Bridging the digital divide in Asia-Pacific

IF YOU are reading this article online, you are among the 66 per cent of people in Asia-Pacific who are connected to the Internet. A transformative opportunity of our time, digitalisation is a driver of connectivity and inclusion. From helping open new bank accounts and new businesses to tackling climate change and creating jobs, digital technologies and platforms have delivered massive economic benefits.

With World Telecommunication and Information Society Day (May 17) just past, it is important to recognise the extent to which the digital divide is leaving people who are unconnected behind, especially women, rural residents, or those from lower-income groups. As of 2023, one-third of the global population – or 2.6 billion people – remain offline. In Asia-Pacific, 96 per cent of the region’s population live in areas covered by a mobile broadband network, but almost half do not yet subscribe to a mobile Internet service. Key barriers include lack of digital skills, affordability of devices and data, and limited local content.

This gap is holding back growth and limiting opportunities. While 93 per cent of people in high-income countries used the Internet in 2023, only 27 per cent in low-income countries were Internet users. Closing this gap would be an absolute economic win. By 2030, digitalisation could add US$1 trillion to the GDP of Asean countries. Building a robust digital ecosystem – through investments and capacity expansion – can speed up this outcome, accelerate development progress, and bridge the connectivity gap.

The way to do this would be to advance financial inclusion through investments in digital payments and data sharing platforms. Bolstering banking and insurance services while equipping workforces with digital skills will be vital. It also means funding open, interoperable, and safe infrastructure that can provide affordable, ubiquitous, and reliable connectivity alongside cybersecurity and personal data protection.

However, traditional actors alone cannot address this digital divide. As a result, scalable financing and infrastructure solutions require new forms of collaboration. We need innovative instruments and mechanisms to encourage more private sector players to participate in the financing of digital inclusion.

Going forward, a range of financial instruments, especially debt and equity co-investments that pool capital from institutional investors, insurance companies, and other development finance institutions, can help attract and mobilise private capital. Blending concessional funds from development partners with commercial investment funds from private sources could be another effective solution. It can help alter the risk/return profile of investment opportunities, unlocking investments. Blended finance is also key to expanding broadband and network infrastructure in remote markets as a prerequisite to future innovations.

Similarly, embedded finance players, fintech companies, digital banks, and super platforms could play a transformative role. Now is the time to explore investment opportunities with those digital lenders, especially in emerging economies.

In the Asia-Pacific region, countries continue to optimise the digital era, especially post-Covid, with some temporary solutions turning into game-changing innovations. In the Philippines, for example, fintech companies such as Voyager Innovations are allowing more people to make financial transactions on smartphones. GoTo, the largest digital ecosystem in Indonesia – where 97 million adults are unbanked – is driving financial inclusion. An investment in Dhivehi Raajjeyge Gulhun, the largest telecommunications and digital service provider in the Maldives, is helping to connect the country to the Internet global superhighway via a state-of-the-art submarine cable system. Additionally, Fiji, Samoa, and Solomon Islands are prioritising digital national payment systems.

Ultimately, a strong partnership between governments, the private sector, and development organisations is key to bridging the digital divide. The digital revolution has transformed society and many of our lives. With shared vision and coordinated effort, we can harness that transformative power to provide life-changing opportunities for millions more.

The writer is regional vice-president for Asia and the Pacific, International Finance Corporation