time "mature students." the knowledge economy. On the other hand, new tech- Computers and an Internet connection can open doors nologies enable more extensive delivery of education. to those in isolated rural areas, those who work most Education is important because the knowledge econ- of the day from home (in domestic and/or productive omy is driven by both the predominance of technical activity), and those who wish to continue their edu- skills that contribute to the economic process, and the cation. To help individuals finance the cost of lifelong ability to access and integrate knowledge into every- learning, an initiative proposed for Singapore which day economic activities. With knowledge being vital seeks to establish a lifelong learning fund could be a for the productive process, the ability to apply knowl- potential model. In this approach, when the economy edge determines economic success. performs well, a special dividend can be paid into each Informatics skills are essential resources for both citizen's account, and the money (or equivalent in study public and private sector organizations seeking to in- credits) can be used to further an individual's study, tegrate into the information economy. Over the next or used to acquire additional employment skills or few years, most client countries of the World Bank knowledge. Group will need to significantly increase their num- Advances in ICT also enable new mechanisms for ber of informatics specialists, in addition to diffusing the delivery of education. Distance learning, using the computer literacy throughout the workforce. Long- capabilities of convergent technologies in particular, term strategies for ICT diffusion among the wider pop- has become very important as a means of extending ulation must be centered around revised education high quality, world class education. ICT provides new policies and integrating ICT skills into programs of tools for teacher training. The concept of the telecenter vocational training, which emphasize information is a useful means of extending education. The tele- handling skills, business and management skills, and center can become the means of delivery for distance entrepreneurship. An essential component for build- learning and virtual education. For instance, the dis- ing ICT resources will be school education for young tance learning centers operated by GDLN deliver a people. An integrated policy for increased ICT invest- host of courses, using a variety of media. ment in education, teacher training, and technical support is the only way to ensure effective local adop- ICT in education: Turkey Basic Education Project tion of ICT and long-term diffusion. The Turkey Basic Education Project (Loan 4355-TU), Familiarity with computers is essential in most approved by the Board in June 1998, is the largest modern professions or careers. There is a tremendous project in the Bank's informatics portfolio. The project wage premium associated with technology. However, extends computerization to grades one through eight. there are inherent poverty and income inequality is- In phase one, the Ministry of National Education sues related to access: computer technology is expen- (MONE) is establishing IT classrooms in 2,600 basic sive, and unless specific action is taken to redress the education schools throughout the country-at least imbalance, the rich will be in a far better position to two schools in each of the 900 subprovinces. In phase 56 ANNEX 4: ICT IN OTHER SECTORS two, it will equip an additional 3,000 basic education WorLD sponsored Internet Learning Center schools with Internet capacity. In the final phase, 5,000 The Bindura Internet Learning Center (ILC) is an ex- IT classrooms will be established. The project's four ample of a school-based community telecenter. Estab- components make it a comprehensive package for ICT lished as a successful partnership between the in schools: expansion of computerization to include Zimbabwe Ministry of Education, Sport and Culture connectivity; evaluation of computer literacy achieved and the World Bank-sponsored Zimbabwe-WorLD, through the project; emphasis on covering rural areas; the Bindura ILC is one of a series of 13 school and and extensive training for teachers to ensure capacity community centers which were opened in 1999. Each building in the use of the technology. In addition, a center is equipped with Windows and Office '95/98 significant number of schools will participate in the software, 10 networked computers, a server (running WorLD program, which would link them to national Windows NT software), printers, modems, and an In- and international school networks. ternet dial-up connection. Similar to the model adopt- Turkey's education system is rigid and highly cen- ed by the other Zimbabwe-WorLD sites, Bindura is a tralized. Curricula and textbooks are approved cen- successful model of a dual-use telecenter, serving stu- trally for use throughout the country. Teachers are dents and teachers in the surrounding schools during recruited and assigned centrally. Students are admit- the day, and the general community and adult learn- ted to universities and the best secondary schools ers in the evenings, weekends, and holidays. The adult through centrally administered examinations. Intro- learners constitute 50 percent of the total clients served, ducing Internet access might combat this rigid and and are ani important source for the center's financial centralized system, and enable greater interactivity sustainability. By paying a fee for training and access, among teachers and students. However, the impact of they are underwriting the recurrent costs of hardware introducing an interactive learning medium can be maintenance, power, supplies, and connectivity. built into the evaluation framework that the govern- The approximately 180 pupils and teachers come ment's Education Research and Development Depart- from nine surrounding primary and secondary schools. ment has already put in place to monitor the program. Two full-time teachers provide these learners with in- Since the project's emphasis is on rural schools, struction in computer literacy, software applications most of the IT classrooms-almost 76 per cent-are (e.g., Word, Excel, PowerPoint, desktop publishing), in subprovinces. Because few children in rural schools and online collaborative projects, which will link these currently have access to computers, this initiative, com- students with their peers around the world via the In- bined with a number of other important investments ternet. Adult learniers receive instruction in operating in rural schools provided under the project, will help systems, software applications, and research via e-mail reduce urban-rural differences in educational facili- and the Internet. Specific client groups served include ties and performance. officers from the Ministry of Education, lecturers from Throughout the project, MONE has included ex- the nearby Bindura Technical University, and students tensive teacher training. The ministry prepared and from the Zimbabwe Open University. A majority of distributed handbooks on the effective utilization of these users, approximately 70 per cent, are women. IT in classrooms. In addition, two-thirds of the teacher Because the WorLD program does not finance any training courses under the program covered IT sub- recurrent costs, the dual-use center provided a means jects. The ministry is presently considering an inter- by which to recover costs by serving not only a stu- esting scheme to encourage teachers to purchase dent community, but also the fee-paying adult com- computers and Internet access for their own use, which munity. The center has brought in an impressive would contribute not only toward computer literacy Zim$200,000 ($5,000) within the first six months of for teachers, but also give them a sense of ownership operation. This will help to underwrite the ongoing of the program. Experiences from other countries were phone and maintenance charges, as well as contribute investigated for adaptation in Turkey. Chile and Swe- toward staffing incentives, and new hardware and soft- den have offered teachers computers on a onetime, ware acquisition. The teachers are direct beneficiaries, smart-subsidy basis. The U.K. government subsidized receiving 25 percent of all the non-school hour income computer purchase for teachers by up to 50 percent as incentive for all the extra hours which they spend at from an authorized list of suppliers. The Ministry of the center, particularly in the evenings, on weekends, Education in Brazil is initiating a similar loan scheme, and holidays. The extra income has also paid for the with subsidized interest payments (at 25 percent of acquisition of a new color printer, replacement car- the market rate), and long repayment periods (seven tridges, a new monitor, educational CD-ROMS, and to eight years). stationery. 57 INFORMATION AND COMMUNICATION TECHNOLOGIES E-learning such subtitled programs. Audience reaction was over- All countries, especially the developing ones, face whelmingly positive: some found it useful to sustain shortage of skilled IT workers. Without an adequate- literacy skills, others found they could understand ev- ly trained IT workforce, the promise that Internet ac- ery word and even sing along. Even those with a hear- cess has to offer will never be fully realized. The ing deficiency could now respond to the "content" of numerous consequences of such shortage include: the songs. slowed economic growth; a loss of foreign investment Doordarshan in Ahmedabad has agreed to telecast to countries with greater supplies of trained person- Chitrageet with same-language subtitling for a six-to- nel; missed business opportunities; negative impact eight-month period. Educationists claim that this sim- on the growth of communications, Internet, electronic ple addition makes Chitrageet itself more entertain- commerce, and electronic business; inflated salaries ing and will, in the long run, make a phenomenal and higher turnover of skilled labor, leading to in- contribution to local literacy skill development. Audi- creased operating costs and lower profits; and out- ence feedback confirmed that same language subtitling sourcing of IT-related work to overseas markets. invites reading, but does not compromise entertain- A majority of e-learning companies offer training ment, making it useful for both the literate and the in IT skills online-a critical area if the World Bank partially literate. Group's client countries are to be able to take advan- Finance tage of II-and many also offer courses in manage- ICT is transformin the financial sector in the First ment, accounting, and other business-related training gCT as newrmnd the ancaton are Fing needs. E-learning also opens the doors to the tight World, as new and improved applications are being tertiary education markets that most World Bank developed to support all types of financial services. A Group client countries are experiencing; it offers op- large financial institution cannot function without the portunities to upgrade the skills of teachers, a partic- use of ICT, since these systems are crucial to profit- ularly dire need with the loss of so many to HIV/ ability. Financial institutions have invested very heavily AIDS; and can provide on-the-spot training across a in ICT over the last decade in the developed coun- range of sectors. tries. Estimates of the cost of work on Y2K alone, for Major reports published by investment firms are example, for the U.S. securities industry came to over urging their investors to consider seriously e-learning $5 billion. Telecommunication and mobile telephony as investment and training opportunities, and devel- are opening up new possibilities for delivery systems oping countries might become important markets for that can be cost effective for a much wider range of this. A report published by SunTrust Equitable Secu- services. rities argues, "However significant the impact on the Internet banking is already well entrenched in sev- consumer and business markets, we believe that the eral Scandinavian countries, with tremendous cost sav- Internet will have the greatest influence on the pro- ings. Competition is very stiff in the area of securities cess of learning; e-learning will change our lives." In trading, clearance, and settlement, as traditional ex- the report, John Chambers, CEO of Cisco Systems changes position themselves to compete with Electron- argues, "Education over the Internet is going to be so ic Communications Networks (ECNs) and investment big it is going to make e-mail look like a rounding banks, while seeking to establish more efficient trad- error."i2 This illustrates the growth potential venture ing, clearance, and settlement platforms. Finally, the capitalists see in e-learning. Over $1 billion in pri- supervision and regulation of the financial sector are vate capital has been distributed to e-learning com- becoming more and more dependent on technology, panies, and more than $302 million in public equity and on understanding the technology to design mar- were raised in 1999 alone. ket-friendly and effective regulatory frameworks. The July Report from G-8 Finance Ministers, "Im- ICT for sustained education pact of the IT Revolution on the Economy and Fi- An innovative experiment from Ahmedabad, in the nance," i4 underscores several key changes driven by IT state of Gujarat in western India, has been exploring in the financial sector, including Internet-supported possible gains from subtitling song sequences from transactions, the extension of financial services globally, Gujarati language films in the same language. Re- "virtual financial sites," innovative risk unbundling, searchers have confirmed from a sustained experiment extended use of derivatives, and the entry of nonfi- in a government primary school, that this leads to nancial companies in the sector. An essential objec- measurable gains in a neoliterate person's reading abil- tive, from the public policy perspective, should be to ity."3 The findings convinced Doordarshan (Indian preserve market integrity without inhibiting private national television) in Ahmedabad to telecast three sector initiative. 58 ANNEX 4: ICT IN OTHER SECTORS The global impact of IT on the financial sector and countries, to increase the success rate of ICT projects. the need for policy adjustments are clearly recognized An outline of the strategy for ICT in the financial by the G-8 countries and must be appreciated by all sector as embodied in the Financial Sector Strategy countries interested in benefiting from the IT revolu- Paper is provided here: tion. However, the resulting economic transformation * Build on existing ICT work more systematically, is not evenly distributed across the globe. Unless ur- in mature areas, such as Real Time Gross Settle- gent action is taken to change existing trends, the ben- ment Systems, and develop more streamlined pro- efits of IT will not reach many emerging economies. cedures (China, Mauritius, Vietnam). Some of the innovative activity in the developed * Develop diagnostic tools for ICT in the financial countries' financial sectors is spilling into the emerg- sector for restructuring financial institutions, and ing economies, primarily through the reach of large build on existing work done in Asia. multinational financial institutions, such as Banco * Examine new initiatives in technology supporting Santander, Citibank, Deutsche Bank, and others. the financial sector, to identify those that could be However, this is essentially on an ad hoc basis, being adopted easily in emerging economies. They could driven by the strategies of individual private sector in- be, for instance: stitutions. Private financial institutions do not neces- - Microfinance, and telephonic banking (Bang- sarily have economic development as their short-term ladesh, India, South Africa, and others). objective in emerging economies. As a result, the ben- - Internet banking (Denmark and Finland), and efits of technological innovation often do not reach lessons for emerging economies. the least developed areas. Nor is there any direct pri- - Trading platforms and ECN, and their possible vate support available for the development of the fi- use for regions (Central America, Northern Af- nancial sector in these countries. Small and medium rica, Western Africa). sized companies already have difficulty accessing the - Card technologies, as access devices for the In- financial sector. Without a more organized effort on ternet and ATMs, and as store of value cards. the part of the World Bank, the private sector, and - Telecommunication links with banks, joint strat- strategic partners, access to the financial sector will egies for privatization, and delivery systems for become even more limited. the financial sector. In this context, the link between ICT and the fi- - Private sector alliances, with technology and the nancial sector, and the importance of ICT for the sur- financial sector (Bankers Association for Foreign vival of heterogeneous financial markets and small and Trade and international organizations). medium sized companies in emerging economies, be- The role of technology in the supervision and reg- comes obvious. The World Bank should take a sys- ulation of financial markets is essential and growing, tematic approach to supporting the adoption of new and the World Bank should be identifying and pro- technologies in emerging economies. The ICT and moting the best practices on the technology side for financial sectors are interacting in new and produc- financial sector development. This can be done in con- tive ways, and the World Bank should tap into these junction with the Bank of International Settlements sources of innovation more actively. By targeting spe- and other international efforts on standardization in cific areas of interest in technological applications for the financial sector. finance in emerging economies, the World Bank Group can provide effective support in improvements Small and medium enterprises in design and implementation. One of the important characteristics of ICT is that it One problem in many emerging economies is that allows access to a global market for even a small busi- financial sector ICT projects are technology-driven. ness with minimum initial investment. ICT, therefore, The business needs of the institutions and markets are provides a unique opportunity to promote the growth not adequately taken into account, and the local so- of small business as an instrument of development in cial and cultural practices affecting trade and com- countries where capital is scarce. Moreover, by encour- merce are often completely bypassed. Financial aging domestic entrepreneurship, it enables sustain- institutions focus on hardware, and to a lesser extent able development, and strengthens the local economy. on software, as promoted by the vendors. Preparation IT is becoming a major tool for SME around the world and analysis of business needs get little attention. Cus- to enhance their competitiveness. The Internet opens tomers often lack sufficient preparation for the project, new opportunities for training, mentoring, and advi- and are not ready to provide the necessary support for sory networks that link worldwide experience and implementation. This is an area where the World Bank, knowledge with local entrepreneurs. Internet access as an honest broker, could provide support to client makes a great difference in the lives of SME owners in 59 INFORMATION AND COMMUNICATION TECHNOLOGIES developing countries, especially those located in small Middle East and North Africa (MENA) region. towns and remote areas. New avenues open up to de- (www.elsouk.com); velop a competitive edge, and to build new technolo- * writing a series of guides (commercial chain, web- gy-based capabilities, competencies, and markets into site design, e-commerce), and training modules existing business plans. The World Bank Group can (managerial and technical) to build capacity in the play the role of knowledge broker and facilitator to region's network of NGOs and artisans; make e-commerce a strategic tool for SME in the de- * conceiving and running training workshops; veloping world. * participating in awareness raising events; A number of initiatives are currently underway * participating in regional conferences on e-com- within the World Bank Group to promote the Inter- merce; net as a tool for development for SME. These include * demonstrating the replicability of the Virtual Souk free computer access and training for SME entrepre- to regions other than MENA. neurs, e-commerce proposals, seed/venture capital for The anticipated outcomes of the Virtual Souk are: Internet-related start-ups, and general Internet train- * poverty alleviation through increased income of iso- ing and access. Other pilot projects include a small lated groups of artisans; business portal; information access service; off-line * better access to international markets and increased training and service provision; Internet skills training; trade; SEAF.com; and "angel" networks in Latin America. * establishment of a commercial chain with secure Core strategies proposed for integrating IT into payment system for small artisans and grassroots broader involvement in SME are: groups; * to better understand the IT needs of different cat- * building of technical and managerial capacity of egories of SME in different regions; participating artisans and NGOs; * to collect, evaluate, and disseminate information * promotion of empowerment and self-confidence of on SME and related agencies; participating artisans and NGOs; * to facilitate the provision of value-added services * preservation of the cultural heritage; to SME and related agencies; and * increased demand for connectivity, and better ac- * to identify, adapt, and promote appropriate IT as cess to information. part of SME initiatives targeted at more disadvan- Matching grant program in Indonesia taged groups. The Technical Assistance and Training Program E-commerce for poor artisans: the Virtual Souk (TATP) is an ICT matching grant scheme for SME Artisans from the Middle East and North Africa have under the World Bank's Indonesian Information In- always crafted high quality products using traditional frastructure for Development Project. It is a three-year techniques. But local markets have been shrinking re- project providing cost-sharing grants to SME to make cently, and it is difficult for rural artisans to cover great ICT consulting services and training more affordable distances to reach more lucrative national and inter- and accessible. ICT consulting and training provided national markets where their work would fetch high by private sector consultants and trainers to SME are prices. This is leading to the gradual disappearance of eligible for funding. culturally rich crafts. In many cases, the artisans who TATP began operations in March 1, 2000 and will produce the most authentic and fine work are also the continue until February 28, 2003. It plans to disburse poorest, with the least access to markets. Therefore, it $3.5 million in grants to SME over the three-year pe- is necessary to bring the market to them without stan- riod. Grants are administered by a private sector enti- dardizing their work or incurring high intermediary ty referred to as the management contractor (MC). costs, and provide opportunities for the artisans to The MC processes grant applications, and monitors organize themselves in order to meet market demand. and evaluates contract activities between SME and The Virtual Souk'5 was started in January 1998 to service providers that are carried out with grant sup- eventually create a financially sustainable, decentral- port. The MC has project offices in Jakarta, Bandung, ized, and locally controlled web e-commerce opera- and Surabaya, and covers three more cities, Semarang, tion for the artisans. The preliminary activities Makassar, and Medan, through the Kanwil offices. represent a combination of awareness raising, capaci- In the first eight months of TATP operation, ty building, network strengthening, and the expan- * grant funding was received for 1,031 applications; sion of use of new technologies. Among these are: a 48 proposals, with a value of $1.1 M, were submit- * creating on the web a user-friendly and multilin- ted to the Ministry of Industry and Trade, Indone- gual catalogue of products and artisans from the sia (MOIT) for approval; 60 ANNEX 4: ICT IN OTHER SECTORS * 31 proposals, with a value of $805,000, were ap- communication and data recording. The Internet and proved by MOIT; mobile phones are simplifying much of the data col- * 22 contracts, with a value of $527,000, were signed, lection process, making it possible to have wide cov- and all 22 are currently being implemented. erage of a population, and to reach remote areas. The Of the 22 signed contracts: old obstacles of record management and paper filing - 55 percent will introduce computerized systems are fading away. to replace manual operations; Telemedicine uses ICT to transmit medical imag- - 45 percent will improve existing computerized es, records, and diagnoses to remote locations in or- systems; der to overcome shortages in regional health care - 54 percent involve more than one SME, coop- providers. Technologies include Internet related ap- erative, or foundation; plications (e-mail, satellite transmissions, etc.), audio- - 18 percent involve a single cooperative (with visual conferencing, and standard as well as other forms each cooperative having several members); and of radio telephony. In Gambia, nurses on a remote - 28 percent involve a single SME. island river use a digital camera and a laptop to pho- tograph visible symptoms that they cannot recognize Health and/or treat. The images are transferred to a physi- Health care is a highly information-intensive indus- cian in Banjul, who either prescribes a treatment or try. The information sharing and management func- forwards the images via e-mail to a company in the tions of ICT can benefit the health care sector in U.K., which can access specialists around the world several important ways. The performance of the health and report back findings.'6 care system is contingent on accurate data collection Geographic information systems (GIS), Internet, and analysis through needs assessments. Also, sustain- and telecommunication together can be a powerful able health financing cannot be accomplished with- force for coordinating health care delivery in areas out precise public and private health expenditure where disease is rampant and communications are reviews. E-mailing of test results from labs to clinics; poor. In a group of sub-Saharan countries referred to phone systems to call ambulances and alert referral as the "meningitis belt," the World Health Organiza- hospitals of incoming patients; better drug inventory tion (WHO) has implemented an electronic system management to help prevent stock-outs; and automat- by which daily reports of disease outbreak are relayed ed billing/collection systems all use ICT to add value to health professionals, who collate the data and use to the sector. At a more sophisticated level, informa- findings to target mass vaccination programs. E-mail tion systems today allow a radiographer to read imag- and medical list-serves can automatically deliver re- es from anywhere in the world. cent medical findings to a wide audience at minimal Finally, national or decentralized health informa- cost. tion systems can provide customized data for local There are already a number of Internet-based ser- problem solving, but efforts to collaborate internation- vices that provide answers to practitioners and con- ally are becoming increasingly important. sumers about diseases, disease management, and In developing countries, however, health services therapy. There is still a need to establish, and strength- suffer from information gaps, as much as they suffer en existing global systems to share and respond to in- from infrastructure gaps. While concerted effort needs formation; to yield more consistent, detailed and to be made to overcome the infrastructure shortage, comparable national and international data; and to combining this with an ICT strategy where adequate facilitate the exchange of technical expertise. There is resources exist provides a means to overcome the in- need to develop new diagnostic, preventive, and cura- formation shortage. Moreover, medical specialists are tive agents for the health problems of developing coun- a scarce commodity in developing countries, and usu- tries, which the poor can afford; ICT has a role in the ally concentrated in metropolitan areas and major cit- development and testing of such agents. It also has a ies. Telemedicine techniques make it possible for these role in the management of health services through specialists to extend their reach by receiving and at- which it is delivered, and in the education of the pro- tending to consultations from patients located in out- viders and users of those services. lying areas. The Internet provides medical practitioners Governments, donors, NGOs and private sector in remote locations with a means of keeping up to health care providers are experimenting with a wide date with latest developments in medical research and variety of ICT applications in support of improved pharmaceutical products. Telehealth covers the broad health delivery. Projects range from linking rural pro- range of services provided across distances by phone, viders to the Internet, using satellites to transmit in- radio, e-mail, the Internet, and every other form of formation (often between continents), and automating 61 INFORMATION AND COMMUNICATION TECHNOLOGIES surveillance, management, and record keeping func- MARA-mapping malaria risk tions in order to improve efficiency, extend coverage (http://www.mara.org.za) and reduce costs. More than one million people die from malaria each Information-based health care delivery in India year, the vast majority in developing countries. MARA, infoDev and CMC Limited, a Government of India a partnership project between a number of interna- enterprise, are together working toward optimum use tional donors and the Government of South Africa, of scarce health care resources in the southern state of collects data on malaria risk and resistance patterns Andhra Pradesh in India. The purpose of the project from five regional centers, and produces outputs that is to improve the effectiveness of preventive health allow health care practitioners and researchers to bet- programs in the state, and increase the efficiency of ter treat and study the disease. The data and maps pro- the auxiliary nurse midwives (ANMs), a small band duced by the initiative can be used to: of women who shoulder most of the weight of health * allow regional transmission patterns and severity care delivery in the vast and densely populated rural to be defined and targeted for control measures; areas. ICT, together with the Personal Digital Assis- * allow geographic targeting of control resources (hu- tant (PDA), is expected to facilitate data acquisition man, financial, and technical) to critical areas; and transmission to the Primary Health Centers for * spatially define regions of similar disease type; the purpose of providing timely support to the ANMs. * encourage regional application of appropriate con- Along with health care delivery, ANMs are also re- trol strategies; and sponsible for demanding data collection and paper- * serve as a model for the study and control of other work. The approach is to train the health workers in diseases. the use of PDAs to process the data more easily. The Gender PDAs are designed to cater to the literacy levels of the health workers. The use of PDAs will improve the re- The promise of a new e-economy is meaningless for liability of data, thus saving up to 40 percent of their women who have no access to opportunities offered work time. The project will be extended to different by the new technology. sites in other districts of the state and eventually to In most societies, women are encouraged to choose the national level. It will help to reduce and eliminate academic disciplines that have employment and equi- the redundant entry of data prevalent in paper regis- ty implications. Gender biases in textbooks, in school ters, generate automatic ANM monthly reports, and structures where positions of authority are held by make data electronically available for further analysis men, prevailing social norms, and a strongly gender- and compilation at higher levels of the health care sys- differentiated workforce make it difficult to change tem. deeply entrenched attitudes to women's lives. Marriage and child bearing often require women to withdraw Health networks from the labor force, and return to it disadvantaged HealthNet and Satellife (http://www.healthnet.org). by this absence. Even when women enter the work Using a diverse array of ICT technologies (including world with similar skills and training and remain as radio and telephone based computer networks and long as men, they are often discriminated against in low-earth orbit satellites), HealthNet serves health care terms of pay and advancement. workers in 30 developing countries. Practitioners can Wherever existing gender stereotypes are reinforced use the service to access medical research, exchange by the educational system, women tend to be overrep- data on emerging epidemics, and obtain information resented in the humanities, social sciences and "soft" on the use of drugs and treatments. A particularly in- sciences such as biology. A low percentage of women novative feature is the diverse array of moderated elec- science and technology graduates seriously limits the tronic discussion groups that cover topics ranging from pool of women suitable for recruiting into technology emerging trends in infectious diseases to regional co- industries. ordination of research efforts containing a specific Some general interventions that will help to increase geographic component. HealthNet and Satellife are the number of women in technology are: separate programs but operate together with funding * desegregation of academic fields by gender; from donor countries in both developing and indus- * removal of practical and sociocultural obstacles to trialized countries. women accumulating skilled technical experience; * provision of outreach systems and networks to en- courage women to enter, remain, and succeed in technical fields. 62 ANNEX 4: ICT IN OTHER SECTORS Generally, women experience greater difficulties funding allocated through libraries, schools, and post than men do in gaining access to and benefiting from offices, would provide community-based access points resources. In developing countries, there is evidence for the poor. The involvement of NGOs, particularly that gender inequalities are increasing even as the na- those for women, can dramatically expand the use of tions make bids for a competitive market economy ICT. The Canadian VolNet Initiative, or E-Mail Ad- and technological progress. Unless this regressive pro- dresses for All Citizens in Sweden, represent possible cess is controlled, the transition to a knowledge econ- models for developing countries. Ireland too is initi- omy will not only be incomplete, but also widen the ating E-Mail for All, a program supported by the gov- gender gap and perpetuate some of the worst obsta- ernment, covering anything from simple promotion cles to social change. of services available in the marketplace to actual pro- In East Asia, the financial crisis brought to the fore curement of e-mail service for the public. Another Irish some of the inherent workplace discriminations. Wom- option under consideration is the promotion of com- en were the first to be laid off. Regular employees were munity involvement through a nationwide event to sacked and then rehired as temporary employees. provide communities with opportunities to access and Women over 35 found it very hard to get new em- learn about the Internet. ployment. Although, since the crisis, opportunities for Opportunities exist for enhancing both democracy retraining have opened up, they do not ensure that and women's participation through ICT. Gender-sen- women will get the training that will provide them sitive local community portals would encourage par- "real world" jobs. ticipation and the production of information relevant On the other hand, women exposed to training in to local communities. Community portals would also ICT can participate fully and productively in the cre- provide women with a medium to participate as pro- ation of a knowledge economy. Internet access with ducers/consumers, providers/users, and counselors/cli- specific focus on women and girls, especially in rural ents. Women's NGOs and other community groups and remote areas, will promote the growth of the econ- should be provided with training and hardware to set omy through knowledge sharing. Interventions for up local networks, and develop websites that offer ser- rural women that can benefit the economy include vices relevant to them. the provision of current information on genetic re- ICT makes distance less significant in business and sources, farming practices, medicine, and other fields production, particularly for multinational corpora- using databases available via ICT.'7 tions. The current trend towards global networking Growth of the e-economy offers possibilities for has led to massive relocation of information-intensive business and self-employment to women in the infor- service sector jobs from high-wage to low-wage coun- mal sector. In Bangladesh, the Grameen Bank has an tries. A large portion of the outsourced jobs already initiative to empower women by supplying credit to go to women. However, a key remaining issue is to buy cellular phones. The business possibilities of sell- identify skills sought by multinationals, and incorpo- ing telephone services to others has created or aug- rate these into women's education and training. The mented the women's capacity to generate income. The need to safeguard telecommuters-and women in par- phones have also helped them to cut down on busi- ticular-from being disadvantaged in comparison to ness related travel expense and time. However, wom- office-based workers who receive benefits such as en in the informal sector continue to need market health coverage, retirement, and social protection, is information and business skills as much as hardware, of equal importance. software, and connectivity to be able to fully partici- In Morocco, the government has set up town por- pate in e-commerce tals on the Internet which provide information about Women form the majority in the lowest income the community, and act as entry points for enhanced communities. When the poor lack access to services, accountability.'8 In South Africa, women's organiza- resources, and opportunities, they are deprived of a tions are linked to various resource websites, which means of getting themselves out of poverty. In a knowl- aim to mobilize women around issues important to edge economy, when the basic resources (telephones them-a human rights website that makes available and computers) are themselves costly, the fear is that practical information for women, and another which the poor will find themselves increasingly excluded. helps the community radio produce gender-sensitive Even in countries where overall levels of poverty con- content and programs. tinue to shrink, the population left in poverty face By enhancing the community's ability to interact serious challenges which cannot be overcome merely with a broader public arena, ICT can support the de- through steady national economic growth. velopment of a rights-driven, modern, decentralized Access centers for ICT created with government state accountable to its citizens. By encouraging a 63 INFORMATION AND COMMUNICATION TECHNOLOGIES transparent polity, ICT can protect the people and In Colombia, for example, a relatively inexpensive and promote social justice and equity. It can create an en- simple microwave radio telephone system, along with abling environment through competition, innovation, community access points, was installed in the remote and the development of human capital. Through region of Tumaco in 1994. Within three years, resi- awareness and utilization of all these opportunities dents of the region reported that the service had re- offered by ICT, women will ensure their own empow- sulted in better trade and market opportunities; erment. reduced unemployment; new business opportunities; improved information access and health care delivery; Networking and gender equality in South Korea improvements in public safety and security; and over- In March 2000, South Korea launched a nationwide all improvement in the level and quality of available campaign to teach basic Internet skills to one million government services.'9 housewives over 18 months. In Seoul and nearby cit- Rural areas also, however, face special challenges in ies, nearly 70 percent of private computer institutes the rollout of ICTs. For the most part, isolated rural joined this government program, which provides 20 communities, with low population densities spread hours of Internet courses per month for just $27, much across large geographic areas, are not an attractive in- lower than the market rate of $90. Singapore too be- vestment for telecommunication providers. Even when gan three new initiatives in March 2000 to extend the rural areas are linked up with telecomminication in- use of computers and the Internet to low income frastructure, the results are often retrograde technolo- households. The Info-Communication Development gies and frequent disruptions in service. Rural areas Authority of Singapore has committed approximately are not homogeneous, and a particular mix of tech- $15 million over three years for initiatives, which in- nologies must be designed with local considerations clude the provision of a free computer with Internet in mind. access and basic training to 30,000 low income house- Nonetheless, recent technology advances, such as holds. The same government body will also provide microwave relay bases, satellite signaling, and cellular free broadband Internet access at communiry centers, telephony have significantly lowered the marginal costs and develop targeted Internet programs for different associated with telecommunication expansion to ru- population segments in their efforts to bridge the lan- ral areas. The concept of telecenters has become very guage gap. important as a means of extending rural access. These Rural development can be divided into two categories: (a) privately owned centers where local operators cater to business demand For most rural people, information on market price, for limited services such as phone, fax, and photocopy- credit and financing opportunities, and access to new ing, and; (b) multipurpose, community initiatives that technologies are difficult to procure. In addition, gov- seek to provide a larger set of economic, technologi- ernment services and benefits are underdeveloped, cal, and/or educational and cultural services. The which isolates rural people from the central govern- growth of these centers may signal an important shift ment, and marginalizes rural concerns from the de- away from the "universal service" goal of bringing a velopment process. telephone into every household, to a more realistic and Providing access to communication technologies in cost-effective goal of universal community access. In rural areas brings many advantages. Farmers and oth- Senegal, for example, more than 6,000 privately oper- er rural businesses can obtain the highest possible price ated telecenters have come into existence since the early for their goods and bypass intermediaries. In addition, 1990s.20 Public access to a telephone has more than supplies and other equipment can be found for the doubled-with the added advantage that the cost-ef- lowest possible price. Communication is integral to fectiveness of each additional line was four times great- knowing what, where, when, and how to plant crops. er than that of a private home line. India, Peru, South In particular, global positioning satellites are increas- Africa, and Thailand have also seen dramatic growth ingly being used to map soil productivity in areas as in privately owned and operated telecenters providing small as two hectares. Similarly, satellite imagery and rural inhabitants with new information sources and Internet communication can be used to transmit data opportunities. on emerging crop infestations, track weather patterns, and monitor expected yields. Rural businesses cani in- Local electronic network in Argentina crease their sales range, resulting in increased produc- In Argentina, private companies such as Agropol and tion, and hence employment. In terms of efficiency, Agrositio have begun pooling farmers together through the reduction of unnecessary travel alone can have a local electronic networks to purchase various inputs major impact on the productivity of rural businesses. in bulk, which has resulted in volume discounts on 64 ANNEX 4: ICT IN OTHER SECTORS the order of 5 percent to 15 percent. In addition, was useful to other Spanish-speaking farmers. Within both firms offer services targeted to farmers, such as a month, there were over 1,000 hits from Latin Amer- bulletin boards where farmers can share information icans outside of Chile, and a further 1,000 hits from on plague alerts, obtain technical information, and Internet users elsewhere, including Asia, Australia, even advertise their wares directly to other farmers and Europe, and North America,.22 consumers. Analysts had estimated that 20 percent of all Argentina's farms would connect to the Internet by gricu/tura/ information system in Mauritius the end of 2000.21 The Faculty of Agriculture at the University of Mau- ritius has set up a prototype agricultural information ICT in rural Chile system for use by the rural community in Mauritius. A rural communication project in Chile, financed by Their main objective is the use of audio files in two the Government of Italy, has creatively used ICT to local spoken languages on a website that offers advice provide information to farmers. The effort stemmed on potato growing. The group uses audio material as from an experience in Mexico under a previous Food a means of overcoming the barrier posed by illiteracy, and Agricultre Organization (FAO) project financed and to add user-friendliness for a rural community. by the Government of Mexico and the World Bank. The big question before them is: how can the com- The project established information networks that pro- puter-illiterate farmer reap the benefits of empower- vided essential data on crops, inputs, prices, markets, ment made possible by the Internet? weather conditions, social services, credit facilities, etc. The focus at the moment is on one part of the ag- Messages were generated, processed, and transmitted ricultural community, the potato growers, in an effort through low-cost computers via the Internet, and de- to test their response to a web interface designed for livered to farmers' organizations, cooperatives, town their needs. A survey was carried out on the informa- councils, etc. equipped with computers, modems, and tion needs of the growers themselves, as well as the printers. main information needs of extension officers dealing The information was based on an assessment of with the potato industry. Information, usually avail- local needs. Extension services, local leaders, and in- able in print in technical reports, has been placed on stitutions required better information to organize and a website with additional graphics to facilitate com- manage agricultural development activities. The munication. One of the first interesting challenges has project provided the electronic network designs, equip- been to develop icons representing cultural practices ment, logistical support, coordination, and technical in potato production. A series of icons were drawn backstopping. Extension workers were trained to use and have been tested with the agricultural communi- ICT for rural development, and to analyze and dis- ty. Their findings suggest the need to develop globally seminate locally relevant information. Small informa- acceptable icons through the creation of a clip-art col- tion centers equipped with a server, computers, lection that targets the agricultural community. modems, and printers within the offices of farmer or- ICT and rural development in India ganizations and NGOs were established. These cen- Warana Wired velage ters distributed the messages to individual farmers and g associations, according to local conditions and facili- In Maharashtra, a cluster of 70 villages is benefiting ties available. Faxes or printed materials were used if from a project, which is modernizing the local coop- the Internet was not available. The messages distrib- erative movement. The Warana Wired Village project uted through the Internet were timely, appropriate, aims to increase the efficiency and productivity of the and transmitted in a form that could be understood existing cooperatives by setting up a computerized by the farmers. In the past, a comparable printed bul- communications network, and by providing agricul- letin took 45 days to reach the people. tural, medical, and educational information to the By 1996, the national agricultural extension ser- people at the facilitation booths in the villages.23 vice in Chile had established an electronic rural infor- The existing cooperative structure has been used mation system, which connected farmer organizations, in concert with high-speed VSATs to allow Internet rural municipalities, NGOs, and local government ex- access to members of local cooperative societies. The tension agencies to the web. It was estimated that trans- first tier of connectivity, the hub, connects to six busi- mitting price and market information this way cost ness centers and six IT centers, and through them, to 40 percent less than using traditional methods. With- 70 facilitation booths, onc in each of the project vil- in six months, the website of the electronic informa- lages. The Sugar Administrative Building (SAB) in tion system had over 7,500 hits. Much of the Warana Nagar is the hub for the business centers, while information available through the Chilean network the engineering college acts as a hub for the Intranet 65 INFORMATION AND COMMUNICATION TECHNOLOGIES accessed by village booths. The IT centers provide ical air pollution information. India's Ministry of facilities for distance education, computer assisted Environment and Forests uses satellite data and GIS instruction, and access to the Indira Gandhi Open to inform the public about the level of forest cover University. Extensive training on applications and in each Indian state. administration of the network has been provided IT also plays an important role in organizing en- to the Warana users. vironmental data to set priorities, model the impact of pollution and natural resource degradation, and identify the major sources of damage to the envi- Gyandoot is a novel example of the extension of new ronment. While formal regulation of these sources communication technologies for welfare and service is critical, government agencies with inadequate re- provision in rural areas. Set up by the government sources cannot possibly monitor and control all of of Madhya Pradesh in 1999, Gyandoot connects 21 them. Developing country environmental agencies cyber cafes (soochanalayas) reaching half a million and NGOs are using public information systems to people. Soochanalayas are located at block headquar- mobilize communities and businesses to counter this ters, marketplaces, and bus depots, and each of them problem. provides services to 10 to 15 gram panchayats (vil- Abundant evidence from Asia and Latin America lage-level local self-government bodies), which cover shows that well-informed communities can influence 20 to 30 villages and 20,000 to 30,000 people. environmental regulations and their implementa- Gyandoot's website (www.gyandoot.org) provides tion.27 Where formal regulators are present, com- information on business opportunities. It connects munities use the political process to influence the from a closed intranet within the district to the strictness of enforcement. Where regulators are ab- World Wide Web and offers information about the sent or ineffective, NGOs, community groups, reli- Dhar district to people who pay $22 as a deposit to gious institutions, social organizations, citizens' open an account. Other services offered include movements, politicians, and other leaders pursue in- commodity marketing information; maps and land formal regulation, based on convincing polluters to records; online registration of applications for in- conform to social requirements. The environmental come, domicile, and caste certificates, and landhold- concerns of market agents create additional incen- er passbooks of land rights and loans; a public tives for pollution control. Green consumers are al- complaint line for reporting broken pumps, unfair ready well known, but investors have also become prices, and absentee teachers; and e-mail in Hindi. important actors. Environmentally damaging oper- Environment ations may signal to investors that a firm's produc- tion process is inefficient. Investors also weigh The greatest contribution of ICT to environmental potential financial losses from regulatory penalties protection is probably the least recognized. The and liability settlements. The importance of such most serious pollution comes from industries that public scrutiny has grown with the rise of new stock make heavy use of energy and raw materials. Ex- markets and international financial instruments.17 panding ICT capacity in an economy raises the rel- New public disclosure programs are using ICT. ative profitability of service activities and more In Indonesia and Philippines, for example, national sophisticated industries that are much less pollu- environmental agencies have used ICT to monitor tion-intensive. This shift in economic structure factories, develop color-coded ratings of environ- greatly reduces the environmental burden.24 Pollu- mental performance, and disseminate the results tion and congestion related to transport can also be through the local broadcast media and the web. Re- controlled, as better communication reduces travel sulting pressure from consumers, investors, and af- requirements per unit of activity.25 ICT contributes fected communities has promoted low-cost efforts directly to environmental protection by strength- to achieve major reductions in environmental pol- ening the regulations for environmental damage. lution.21 Protecting the health of human populations and General environmental education also plays an ecosystems requires frequent monitoring of environ- important role in building public understanding and mental conditions. ICT allows many developing- support for higher levels of environmental protec- country environmental agencies to record, analyze, tion. Many environmental agencies and NGOs use and publish extensive environmental information. ICT to disseminate their messages internationally In Brazil, for example, the Sao Paulo State Envi- and locally. For example, the Central American ronmental Agency uses the Internet to update crit- Commission for Environment and Development has 66 ANNEX 4: ICT IN OTHER SECTORS recently collaborated with the World Bank to pro- Australia: Centerlink, statutory authority responsi- duce Cloud Forest Alive, a website that educates ble to the Ministry for Social Security viewers about forest protection issues while trans- Centerlink has integrated customer services previ- mirting live pictures of rare forest species in their ously provided by several departments (the Depart- natural habitat. ment of Social Security, the Department of Family ICT itself creates little environmental damage, and Community Services, the Department of Edu- although producers of ICT components generate cation, Training and Youth Affairs, and the Depart- some toxic pollution. Sitting of wireless communi- ment of Health and Family Services) including: cations towers may raise aesthetic issues, but na- . child care and student assistance; tional and international health authorities currently . registration of applicants for supplementary in- believe that their transmissions pose no threat to come; human populations.29 Similarly, extensive research . self-help job search facilities with computer ac- has not established a significant link between cellu- cess to national databases; lar phone transmissions and brain damage. Howev- . referrals for employment; and er, continued public concern has prompted . specialist labor market assistance for disadvan- sponsorship of further research on this issue by taged groups, such as Aboriginals, Torre Strait Is- WHO, the U.S. Food and Drug Administration and landers, single parents, people with disabilities, other agencies."' The Cellular Telecommunication migrants, and young people. Industry Association has responded by requiring its Centerlink Online provides integrated services members to include radio-frequency radiation rates round the clock on the basis of available technol- with all new wireless phones.3' ogy, through street kiosks, Internet cafes, or com- ICT and social security munity centers, as well as Smart Card and interactive voice systems. ICT plays an important role in the delivery of so- cial security, enabling institutions to automate ad- Canada: Human Resources Development Canada ministrative processes to provide value-added (HRDC) electronic services to citizens. In this context, ICT HRDC is responsible for delivering social services is not only a supportive factor in improving insti- including programs such as employment insurance, tutional performance, but also a driving factor in the Canada Pension Plan and Student Loans. Elec- process re-engineering in social security institutions tronic services provided via various channels include as a result of short-cycle innovations. In addition, e-mail, telephone service, Internet access, electron- ICT allows integrated information distribution re- ic employment insurance claims filing; pension ap- lated either to one specific or to all institutions of a plication forms filing, as well as pension payments social security system. With a best practice ICT sys- via direct deposit to bank accounts; job bank appli- tem in place, social security institutions are able to cation submittal via the Internet; payment status deliver high-quality and more efficient services to information via the interactive voice response sys- their customers. tem. IT supports the business processes of employ- ment and pension institutions and, at the same time, Italy: Information and Services for the Public (Pub. offers the opportunity to re-engineer them, thus de- blincontro) veloping highly effective process- and service-ori- Pubblincontro facilitates direct communication be- ented social protection administrations. tween citizens and the Italian Public Administra- Government institutions increasingly use IT to de- tion through a network of self-service kiosks. liver programs in social risk management. From the Client-server architecture with a public network technological perspective, multiple processes of la- provides general information in real time through bor, pension, and social welfare systems can be au- free access, use of password, or magnetic fiscal card. tomated and moved online. Also, the very short The facilities include general information (docu- innovation cycles of IT result in a higher frequency ments, deadlines, office hours); personal files (ben- of available new solutions. However, social protec- efits, contribution certificates, contributions tion agencies operate with limited budgets, and history); setting up meetings or medical appoint- therefore must consider the cost-benefit perspective ments; notification of changes in personal data; and whenever they invest in major IT projects. application for benefits. 67 INFORMATION AND COMMUNICATION TECHNOLOGIES Poland: Employment Promotion and Services Project Under this project, a pilot MIS implementation Part of the project was the automation of some 400 in the Poznan region established a network on the local labor offices and more than 2,500 social welfare basis of fiber optical technology, linking labor of- offices. The offices are equipped with modern hard- fices with other institutions such as Social Insur- ware and telecommunication infrastructure. A uniform ance Institution, and fiscal offices. This allows data software application for both the labor and the social screening of the unemployed and contributors in welfare offices supports operations and management order to detect and prevent fraud. activities, such as registration, benefits calculation, payment, job placement, and cost reporting. 68 ANNEX 5 WORLD BANK SPECIAL INITIATIVES IN INFORMATION AND COMMUNICATION TECHNOLOGIES In addition to its standard operations in the II and different stakeholders, to ensure both a concerted ap- education sectors, the World Bank Group has estab- proach to development as well as the application of lished a number of special knowledge initiatives seek- knowledge for poverty-alleviation. ing to create, share and apply knowledge with our Human capacity building clients, partners, and the outside world. The global knowledge programs fall into two broad The World Links for Development (WorLD) is a global categories. The first is a set of programs focused pri- collaborative learning program sponsored by the World marily on education, and directed toward capacity Bank Institute, in coordination with the World Links building in developing countries. These programs fo- Organization. The program connects students and cus on developing skills in the use of ICT. The second teachers in secondary schools in developing countries set of programs focuses on the sharing of knowledge with their counterparts in industrialized countries, for resources within the development community and with collaborative learning programs through e-mail and The Development Gateway Foundation and infoDev infoDev was created in 1995 as a multidonor grant facility to support innovative uses of ICT in developing countries. The program currently engages 23 public and private donors including the World Bank, and its Secretariat is hosted by GICT. infoDev receives proposals from governments, private firms, civil society organizations, and other multilateral organizations, and evaluates them on a competitive basis, providing grants of up to $250,000 per project. Over the years, infoDev has established itself as a venture fund for innovative ICT ideas addressing the needs of the poor in the developing world. infoDev has also served as the funding mechanism for quick strike policy-oriented inter- ventions in special circumstances such as the Y2K problem and telecom negotiations under the WTO. The Development Gateway Foundation became operational in 2001, and will pursue the following objectives: * Support sustainable development and poverty reduction through the creation of a common Internet platform (the Development Gateway portal), in partnership with the donor community, governments, the private sector, civil soci- ety organizations, and other key development actors. * Create a knowledge resource that will catalogue, organize, and monitor initiatives intended to diminish the digital divide, and provide a forum for discussions intended to promote partnerships and synergies between civil society and the public and private sectors on key ICT issues. The Foundation will also promote the development of an active network of experts on ICT for development, training staff from partners to strengthen their capacity for delivering projects in this area. * Establish a research and training center in the developing world, where ideas can be exchanged and new technologies can be tested on the ground. The Development Gateway Foundation is also expected to provide seed funding for selected projects and programs at the local, national, regional, and global levels that are working to overcome the digital divide, and to foster the use of ICT to enhance the fight against poverty. Donors to the Development Gateway Foundation may, for example, earmark part of their contributions to support projects selected by infoDev. The Foundation will outsource to infoDev (on a fee- for-service basis) the evaluation of proposals. infoDev and the Development Gateway Foundation will maintain independent governance structures-infoDev as a network of trust funds managed by the World Bank, and the Foundation as an independent not-for-profit organization in which the World Bank will be one among many partners. They will focus on different types of activities-the Founda- tion on the management of larger ICT projects, and infoDev (as it currently does) on small-scale pilot projects managed at arm's length from the program and/or policy-oriented interventions. But the two initiatives will work together in a complementary way to address the digital divide. 69 INFORMATION AND COMMUNICATION TECHNOLOGIES the Internet. As a complement to WorLD, WBI's De- the world. Since the launch of its pilot phase in 1997, velopment Education Program provides curriculum AVU has provided students and professionals in 15 tools and resources for teachers and students to ex- African countries over 2,500 hours of interactive plore social, economic, as well as environmental is- instruction in English and French. More than 12,000 sues of sustainable development. students have completed semester-long courses in The African Virtual University (AVU) is a "university engineering and the sciences, and over 20,000 without walls" that uses modern ICT to give sub- professionals have attended management seminars on Saharan African countries increased access to high topics such as strategy and innovation, leadership, and quality education and learning resources from all over use of IT. After its successful pilot implementation, Overview of Bank Group Special Knowledge Initiatives Program Description Budget costs* Other Expenditure Bank budget contributions on projects Education African Virtual Delivers courses by satellite to 26 750,000 13,500,000 I ,500,000 University African univversities, with real-time interaction by email, fax, and phone. Global Development As of January 31, 2001, operates 22 6,990,000b 15,000,000 3,350,000 Learning learning centers in least developed Network countries connected by high-speed communications. WorldLinks for Promotes educational use of Internet 1,240,000 400,000 NA Development in 500 schools in 20 countries with donor funding. Knowledge sharing Development An electronic discussion venue on key 200,000 TBD NA Forum issues and challenges facing the development community. Development An interactive web portal on a wide 7,000,000 200,000 2,000,000 Gateway range of development issues to be linked to country gateways for each developing coountry. Global Seven regional networks of research 1 ,200,000d 600,000e 8,000,000 Development institutes, poicy akers and donors to Network encourage research on critical development topics. Global An evolving, informal collaboration of 100,000' 245,000 NA Knowledge about 40 public, private, and NGO Partnership partners working to promote knowledge for development. GICT/infoDev Global grant program promoting 200,000 1,600,000 10,700,000 innovation in the use of ICTs for social and economic development. Estimates based on informatiom provided in late 2000 to the Knowledge Strategy Review for FY01 budget, updated Februray 2001. a Total costs 2000.4 divided by 5. b Total administration budget. c $IM capex + $0.45M annual opex each, assuming 25 set up the same year. d $ IM + I staff year (estimated at $200K). e $8.5M cash plus estimated cost of 2 economists (@$ 1OOK each), admin assistant and 5 scholarships (@$50K each). f $55K + 15 SW (@$3K each). 70 ANNEX 5: SPECIAL INITIATIVES IN ICT AVU has now been established as an independent not- and effective use of knowledge and information as tools for-profit organization in Nairobi, Kenya with of development. The GKP emerged from the Global supporting offices in Washington, DC. Knowledge conference, "Knowledge for Development The Global Development LearningNetwork (GDLN) in the Information Age," in Toronto, Canada in June is a telecommunication network that connects dis- 1997. Members of the partnership cooperate through tance-learning centers in cities around the world that a variety of initiatives-pilot projects, conferences and are used to provide training and education resources workshops, capacity building initiatives, information for policy makers and professionals. Linked through a sharing, and project coordination. web of high-speed communication technologies, The Development Gateway Foundation, is a response GDLN members are part of a worldwide exchange of to the demand for programs on the ground, and for learning activities, including courses, seminars, and support for knowledge sharing, networking, and discussions on key development issues. The learning capacity building. It will support both research in the center includes high-speed access to the Internet and ICT area and e-learning, and action in the field. The a fully equipped multimedia learning room with com- Development Gateway portal, a central program of the puter workstations, and provides videoconferencing Development Gateway Foundation, aims to establish services. partnerships with private, public, and civil society organizations to build a common space for dialogue Knowledge sharing and sharing of knowledge and ideas. The Gateway The Global Development Network (GDN) fosters col- portal also supports the creation of Country Gateways, laborative efforts among research institutes, policy locally owned and managed by partners of the project, makers, and donors to encourage capacity building and to foster the availability of development information networking. GDN supports capacity building for re- at the local level. search through the Regional Research Competitions, The OED/OEG report suggests that a process of which have disbursed $10 million through peer-re- streamlining might be needed, based on a systematic viewed competitions over the last three years, and the evaluation of relevance, impact and efficiency. A re- Global Development Awards, which are emerging as view of the World Bank Group's knowledge work, in- the premier prize for research on development. It also cluding these initiatives, is currently being led by the supports networking through GDnet, an interactive office of the MD for Human Development. The re- web strategy linking the regional networks and hubs view aims to better identify the scope, interrelation- in Europe, Japan, and North America to create a truly ships, and value of the various elements of the global association. "Knowledge Bank", and to develop a single strategic The Global Knowledge Partnership (GKP) is an framework for the World Bank Group's knowledge evolving, informal partnership of public, private and work. The review will be completed during the sec- not-for-profit organizations for sharing information, ond quarter of FY02. experiences, and resources to promote broad access to, 71 ANNEX 6 KNOWLEDGE DEVELOPMENT AND DISSEMINATION As part of delivering its new strategy in the ICT sec- partners, as well as telecommunication policy makers tor, the World Bank Group will develop a series of in client countries. There is increasing need, and of- databases and knowledge resources on topics and is- ten expressed demand in developing countries for as- sues crucial to its agenda in this sector. These knowl- sistance in dealing with issues of the new economy edge resources will be delivered to public and private and of rapid changes in the ICT sector. The World sector clients, partners, and other stakeholders. The Bank's thrust on policy advice is in response to this knowledge resources will be important to the World need, and developing knowledge resources is key to Bank Group's operations, as well as provide crucial this response. Additionally, knowledge about invest- resources to clients. ment opportunities will play a catalytic role in direct- Advisory and technical support to governments to ing private investment to areas that are particularly create the conditions for a knowledge economy-in relevant to the World Bank Group's developmental terms of policies, regulations, capacities, and infra- agenda. Private sources of market information do not structure-have become one of the most significant fulfill this key need. product lines of the World Bank Group. Building and disseminating important knowledge resources is cru- Country assessments/action plans cial to such an exercise. Providing knowledge prod- These will essentially be summary documents about ucts and services will enhance and support the World the status of the country's II, e-readiness assessments, Bank Groups' strategic interventions. It will also ac- and national plans. Efforts to scale up this kind of celerate the development of the sector in client coun- background knowledge exercises is crucial to deliver- tries by supporting better policies across regions, and ing clear, coherent strategies in the sector at the coun- larger investment flows in frontier countries and mar- try level, as the World Bank's agenda becomes kets. It will increase operational effectiveness by of- increasingly focused on enabling countries to come to fering rapid access to a comprehensive repository of grips with various facets of the knowledge economy. sector and industry knowledge and background in- It will be important to share these assessments online formation necessary to sustain and expand operations to provide benchmarks to other countries. To the coun- in the sector. The value added of this service will come try and regional managers of the World Bank, this will from: provide a means of determining where their respec- * Knowledge that is clearly targeted to the main pil- tive countries are falling behind, and where interven- lars of the World Bank Group's agenda: creating tion can be most effective. an enabling policy environment; instituting broad cross-sectoral reform for transition to a knowledge ICT policy and regulatory database economy; deploying ICT for poverty alleviation; This will a comprehensive repository of information extending rural access; supporting investment in on policy, legal and regulatory structures, and issues frontier markets and regions; and supporting so- in different countries such as on competition, inter- cial and sectoral applications of ICTs. connection, tariffs, and spectrum auctions. It will sup- * Knowledge that derives from the World Bank plement statistical snapshots and matrices of regulatory Group's unique position and comparative advan- data and legal documents (provided at present largely tage (firsthand knowledge of country conditions, by ITU), to include a compendium of analytical piec- global experience), and hence is not easily avail- es, progress updates, historical experiences on policy able elsewhere. reform, best and worst practices, and what works for * Packaging information and documentation with successful private investment and investor confidence analysis, so as to provide a comprehensive and in- and what doesn't-all issues on which the World Bank depth understanding of country conditions and has unique knowledge and firsthand experience. To a sector development. potential investor, this will provide a comprehensive This will be targeted toward both private sector picture about the investment climate, and the World 72 ANNEX 6: KNOWLEDGE DEVELOPMENT AND DISSEMINATION Bank Group's support to that country. To a policy list of resources on various means of providing rural maker, it will provide a means of comparing experi- access to ICT, and information on subsidies. ences, important lessons, and best practices about Learning resources policy reform. Resources such as standard agreements for inter- The website for the databases can also be a tool for connection arrangements, will be made available to distance learning in the sector. The courses for both aid regulators and policy makers. This will be new internal and external clients will be put online to the content only to the extent that these resources are not extent feasible. already available on other websites, primarily that of the ITU. In other cases, links will be provided. Simi- Implementation and resource implications larly, technical papers on issues such as intellectual Developing the knowledge resources will entail exten- property rights, data security, etc. will be provided, sive knowledge collection, management, and packag- again selectively, and geared to policy makers and reg- ing, selecting the best analytical sources, combined ulators. with analysis of relevant information. This will be supplemented with information and The World Bank Group has significant presence and analysis on Internet content laws related to intellectu- close familiarity with developing countries, and access al property rights, privacy, security, and digital signa- to significant sources of information. Content part- tures, as well as laws related to the market structure in nerships will be inculcated with both external and in- the Internet and broadcasting fields-for instance laws ternal partners. Key internal content partnerships will related to competition in the ISP markets, legal re- be explored with PSD, MIGA, and WBI, and special straints on Internet telephony, broadcasting laws, and initiatives in the ICT arena, such as WorldLinks, Afri- convergence issues. As with telecommunication poli- ca Connection, GDLN, GKP, and AVU. External part- cy, this too will be supplemented with analytical re- nerships will be with agencies such as the ITU, as well sources. as with ICT-related agencies in the client countries. Content partnerships with private sector partners such ICT markets as the Economist Intelligence Unit, as well as with oth- This database will identify and provide access to in- er content providers on the Internet will also have to formation on opportunities in frontier markets and be considered, to provide primary as well as analytical regions that have potentially lucrative investment op- data, but the parameters of these partnerships, as well portunities, but might be outside the commercial sec- as the benefits accruing to both parties, will need to tor's radar. It will also provide information on tenders be worked out clearly. in the ICT sector for privatization, issue of licenses in Dissemination will be done over the Internet, different market segments, etc., especially in frontier through either a stand-alone website, or, in the initial markets and regions. phases, through GICT's external website. Through The database will reflect the structure of the ICT internal knowledge management, links may also be market in developing countries and the players in dif- provided to databases of select documents that can be ferent segments of the ICT sector-telecom equip- made publicly available. ment and service providers, ISPs, ASPs, IT hardware Scaling up GICT's knowledge services has signifi- suppliers, software solutions companies, etc. This will cant resource implications. Resources from the VPs (a also be a means of matchmaking developing country combination of regional and PSI VPs for Policy and firms with developed country partners and source of Investments), from Trust Fund sources, as well as from finance. infoDev will be solicited in the initial stages of the It will also provide important knowledge resources project. The initial scope of the exercise will be limit- on rural telecom expansion-technical information ed, based on the availability of internal and Trust Fund about private options for rural infrastructure delivery, financial support. In the later stage, however, based and best practice case studies. on response, needs, and demand, this could be devel- In rural areas, there is a need for identifying in- oped as a separate business line that is financially sus- vestment opportunities that might be attractive to the tainable, with costs covered through fee-based services, private sector, and demonstrate the commercial viabil- sponsorships, and limited advertising. Some compo- ity of some rural operations. Rural demand figures nents of this service could also be fed into the II sec- might help identify where there are possible opportu- tion of the Global Development Gateway, which is a nities. Therefore, the database should also include a portal for connecting to various resources on the web. 73 ANNEX 7 WORLD BANK GROUP INSTRUMENTS The OED/OEG review emphasized that the World Specific investment loan (SIL) Bank Group needs to use the full array of instruments . SILs will continue to be used for supporting sec- available to it to support the development of the ICT toral applications of ICT within broader sectoral sector in its client countries. loans. * While the World Bank Group has moved away from IFC Instruments infrastructure investments through state-owned en- Loans and guarantees terprises, investments from rural access will be con- * Preprivatization support will be used to ensure im- sidered when channeled through a onetime subsidy proved services from the privatization of state- scheme, special rural infrastructure funds, and other owned incumbent operators. A past example of this public-private mechanisms for setting up rural com- type of operation was the $25 million FYR Mace- munity telecenters. donia Telecommunication Company loan to sup- * In some instances, investments will also be made port service quality and rollout before privatization. in postal sector reform. * SILs might also include other components, includ- Equity, quasi-equity and other financial products ing TA. The Dominican Republic Telecommuni- * Since IFC has initiated investments into the Inter- cation Regulatory Reform Project is an example of net sector, given the pre-IPO nature of a number a SIL with a telecommunication focus, which in- of Internet investments, quasi-equity financing, cludes funds for TA, equipment, and severance pay- IFC intermediary services, and venture capital ments related to the creation of an independent funds will be particularly important. telecommunication regulatory body. Special funds Adaptable program loan (APL) * IFC's SoftBank investment has created a Global * APLs will be useful instruments for investment in Private Equity Fund focused on Internet business- both ICT components of sectoral projects and for es in developing countries. rural access, because many of these projects are new; * The appropriateness of other such funds will be they are mostly untested; and their efficacy and determined, for example, to support the rollout of efficient implementation models would need to be rural telecommunication. demonstrated. An example of an APL with an IT component is the Turkey Basic Education Loan, World Bank instruments supporting inter alia, provision of computer World Bank investment loans-specific investment hardware and software to over 5,000 Turkish loans (SILs), APLs, LILs, and technical assistance loans schools. (TALs)-are most widely employed for investment to develop the sector, to test new development models, Learnng and inovaton loan (LIL) and for organizational capacity building. They will be * LILs will be used to pilot new initiatives including deployed for extending rural and universal access, post- innovative techniques of financing rural access to al investments, and for ICT components of sectoral ICT. investment loans. In some instances, investment might * LILs will also be widely used to pilot the use of be necessary in the postal sector, in which case invest- ICT in various sectoral applications including ment loans could also be deployed for this purpose. health and education. Adjustment loans will be used to complete the tele- Technical assistance loan (TAL) communication reform process, to initiate and com- plete reform in the postal and broadcasting sectors, * TALs, especially multisectoral TALs, have been and also to initiate larger knowledge economy agen- widely deployed for telecommunication reform and das, cutting across different sectors. to build institutional capacity in the regulator and 74 ANNEX 7: WORLD BANK GROUP INSTRUMENTS the ministry. They will continue to be a major tool development of best practice in the sector, promote for the support of ICT regulatory reform programs dialogue and coordination, and fund pilot projects and capacity building for regulators in telecommu- in both the public and private sectors covering a nication, posts, and broadcasting. An example of a range of applications. past TAL was the OECS Telecommunication Re- Public-private infrastructure advisory facility (PPI- form Project supporting ICT sector reform in the AF): PPIAF grants will support limited technical Eastern Caribbean and the creation of a regional assistance for all stages of the reform process in regulatory authority. developing countries, research on the impact of re- form, and the development of best practices for the regulation of privately provided ICT services. * SALs have been used for multisector use, public * TrustAfnds: Trust funds will provide small-scale TA, sector reform, and privatization with telecommu- for example, for the design of legislation, research, nication as a component. When stand-alone tele- and ICT assessments. The Japanese government's communication reform projects are not feasible, Policy and Human Resources Development pro- SALs will continue to be deployed for this purpose. gram, which now has a focus on IT and innovative Sector adjustment loans (SECALs) applications, will be one source of funding. Project developmentfacilities: IFC expertise in sup- * The scope of SECALs can be extended to cover porting SMEs will be used to assist developing convergence and new economy issues, such as ISP country Internet start-ups and niche providers of market regulation and e-commerce legislation. An ICT services, in carrying out feasibility studies and example of an ICT SECAL is the Morocco Tele- preparing sound, viable business plans. communication, Post, and Information Technolo- * Technical Assistance Trust Fund (TATF) and Priva- gy Sector Adjustment Loan project, which supports tization Advisory Services (PAS): TATF resources will legal and regulatory reform across the ICT sector, be used to support TA for the public and private as well as licensing competitive new entrants in key sector development of business plans, private sec- market segments. tor pilot operations, and training programs, priva- tization advisory services, and legal and regulatory support. PAS will be used to hire consultants to * In countries where ICT is identified as a key com- support the privatization of government telecom- ponent of the national poverty reduction strategy, munication operations. financing for ICT could be included in the PRSC. . Paid advisory services: Paid advisory services for cre- This source of funding will be most appropriate ating policy and regulatory structures to support for activities with a strong poverty reduction fo- the development of ICT markets will also be of- cus, such as universal access initiatives. fered to countries on demand (GICT is already working with Kuwait and Saudi Arabia in this ca- pacity). Advisory services will focus on legal and * Political risk guarantees will continue to be used to institutional mechanisms necessary to invite for- support private investment in telecommunication eign investment into the ICT sector and to foster and the Internet. An example of a MIGA issued domestic entrepreneurship. guarantee is that to a number of companies sup- * Project preparationfacilities (PPF): PPFs will sup- porting investments in Azercell Telecom MMM port the design of initial sector reform, or larger (Azercell) to expand its digital cellular telecommu- investment projects in small countries eligible for nication capabilities in Azerbaijan. International Development Association (IDA) lend- Grants and trust funds ing. * infoDev: infoDev grants will continue to finance Core funding innovative ICT applications projects, for creating * Development Economics (DEC) and World Bank In- an enabling environment for ICT, reducing pover- stitute (WBI): DEC and WBI will have leadership ty and economic exclusion, promoting education, roles in research and best practice studies, dissemi- health, and environmental sustainability, improv- nation, and learning initiatives for developing coun- ing the efficiency and transparency of governments, try policy makers, covering the knowledge economy, and conducting e-readiness assessments. Scalabili- telecommunication sector regulation and policy, e- ty and replicability will be important criteria. The commerce and e-government, ICT access, and de- grants will continue to support research and the velopment impact. 75 INFORMATION AND COMMUNICATION TECHNOLOGIES Special Initiatives * Special initiatives such as WorldLinks and the Glo- bal Development Gateway will support pilot projects, research programs, learning initiatives, and dissemination covering ICT and applications. 76 ANNEX 8 PROPOSED TRAINING COURSES In order to respond effectively to the challenges of the provided to staff outside of GICT (excepting those new economy, staff from across the World Bank Group on infrastructure). Course area include e-government, will need to be trained in an array of skills necessary education, infrastructure, and e-commerce as described to the digital economy, covering courses on e-govern- below. ment, education, infrastructure, and e-commerce. For the many ICT specialist staff outside of GICT, These courses are recommended as part of the busi- currently hosted in some regions, and possibly expand- ness strategy for GICT staff but could be similarly ing in the sector groups as ICT components increase E.government Web hosting, ISPs, ASPs, integrators, outsourcing (infrastructure and S&M issues) Costs of deployments and ownership of websites. Level of sophistication of web access/transaction Security and authentication issues Back-end issues: Data warehousing, enterprise resource planning, managing the supply-chain of applications Decentralization of governments and the consequence on distributed systems, and type of architecture and infrastructure needed Databases development and management Learn more on applications and best practices available for: * Tax filing/payments/returns (for IRS, Customs or Ministry of Finance) * Property registration (land, commercial properties, movable assets, etc.) * General accounting packages for commercial and central banks * Electronic payment systems * Biometrics * Connectivity of government agencies * Unified budget systems * E-voting * News and information to/from citizens * Decentralization of e-government applications to local/municipal level for content * Case studies Education Distance education techniques, tools, and packages Infrastructure prerequisites Content creation, distribution, and delivery models of distance Learning Streaming and advanced techniques Intellectual property rights, copyrights laws, and best practices for multimedia content Major players Infrastructure Connectivity basics: Internet protocol, media, bandwidth, broadband, etc. Wireless connectivity and applications (e.g. rural access) Main players/vendors in wireless telecommunication provision Models for telecenter-basic infrastructure needed, costs, maintenance, content development VSAT basics Business models for ISPs, ASPs and integrators E-commerce Step by step guide to all elements needed: * Legal implications: Which laws are required to be amended/created. * Commercial implications: Tariffs, taxes, etc. * Enabling infrastructure: Transport, postal, etc. * Case studies of e-commerce in developing countries. * Global regulation environment: WTO, United Nations Conference on Trade and Development, ITU, etc. 77 INFORMATION AND COMMUNICATION TECHNOLOGIES in importance and quantity in the World Bank's lend- my, where in-depth treatment of the courses market ing portfolio, courses would range from basic or ad- for GICT staff may not be possible due to time and/ vanced knowledge of the technical fundamentals of or budget constraints. Also, a critical skill to build is ICT, training in the emerging e-commerce scenario, the vertical ICT expertise, needed for sectoral appli- skills development in the application of ICT to vari- cations in public sector management, health, educa- ous other sectors, and laws and regulations related to tion, etc. A brief description of some shorter courses technological and business aspects of the new econo- that the staff could be trained in follows. Course and Content Audience Basic ICT: Three day overview of IT, networks, telecommunication, Internet, World Bank Group staff working on ICT invest- e-economy issues (Model: "E-networks for Professionals" by Learning Tree). ments, projects, and components. Telecommunication Fundamentals: Two day overview of the technology and World Bank Group professionals working on 11 operation of telecommunication, the Internet, broadband, video, wireless projects. and ATM networks (Model: "Telecommunication Fundamentals" by Globalknowledge.com). Broadband and Wireless:Two day refresher/update course with updates on World Bank Group staff working on 11 projects. latest applications and technology. E-commerce:Two day overview of e-commerce concepts, legislation, regula- World Bank Group staff working on 11, ICT sec- tion, privacy issues, security, taxation, the broader enabling environment, tor, or macroeconomy projects. and available products and services. E-government:Two day discussion of e-government applications, coordina- World bank Group staff working on public sec- tion issues, best practices, and case studies. tor management projects and governance issues. ICT Training for World Bank Group Managers: One day customized course Bank Country Directors, Sector Leaders, Network as part of the electronic data processing program to review fundamentals, Heads, VPs. development impact, and priorities in the ICT sector. Vertical applications on health care systems, financial management, account- All ICT specialists currently in regions (ECA, LAC, ing systems, payment systems taxations and customs, education and e-learn- Africa), and for the possible additional resources ing, human resource management, GIS, Social Security, e-government, e- needed in the networks (ESSD, HD, PREM and commerce, etc.: Courses to be offered by the industry, whenever possible, FPSI). BBLs, sharing best practices, World Bank-funded research through thematic groups, communities of ICT practice retreats, etc. 78 ANNEX 9 INFORMATION AND COMMUNICATION TECHNOLOGIES MONITORING AND EVALUATION INDICATORS Monitoring and evaluation of ICT operations is im- for Internet-based transactions, and improvements portant and can be improved, particularly in current- in service delivery. ly undercovered areas: * Improvements in entrepreneurial environment: more * at the project and activity level for multisector and businesspeople ready to make use of the opportu- advisory work; and nities presented by the new technology. * for IFC projects (to set targets related to particular * Quality ofcontent: content sites that overcome mar- development impact objectives). ket barriers and are particularly suitable for devel- Monitoring and evaluation of project outcomes will oping nations. primarily involve tracking changes in various measures * Improvements in knowledge: Well-disseminated stud- of sector development against predetermined targets ies and reports, with focus on developing econo- and comparator countries. This is already the case in mies, on best practices in telecommunications/ the majority of stand-alone II projects on the World Internet/postal/broadcast areas. Bank side. Additional monitoring indicators may, depending on Quantitative sector indicators tend to be chosen from project scope, link to the World Bank Group's broad- a list covering areas such as those given below (with er PSD, growth, and living standards measures. For examples of indicators): some projects expected to involve large transactions * Overall sector development: telephones (fixed, mo- (such as privatization of the state monopoly) the World bile), Internet hosts or users, Internet traffic, radi- Bank Group will set macro targets. For others aimed os, computers, e-commerce, postal use, all on a per at improving rural access, the World Bank Group will capita basis. measure income and nonincome impacts of the ac- * Extentofcompetition:numberofoperators, and the cess. However, it is difficult to clearly establish the market share of the largest ones, in main ICT mar- link between project outcome and development im- ket segments. pact. Therefore, macro, income, or quality of life in- * Access for the excluded: telephone/Internet/postal/ dicators should be chosen broadcast access among the poorest, access in rural * on a case-by-case basis, areas, and the percentage of land area/population * only in large projects where the impact is expected with access. to be significant, and * Costandqualityofservice: cost oflocal/international * only where resources have been dedicated at the calls, ISP service, and high-bandwidth connectivi- outset to carry out such an evaluation. ty; waiting time for a phone line; and the percent- Some of the above monitoring indicators (ISP costs, age of calls completed successfully. percentage of population with postal access for exam- * Quality of content: size and number of local lan- pie) are not easily available at the country level, espe- guage websites, and frequency of hits. cially not in an internationally comparable format. For * Availability of skills: number of students given In- the indicators to have contextual meaning for indi- ternet-based instruction. vidual projects, this would need to change. It would For some projects, especially those that aim to im- require at the least a project-specific approach, to col- prove knowledge provision or reform sectors, the lect data both in the project host country and a range quantitative measures of sector progress should be of comparator countries at the time of project imple- complemented with qualitative estimates: mentation. * Status of reform: movement toward a well-regulat- This would involve the inclusion of support in the ed, competitive environment in the sector with project agreements for gathering suitable project mon- strong provision for universal access, and extent of itoring data that are not already available. A more gen- privatization. eral effort to collect such data across our client * E-readiness: passage of an appropriate package of countries, and in a globally consistent way, would like- e-commerce enabling legislation, financial reforms ly be more efficient and provide a global public good. 79 INFORMATION AND COMMUNICATION TECHNOLOGIES However, factors like budget realities might very well push against this. More detailed impact evaluations and studies, in- cluding lessons for future projects, will remain under the purview of OED/OEG. Given the rapidly chang- ing and expanding nature of the sector, the priority of evaluations of ICT projects will be increased, and a sector review will be carried out in FY05. 80 NOTES 1. Some limited public funding may be warranted to procurement or e-procurement" is used to denote only the restructure the incumbent along business lines (e.g. by electronic procurement activity of governments (or B to G separating basic telecommunications services from other e-commerce). activities), restructure its balance sheet, or reduce 9. http://compranet.gob.mx surplus labor. In this context, IFC preprivatization 10. A draft strategy paper has been prepared by OCSPR, loans have proven effective instruments (see below the ideas of which are reflected here. section on World Bank Group investment in the 11 1]. The agreement, based on a technical review of sector). Compranet done by the World Bank in July, 2000, provides 2. Priority in supporting access schemes will often go for mutually agreed standards of quality, accessibility, to basic services. Indeed, (a) access to basic information reliability, security, and transparency for the operation of infrastructure services, including broadcast technolo- Compranet in a manner consistent with World Bank gies, may be more easily achieved than access to procurement guidelines. advanced services (such as the Internet); (b) basic 12. Close, Humphreys, and Ruttenbur, SunTrust services are more relevant to poverty reduction as they Equitable Securities, March 2000. can he more easily used by the excluded, including the 13. Kothari, B. and J. Takeda, "Same Language Subti- very poor and the illiterate; and (c) basic services have a tling for literacy: Small Change for Colossal Gains," in S. strong record in promoting development objectives. Bhatnagar and R. Schware (eds.), Information and Commu- 3. This paragraph deals only with World Bank nication Technology in Rural Development, World Bank Group investments in public entities providing public Institute, 2000. network infrastructure or services. It does not deal with 14. Report from G-7 Finance Ministers to the Heads of funding of (a) the subsidy element in output-based aid State and Government, "Impact of the IT Revolution on schemes (discussed above in the section on access); (b) the Economy and Finance," Fukuoka, July 8, 2000. "private" or "closed" networks owned by public entities 15. From M. Hazan, infoDEVIIICD Stories Database. (such as administration intranets); or (c) equipment 16. ISU (International Space University). "Telemedicine that may be needed for regulatory purposes (such as in the 21st Century: Opportunities for Citizens, Society frequency monitoring and management equipment); and Industry: An International Space University Work- nor does it modify existing World Bank guidance shop," Hilton Hotel, Strasbourg, France, 4-5 November, regarding the financing of severance pay in public 1999. enterprise reform operations. 17. Outcomes of the Women's Forum Action Plan, 4. See the UNCITRAL Model Law on Electronic Kuala Lumpur, March 2000, a conference organized by the Commerce, 1998; and the UNCITRAL Model Law on Global Knowledge Partnership, an informal coalition of Electronic Signatures, 2000. intergovernmental and development organizations, 5. See the WIPO Convention and the TRIPS governments, businesses, and NGOs, together with the Agreement. Government of Malaysia. 6. To encourage network use, existing operators can 18. Cited in the proceedings of the Women's Forum set up schemes to part finance diverse retail activities. Action Plan, Kuala Lumrrpur, March 2000, a conference The prerequisite, however, is that the regulatory regime organized by the Global Knowledge Partnership. must not prohibit reselling of services. The traditional 19. ITU, "Rural Telecommunications in Colombia- approach is to franchise a telephone line to private Lessons Learned." World Telecommunications Develop- individuals or small businesses and to pay a percentage ment Conference (WTDC-98), Valletta, Malta, 23 March commission to the franchisee. Small loans may be -1 April, 1998. granted to set up operation or to enhance services to 20. For more information on telecenters in Senegal, see include fax services for example. Micro loans can also http://www.idrc.ca/acacia/engine/eng-6.htm; http:// be used to finance phone shop and small telecenter www.telecom-plus.sn/observatoire/Obtcp.htm; and http:// operators to expand from basic telephone and fax into www.sonatel.sn/c-telece.htm. the Internet and ICT arena, as the market potential 21. Wall StreetJournal, March 2, 2000, Page A12. permits. 22. Balit, S., Listening to Farmers: Communication for 7. Wellenius, B., "Extending Telecommunications Participation & Change in Latin America, FAO, 1998. Service to Rural Areas - The Chilean Experience," 23. Vijayaditya, N., "A Wired Village: The Warana World Bank Public Policy for the Private Sector Note Experiment," in S. Bhatnagar and R. Schware (eds.), No 105, Washington, D.C., 1997. Information and Communication Technology in Rural 8. For convenience, the term "electronic commerce Development, World Bank Institute, 2000. or e-commerce" is used in this paper to denote the 24. Dasgupta, S., H. Wang, and D. Wheeler, "Surviving business-to-consumer and business-to-business Success: Policy Reform and the Future of Industrial electronic commerce activity. The term "electronic Pollution in China," World Bank, Development Research 81 INFORMATION AND COMMUNICATION TECHNOLOGIES Group Working Paper No. 1856, November, 1997. 25. For a detailed discussion of technology, input prices and pollution, see Wotld Bank (1999). 26. Pargal, S. and D. Wheeler, "Informal Regulation of Industrial Pollution in Developing Countries: Evidence From Indonesia," Journal ofPolitical Economy, Vol. 104, No. 6, 1314+, 1996. Dasgupta, S., H. Hettige, and D. Wheeler, "What Improves Environmental Compliance? Evidence from Mexican Industry," Journal ofEnvironmental Economics and Management, Vol. 39, No. 1, January, 2000, pp. 39- 66. Huq, M. and D. Wheeler, "Pollution Reduction Without Formal Regulation: Evidence from Bangladesh," World Bank Environment Department Working Paper, No. 1993-39,1992. Hartman, R., M. Huq and D. Wheeler, "Why Paper Mills Clean Up: Determinants of Pollution Abatement in Four Asian Countries," World Bank Development Research Group Working Paper, No. 1710, January, 1997. 27. Dasgupta, S., B. Laplante, and N. Mamingi, "Capital Market Responses to Environmental Perfor- mance in Developing Countries," World Bank Develop- ment Research Group Working Paper, No. 1909, October, 1997. Dasgupta, Hettige and Wheeler, 2000. 28. For a description and analysis of the Indonesian program, see S. Afsah, and J. Vincent, "Putting Pressure on Polluters: Indonesia's PROPER Program," A Case Study for the HIID 1997 Asia Environmental Economics Policy Seminar, Harvard Institute for International Development, March, 1997. 29. WHO, "Electromagnetic Fields and Public Health: Mobile Telephones and Their Base Stations," WHO Fact Sheet No. 193, June, 2000 (available at http:/l www.who.int/inf-fs/en/factl 93.html). 30. WHO, 2000; US Food and Drug Administration, 1999, "Consumer Update on Mobil Phones," October 20 (available at http://www.fda.gov/cdrh/ocd/ mobilphone.html). 31. "CTIA Requires RF Data In Boxes," Wireless Week, Tuesday, July 18, 2000 (available at http:// www.wirelessweek.com/newsat2/na2artue.htm). 82 'gY~~~~~~~~~~~~~~~~~~~~~~~~~1b :3 i:u1u:i.B 15105 M 9O 780821 35105 5 II~~~~~~ *~~~~~55. * 5 55. 5 6 ~ ~ ~ ~ ~ ~ ~ ~ [1 11 i i*Acf f1v