Dollar Divide, Digital Divide: Funding the ICT Revolution

This briefing document is part of a series produced by Panos for journalists on different aspects of information and communication technologies (ICTs) and the 'information society'. This brief covers issues related to funding for (ICTs), and in particular the debate around the Digital Solidarity Fund (DSF).

The brief provides a background to the founding of the Digital Solidarity Fund. At the first stage of the World Summit on the Information Society (WSIS) in 2003, a group of mainly African countries proposed that a fund be set up – the Digital Solidarity Fund (DSF) – with revenues raised from both governments and private companies to support ICT. Many civil society organisations (CSOs) and Southern governments supported this idea, and a voluntary Fund was launched in March 2005. The fund intends to mobilise a worldwide solidarity effort between cities, regions, states, civil society and the private sector, to support immediate action to bridge the digital divide. In addition to traditional north-south cooperation, it intends to develop increased cooperation between the emerging south and the least developed countries. The Fund does not carry out projects itself. It aims to finance mostly community-level development projects that will create new activities, new markets and improved job opportunities. Support includes the supply of ICT equipment; development of local content, applications and services; and training of human resources. The Fund will give priority to women’s associations, youth or groups with special needs.

The brief points out that many developed countries and donors argued that a new Fund was not the best way to increase funding for Information and Communication Technologies (ICTs) in developing countries, and there was intense debate over its viability. Opponents of the fund argue that aid is most effective when priorities are set by developing country governments themselves as part of their national development strategies. They should make their own decisions about how to spend aid money, including what proportion to spend on ICT development, and a special fund would work against this principle. Opponents of the Fund also argue that there is more money available than is being used at the moment. As well, as most African governments do not have the money and technological capacity to develop ICTs, so today’s communications infrastructure in Africa is largely the outcome of private sector investments and partnerships. A new organisation will create costly bureaucracy and may lead to disputes, and is not the best solution to the challenge of increasing funding available for ICT. In addition to the arguments against the DSF, some donors and international agencies now believe that ICT projects, rather than being funded separately, should be supported through other projects such as health, education, micro-credit and agriculture. New studies and strategies by international agencies suggest that ICTs on their own do not reduce poverty or promote development – rather, good development plans can make good use of ICTs.

Those that are in favour of the Fund argue that in the last ten years the private sector has failed to bridge the digital divide between developed and developing countries and between rural and urban centres in developing countries. They say the market tends to favour well-off customers who are able to pay for goods and services. At the same time, communication infrastructure is expensive and the market has failed to develop this infrastructure in Africa. The DSF will not fund major infrastructure investment itself, but it could play a role in helping to attract private investment back into the sector: They further argue that existing funding sources are not enough and new sources of funding are needed.