The Key to Building a Sustainable Future: Inclusive Digital Infrastructure
Article written by the Energy Transition team at ThirdWay Partners.
The digital economy is emerging as a vital driver of growth in modern society, transforming traditional industries and providing new sources of economic prosperity. However, ensuring that our digital infrastructure is sustainable is crucial for long-term success. By prioritising investments in sustainable digital infrastructure, we can address economic and environmental challenges while promoting social inclusion and equitable access to technology.
More specifically, the Internet’s availability and access to broadband have demonstrated positive impacts on local economic growth and employment, especially in regions like Sub-Saharan Africa (SSA). Mobile broadband adoption has the potential to boost economic growth and improve market efficiency. By investing in sustainable digital infrastructure, we can harness the power of technology to drive progress and bridge the digital divide:
Hjort and Poulsen (2019) found that when fast internet is available in Sub-Saharan African countries, the probability of an individual being employed increases by 3.1% to 13.2%. Increasing broadband access also enhances household welfare and lowers poverty, as in Senegal, where 3G coverage resulted in a 10% reduction in extreme poverty ($1.9 per day)[1]
Increasing mobile broadband adoption by 10% increases GDP by 0.6% to 2.8%, according to a cross-country study. Additionally, mobile phones enhance coordination between producers and traders, decreasing price dispersion, especially for perishable agricultural products that cannot be stored, and improving market efficiency, such as in the case of Niger and India[2]
Why it matters?
The United Nations Sustainable Development Goal (SDG) 9: Industry, Innovation, and Infrastructure explicitly emphasises the importance of technological progress in finding sustainable solutions. As our world becomes increasingly reliant on digital technology, it is crucial to ensure that everyone has access to the technology and resources they need to participate fully in the digital world.
Digital infrastructure plays a pivotal role in promoting social inclusion and connecting people across geographic and economic boundaries. In 2021, mobile technologies and services generated $4.5 trillion of economic value added, corresponding to 5% of GDP globally[3]. However, vulnerable populations in both developing and developed countries still face challenges in accessing and utilising digital technologies. Failure to bridge this digital divide can result in further inequalities and hinder post-pandemic recovery. In fact, although mobile connectivity is growing rapidly in Africa, with mobile platforms creating opportunities for entrepreneurs and businesses, around 900 million people in Africa are not connected to the internet and connectivity prices remain high[4]. There’s also a significant disparity in digital infrastructure investment between the urban and rural areas in Africa: only 6% of rural areas have some sort of digital connectivity[5].
What is digital infrastructure?
Digital infrastructure encompasses the physical and virtual systems and resources that support the use and deployment of digital technology. This includes hardware, software, networks, and data centres that enable digital information storage, processing, and transmission.
From a sustainability perspective, digital infrastructure presents both opportunities and challenges. On one hand, digital technology has the potential to reduce the environmental impact of traditional industries by enabling remote work, virtual meetings, and more efficient supply chains. Cloud computing, for instance, can reduce energy consumption and carbon emissions associated with on-site data centres, while smart grids and demand response schemes can reduce energy consumption and waste. On the other hand, there is a significant funding gap, thus leading to unbalanced access and further inequalities.
What are the key features that define sustainable digital infrastructure?
Renewables & Energy Efficiency: Designing energy-saving features in digital devices and using renewable energy sources can reduce the carbon footprint of digital infrastructure. Furthermore, the roll-out of smart grids, underpinned by IoT devices and advanced metering infrastructure, may allow systems operators to shift consumption to hours when energy is greener, improving affordability, access and sustainability of energy consumed by end-users.
E-waste Management & Circularity: Responsible e-waste management can reduce the environmental impact of digital infrastructure. By implementing digital systems for tracking and managing e-waste, companies can ensure responsible disposal throughout the value chain. This not only contributes to lower Scope 3 emissions associated with e-waste but also helps them avoid potential penalties in the future.
Data Privacy & Security: Ensuring secure data storage and protecting users' privacy is crucial for building trust in digital technologies. Companies and governments must address concerns regarding data privacy and security.
Differentiation & Innovation: Prioritising sustainability in digital infrastructure can help companies differentiate themselves and attract environmentally conscious customers. Additionally, investing in sustainable digital infrastructure can lead to the development of new technologies and business models.
Connectivity: Robust connectivity is essential for remote work and reducing carbon emissions associated with commuting and office space. Investing in digital infrastructure ensures seamless connectivity and a sustainable future of work.
What is the impact of investing in sustainable digital infrastructure?
Investing in sustainable digital infrastructure yields numerous positive outcomes that benefit both individuals and communities. These outcomes include:
Job Creation: Developing digital infrastructure requires a skilled workforce, leading to job creation and economic empowerment within local communities. Investing in training and capacity-building programs cultivates a tech-savvy workforce capable of managing and operating digital infrastructure projects.
E-commerce & Entrepreneurship Development: Digital infrastructure facilitates e-commerce platforms and digital marketplaces, providing opportunities for businesses and entrepreneurs in underserved markets to participate in the global economy.
Education: Digital infrastructure enables remote learning, bringing quality education to individuals in remote or disadvantaged areas. This enhances educational access, and inclusivity, and empowers learners facing geographical or socioeconomic barriers.
Productivity & Efficiency Enhancement: Digital infrastructure streamlines business operations, improves efficiency, and enhances productivity across various sectors through automation, real-time data analysis, and access to information and knowledge resources.
Government Cooperation & Engagement: Digital infrastructure enables governments to deliver public services more efficiently and transparently, enhancing public access to essential services such as healthcare, education, transportation, and public safety.
Social Inclusion and Empowerment: Digital infrastructure reduces social and economic disparities by providing equal access to resources, information, and opportunities. This fosters cohesion, empowers individuals and communities, and ultimately reduces inequalities.
Where do we go from here?
Sustainable digital infrastructure is a necessity in our increasingly interconnected world. However, the existing funding gap poses challenges to equitable access and further development. Approximately 4.5 billion people lack access to the internet worldwide. In Africa, only 17.8% of people have home internet access and only 10.7% have computers. [6]
In our next article, we will explore the funding gap in digital infrastructure and discuss potential ways to address it. Stay tuned to learn about the main players bridging this gap, available financial instruments, and the importance of cooperation between the private and public sectors in funding digital infrastructure.
Together, we can ensure that digital infrastructure continues to drive economic growth, innovation, and social inclusion, while addressing sustainability challenges. Let's build a future where everyone has access to the technology and resources needed to thrive in the digital world.
[1] The Impact of Infrastructure on Development Outcomes: A Qualitative Review of Four Decades of Literature
[2] How important are mobile broadband networks for the global economic development?
[4] Infrastructure Solutions: Digital power for Africa
[5] Digital connectivity and infrastructure
[6] The digital infrastructure technology that could help emerging markets leapfrog developed economies