When the pandemic caused much of public life to grind to a halt earlier this year, many people found refuge online. Accessing the internet via computers, mobile devices or other technology became a portal not only to work, but also to classrooms, social lives, bank accounts and basic necessities.
But for millions around the globe, this transition wasn’t realistic – or even possible. The digital divide refers to the gap between those who have access to information and communications technologies and those who lack it.
This is a global issue: a recent study commissioned by Visa and conducted by global data intelligence company Morning Consult found that about half of North Americans and Australians and 40% of UK residents have trouble accessing the internet due to cost, bandwidth constraints and reliability issues. In some countries like South Africa and India, this number is much higher – 60% and 70%, respectively. Progress toward digital equity varies across different regions: although all European Union countries improved their International Digital Economy and Society Index (I-DESI) scores from 2019-2020, countries like Turkey, Mexico and Brazil still have significant strides ahead.
Digital equity is a critical part of inclusive development around the globe. What’s more, it’s integral to achieving the Sustainable Development Goals (SDGs) outlined by the United Nations. The UN also points out that digital equity will be a key part of economic recovery from the pandemic.
Advancing an equitable digital world will require collaboration on a massive scale – so here’s what to know.
What is digital equity?
Much like digital transformation itself, digital equity is an evolving concept.
“What digital equity means today is different than what it meant 10 years ago, and will be different in another 10 years,” says Amina Tirana, a fellow at the Visa Economic Empowerment Institute.
Today, explains Tirana, the term refers to the assurance that all individuals and businesses have the opportunity to participate and receive full benefits from digital platforms.
“Importantly, this includes data and communication connections, and also the availability of appropriate services and the knowledge of how to participate in the digital economy,” she says. “So, it’s not just technology, but also the purpose for which it’s used and the ability to use it.”
The fact that we are not currently living in a digitally equitable world is evident in myriad ways around the globe. In the US, un- or underbanked citizens are often unable to access funds via digital platforms or apply for loans and aid online. In Nigeria, people selling pottery at open-air markets are reluctant to accept mobile payments on their smartphones because the data-related charges are cost-prohibitive; however, they will accept payments via old USSD phones, which are much more affordable than data-intensive devices.
The Morning Consult survey found that while the vast majority of respondents access the internet daily, those in wealthier countries were more likely to have at-home internet connections. In India and South Africa, respondents reported using mobile data networks far more frequently.
The complexities and root causes of these issues must be explored. For one, national infrastructure is a determinant of how technology is adopted across local markets. For example, in countries such as India and South Africa, there is less telecommunications infrastructure reaching individual households. Ultimately, this has led to mobile-based technology leapfrogging traditional forms of accessing the internet. Cost is also an important factor. In addition to hefty fees for data, the cost of hardware and equipment is a barrier for some.
“Every country is unique, and every community has its own patterns,” says Tirana. “We need to think about digital equity and inclusion not in a single, static way, but relevant to local contexts.”
Digital equity is split along gender lines, too. “It is well-established that women have much less access to digital resources,” says Tirana.
This is particularly problematic since women’s economic habits are foundational to communities and households – one of the reasons why gender parity is specifically outlined as Goal Five of the UN’s SDGs.
“When a woman has an extra dollar, it usually goes to household well-being, such as more food and schooling,” says Tirana. This spending helps fuel development in local economies and ladders up to increased global GDP . In fact, a 2015 report by McKinsey Global Institute suggests that gender equality could add a whopping $12 trillion to global growth.
How the digital divide affects small businesses
Small businesses are the backbone of many local economies. Micro businesses in particular – mom-and-pop stores with just one or two workers – contribute significantly to household incomes in many developing nations.
“These types of businesses are part of the fabric of a community – they’re where many people live and shop,” says Tirana. “So if these businesses start to falter, you can imagine the significant ripple effect.”
Small and micro businesses have suffered heavily in recent months. Many micro businesses work exclusively with cash, which presented a challenge when in-person transactions all but halted due to the pandemic.
A digital presence for small and micro businesses is proving critical for their survival and recovery. This is increasingly true as consumers make changes to their use of cash and digital payments. The Morning Consult survey found that since COVID-19, between 40% and 54% of respondents across seven countries are using their credit and debit cards more. Many are turning to digital payments platforms more frequently.
A lack of access to digital resources also impacts a business’s ability to receive government aid. Companies that do not have digital records or accounts are more easily overlooked for dissemination of relief funds. What’s more, a lack of access can be a direct impediment to individuals’ ability to make a living. While 61% of American respondents to the Morning Consult report said they need the internet to do their jobs, almost all (95%) of respondents in India reported needing connectivity through their mobile device for work.
Solutions for a more digitally equitable world
Advancing an equitable digital world – bridging the digital divide being one important step – requires more than simply equipping small businesses and families with devices and a WiFi connection. It’s also necessary to provide education on how to effectively use digital platforms, explains Tirana.
“Businesses must be able to pivot to a new context, and certainly being connected to digital commerce is part of it, but another part is having the skills and confidence to be able to adapt accordingly and use those tools to your purpose,” she says.
To this end, Visa recently announced an initiative to digitally enable 50 million small and micro businesses during the global recovery from the pandemic. Efforts will include community support for digital payments, as well as digital literacy and skills training programs. The Visa Foundation also pledged $200 million in support with a focus on women’s economic advancement over the next five years.
Tirana stressed that collaboration among corporate players, NGOs, nonprofits and government entities is crucial to achieving these ambitious goals. “No one can do this alone. We need to create a new kind of leadership,” she says.
Visa has long seen success with some of its ongoing initiatives to improve financial inclusion, one way in which progress can be made towards achieving digital equity. In the Dominican Republic, Visa developed a virtual prepaid solution to rapidly expand the government’s emergency disbursement program during the pandemic from 800,000 to 1.5 million beneficiaries. In Guatemala, the company used its Visa Direct solution to support the country’s emergency relief program, reaching 2 million households over the past three months. Finally, in Africa, Visa’s collaboration with fintech company PalmPay enables greater access to real-time digital payments.
“A network is a community of people sending, receiving and communicating,” says Tirana. “We want to use the power of ours – along with our partners’ – to enable inclusive and equitable economic recovery, and then going forward, more resilience.”
An unprecedented crisis calls for an equally extraordinary response. Economic recovery in the wake of COVID-19 will require collaborative partnerships, as well as an innovative mindset to uncover areas of opportunity and bridge long-standing chasms of social, digital and financial inequality.