The nexus between development and digitalization

Since the start of the industrial revolution in the mid-1700s, technology have been a key catalyst in improving the efficiency and effectiveness of day to day operations in both business and institutional settings. In our era of digital transformation, technology has reshaped economies, societies, and governance, digitalization is at the core of modern development, from expanding access to resources and services to AI optimizing workflows to mobile banking extending financial inclusion.

In his Network Society concept, Spanish sociologist Manuel Castells, articulated how digital technologies are creating a new socio-economic structure that is transcending geographical and institutional boundaries, where information flows dictate power, culture, and progress. Today, these ideas manifest in everything and are altering how individuals and institutions operate.

In advanced economies, Artificial Intelligence optimizes resource allocation and cost minimization strategies, while at the same time improving decision-making in sectors such as manufacturing, finance, and healthcare. However, this leapfrog effect can be also felt in Least Developed Countries (LDCs), where digital tools are proving to be game-changers when adapted to local needs.

Take mobile money in Somalia as a case in point. With limited access to traditional banking, Somalia has become one of the world’s most advanced mobile money economies, where mobile money transactions accounted for around $2.7 billion per month in 2018, and 82 percent of adults use mobile phones to access finances.

Beyond economics, digital transformation can scale social inclusion, such as digital-based learning platforms and digital curricula to scale educational gaps.

Distance learning programs have been explored as an alternative to traditional schooling in Somalia during the COVID-19 pandemic, and while quantitative data on its impact hasn’t been made public, this experiment provides an opportunity to deliver education to a population, 54 percent of whom live in rural areas.

Anticipation and early warning systems is another area where digital transformation might help to reduce climate shocks in fragile and conflict-affected economies where communities mostly depend on rain-fed irrigation.

By means of geo-targeted alerts issued to farmers and herders via SMS and voice notifications, this anticipation and early warning systems combine satellite imaging and weather prediction algorithms to enable governments react to droughts and extreme weather conditions.

Despite these promising developments, however, LDCs face significant barriers in their digital leap. Leadership and policy gaps, slow adoption rates, infrastructure limitations, and funding constraints all remain critical challenges. Another major issue is the lack of human and institutional capacity. While in advanced economies, slow technological adaptation often stems from cultural inertia, in LDCs, where the population is often young, the primary barrier is low digital literacy and a skills gap. In rural areas, socio-cultural factors also play a role, as many communities still rely on traditional methods and are slow to adopt unfamiliar digital solutions that require steep learning curve and is often in foreign language.

In conclusion, let me close with this quote by mathematician and philosopher, Alfred North Whitehead.

Civilization advances by extending the number of important operations we can perform without thinking about them.