Digitalisation implications on macro-economic stability: Moving from cliché to government action- (1)
While digitalization and automation are not new, they have accelerated in recent years, and the wave of innovation has reshaped the whole global economy. Many governments, public institutions, and private players speak to the need to digitalise with the view that it is the panacea to stunted or lack of growth faced by many. Vast opportunities could be unlocked in Zimbabwe and Africa at large by embracing digitalisation both in the public and private sector causing a leap in growth and development.
Among the major triggers of the Fourth Industrial Revolution dubbed the “Digital Revolution” is definitely artificial intelligence (AI), robotics, computing power, cryptography, cloud computing and big data. These technological advances are multiple and overlapping, creating synergies, accelerating outcomes, and at the same time multiplying the challenges that have to be tackled through an “all- players” approach.
This digital revolution we have begun to experience has effects on all sectors, with far-reaching social and economic impacts. There is huge potential to transform the economy for a country like Zimbabwe, boost productivity, and fundamentally alter the way we live and work. Left to chance, without policy, regulations, law, and budget support, these technologies may also cause substantial disruptions and dislocations.
Acknowledging the role of digitalisation in accelerating growth and development means that resources have to be allocated for that transition to allow every sector to leverage on the advantages of building a digital economy, enhance returns, mitigate the negative impacts that can leave others behind, and in turn transform livelihoods. This can be tracked through the national budget allocations to show the steps being taken by the government to propel a leap in digital-based economic development. Without resources, policies, and institutions to support the process, it only remains what it has become for many- just a cliché.
In the 2022 national budget, the Minister of Finance and Economic Development highlighted that the budget seeks to strengthen macro-fiscal stability, advance the policy on value chains and value addition for purposes of sustainable jobs creation and growth, enhance public services delivery, and strengthen governance and anti-corruption measures among other goals. All these could get a leap in the right direction with a focus on digitalization as one of the key enablers of these transformative endeavours.
Tracking of the actions towards digitalization can be done through assessing priorities given to three main pillars of Digital Revolution in the national budget;
- Digital Infrastructure
In assessing the efficacy of both public and private sector pronouncements or commitments to digitalisation, citizens must be able to see resources put in developing the digital infrastructure across sectors and how this infrastructure will build cross-linkages and interdependence to reduce sector-specific vulnerabilities. This infrastructure includes hardware and software infrastructure for production enhancement, communications networks, payment services, market linkages, detection of risks, transparent and accountable operations among others.
However, Zimbabwe like many other African countries lacks investment in digital infrastructure due to the debate around who should meet the costs, the huge infrastructural funding gap, and the lack of political will to roll out digitalisation programmes for public institutions. An example is an allocation of ZWL3.3billion for ICTs in the 2022 national budget. Given the huge need to develop the digital infrastructure exacerbated by the COVID-19 pandemic, this is a meagre allocation as it has to be divided across sectors for a digitally facilitated rebound from the impacts of the pandemic.
- Human Capital
Human capital refers to the economic value of the skills, knowledge, and experience that a person or group possesses. Because of increasing globalization, technological changes, and economic liberalization, governments are forced to prioritize the development of human skills as a strategy to amass competitive advantage. Also, a well-developed human capital base tends to be more innovative. It is through innovation that new ideas, methods, and processes of production that accelerate economic growth can be realized. As such, human capital development and innovation are critical in complementing other public investments.
While the success of the 1st Industrial Revolution was hinged on the availability of unskilled labour to work in factories, the 4th Industrial Revolution is hinged on the availability of skilled labour. Knowledge of ICT & the internet has become a basic requirement in most jobs. This means that the government has to come up with a funded human capital development programme geared towards the required skills sets and this begins from the education curriculum. Resource channelling to the education sector of at least 20% of the country’s Gross Domestic Product (GDP) can meet the required needs. This has to be targeted at all educational levels, all forms of education- formal and informal, hedging the human capital towards competitiveness in the digital economy.
- Institutional Quality
It is Douglas. C North who says, “Institutions are the rules of the game in a society, or more formally devised constraints that shape human interaction. In consequence, they structure incentives in human exchange whether political, social, or economic. Institutional change shapes the way societies evolve through time…..” Investment in institutions for the leap in digitalisation is imperative. Institutions that can deliver efficiently, reduce the diversion of resources, and become accountable by enhancing openness will foster macro-economic stability- which is a top priority in the 2022 national budget.
To be Continued in Part (2)
