Why should cities make digitalization more inclusive?
Date: 5 Jul 2023
Digitalization is happening almost in every corner of the world.
Digitalization is seen as essential for long-term growth, for greater inclusiveness and for ensuring a resilient and sustainable operating environment.
Digitalization is seen as essential for long-term growth, for greater inclusiveness and for ensuring a resilient and sustainable operating environment.
As digitalization is rising rapidly, cities have an opportunity to increase engagement of vulnerable segments of the population that have traditionally lacked access to public services, or to social and economic opportunities. Cities that can successfully implement universal availability and widespread adoption of digital services can see significant gains. For example, digitalization can have a positive impact on public transport, health systems, transparent forms of e-government or digital payments, among others.
Mobile Internet usage is on the rise
The GSMA’s 2022 State of Mobile Internet Connectivity report1 and 2022 Mobile Economy Report2 reveal significant progress in mobile internet penetration.
55%
of the world’s population, or 4.3 billion people, are now using the internet.
1/2 + of pop.
For the first time, more than half of the population in in low- and middle-income countries is using mobile internet.
There are more smartphones in all regions of the world than regions with basic of feature phones.
4.2bn
In 2021, there were 4.2 billion mobile internet subscribers (53% of the global population)
5bn
By 2025, 5 billion mobile internet subscribers are expected (60% of the global population)
Digital payments continue to grow
The World Bank3 estimates that as of 2021, more than three-quarters of the world’s adult population has a digital payment account.
51%
in 2021
68%
in 2017
76%
in 2021
Digital payments have also increased in the wake of the Covid-19 pandemic. More than 40% of adults in low to lower-middle-income countries, except for China, made their first online digital transaction at the start of the pandemic.
In India, more than 80 million adults made their first digital payment online in 2020. In China, it was more than 100 million adults.
In India, more than 80 million adults made their first digital payment online in 2020. In China, it was more than 100 million adults.
The rise in mobile Internet usage is unequal
However, despite strong growth in Internet usage and digital payments, this rise has not been equal. Cities and national governments must make greater effort to include all segments of the world’s population in the use of mobile internet.
5%
of the world’s population, or 400 million people, is not covered by mobile broadband
94%
of the population who do not access the internet are in low- and middle-income countries.
40%
of the world’s population, or 3.2 billion people, live within mobile broadband coverage but are not using it.
Connectivity varies substantially by region too. Sub-Saharan Africa remains the area with the largest coverage and usage gaps, while South Asia and East Asia and the Pacific saw the largest increases in mobile Internet in 2020 to 2021.
Towards more digitally inclusive societies
Indeed, for digitalization to be inclusive, cities must consider infrastructure, access and education.
For example, the BBVA-DiGiX 2022 study assessed the digital performance and progress of 99 selected economies, using the most recent data for 2020 and 20214: It combined 20 variables that are grouped into six dimensions representing three broad pillars: supply conditions (infrastructure and cost), demand conditions (user, government and enterprise adoption), and institutional environment (regulation). Below are the rankings by country.
Greater efforts needed to increase financial inclusion
About one-third of those living in rural areas in low-and-middle-income countries are less likely to use mobile internet than those living in urban areas, according to the State of Mobile Internet Connectivity report6. Affordability and a lack of literacy and digital skills remain the main barriers to mobile internet adoption.
Adults living in rural areas are 33% less likely than those living in urban areas to use mobile Internet
Women are 16% less likely than men to use mobile Internet
The World Bank’s 2022 update on income inequality7 states that countries with a widening gap between those with better life opportunities and those without will find it harder to sustain economic growth and social stability over the long term.
However, The World Bank also states that “the pandemic has led to a significant leap towards forms of financial inclusion, manifested in a large increase in digital payments amid the global expansion of formal financial services.”8 This expansion has created new economic opportunities, narrowed the gender gap in account ownership and helped build resilience at the household level to better manage financial shocks.9
6GSMA Intelligence, The State of Mobile Internet Connectivity Report 2022
7World Bank, Inequality and Shared Prosperity,2023
8World Bank, COVID-19 Drives Global Surge in use of Digital Payments, 2022
9Demirguc-Kunt, Asli; Klapper, Leora; Singer, Dorothe; Ansar, Saniya; Singer, Dorothe. 2022. The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. © Washington, DC: World Bank. http://hdl.handle.net/10986/37578 License: CC BY 3.0 IGO.
7World Bank, Inequality and Shared Prosperity,2023
8World Bank, COVID-19 Drives Global Surge in use of Digital Payments, 2022
9Demirguc-Kunt, Asli; Klapper, Leora; Singer, Dorothe; Ansar, Saniya; Singer, Dorothe. 2022. The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. © Washington, DC: World Bank. http://hdl.handle.net/10986/37578 License: CC BY 3.0 IGO.