How the Covid-19 pandemic accelerated digital transformation

The onset of the pandemic in 2020 gave rise to global acceleration in the uptake of digital platforms and services. This surge was consolidated in 2021, as it became clear – in emerging and developed economies alike – that digital is the new normal. While in some ways 2020 was reactive, with governments and businesses scrambling to implement digital approaches, 2021 was proactive, as those approaches were streamlined and synthesised. As countries went in and out of lockdown in response to successive waves of Covid-19, many businesses and institutions integrated a flexible, “blended” approach, combining online and in-person operating methods. Key aspects of the ongoing digital transition include increased remote work, online payments and e-commerce. In emerging markets, these trends have led to opportunities not only for investment, but also for public-private collaboration in strengthening digital infrastructure and expanding financial inclusion.

Digital Dividends

Most developing countries have begun to adapt to this accelerated digital transition, which is already paying dividends in many cases. In Egypt, for example, the initial shift to digital led to a surge in demand for ICT services, and highlighted the need to expand both hard and soft infrastructure. The government has responded with a range of initiatives. The Ministry of Communications and Information Technology’s CREATIVA, a network of knowledge and innovation centres, was granted LE300m ($19.1m) in March 2021 to fund its second project phase, which focuses on developing an integrated system for technological innovation. Saudi Arabia has likewise intensified its commitment to its digital agenda, enshrined in Vision 2030. The economic development strategy has helped advance the digital transformation in all aspects of daily life, from e-government services, to digital financial solutions and work-from-home options.

Financial Inclusion

Similar trends have been seen in Latin America. Peru has benefitted from the impact of increased digital innovation across key sectors such as mining, agriculture and financial services. Digitalisation is also helping to expand financial inclusion in the country – an effect that is being observed in many economies around the world. For example, in Morocco, financial technology (fintech) is advancing rapidly: the country has embraced its efficiency and low costs as a way to bolster financial inclusion, with both the government and the private sector deploying fintech tools for payments. Indeed, the development of a fully digital financial environment is an important objective in Morocco’s strategy to cement itself as a leading financial centre in the region – a transformation that has been accelerated by the pandemic.

E-commerce

Closely connected to the rise in digital payment methods is the worldwide boom experienced in e-commerce since the start of the pandemic. This took place in markets where e-commerce was already established, as well as those that had previously been more hesitant. In Africa, the pandemic has given rise to a marked increase in e-commerce use, notwithstanding ICT infrastructure constraints. This is a trend that seems likely to continue: a report by the UN Conference on Trade and Development published in March 2021 found that more than 40% of customers in four large African markets were planning to reduce their supermarket shopping in the future by purchasing food, clothing and electronics online. A number of African start-ups have emerged to capitalise on this growth. These include TradeDepot, an end-to-end distribution platform, the main focus of which is the digitalisation of micro-retail distribution. Responding to supply chain disruption caused by the crisis, TradeDepot today supplies tens of thousands of small-scale retailers in Nigeria, South Africa and Ghana. Indeed, Africa’s tech start-up ecosystem is increasingly being recognised for its dynamism. Major tech clusters have emerged in Lagos, Nairobi and Cape Town, while in Algeria the minister of the knowledge economy and start-ups is spearheading a drive to increase digital innovation in the country.