We ought not to embrace digitalisation at face value
As pressure mounts on us to integrate digital innovations into our manual (analogue) systems on unprecedented and comprehensive scale with agility, the concern to establish whether risks associated won’t outweigh anticipated benefits in the long run must not be ignored.
The disruption effect of digital transformation fuelling the fastest growing digital economy apparently worth $12 trillion (16 percent of global GDP) remains unfortunately unmeasured and unknown especially on the survival of our retail business, industries reliant on manual and low skilled workers, privacy of persons, security of data and intellectual assets, cultural and traditional values, organic crops and animals, social interaction, management, safety of private and national resources, and sovereignty - all of which formerly guaranteed economic and political stability of developing world.
For instance, the controversy hovering over widening inequalities between investors and workers is likely to worsen by use of artificial intelligence.
Then the trade imbalances between exporters of internet, digital services and products and importers, majority, of which are developing nations is critical too.
Also, given the high-tech driven machines are not complementary with labour but substitutes, thus becoming not only potential displacers of workers but also powerful enablers of capital freight moreover untaxed from poverty stricken nations to wealth nations.
Researchers such as Andrew McAfee and Erik Bryn Jolfson, in their latest book Second Machine Age, note that digitalisation phase involves the automation of a lot of cognitive tasks that make humans and software driven machines substitutes rather than complements unlike during industrial revolution (First Machine Age) which helped make labour and machines complementary.”
Digitalisation journey has already ushered in technology business driven solutions to enhance efficiency and productivity in production, research, trade and service delivery both in public and private domain.
More gains in terms of new versions are expected in robotics, 3-D printing, internet, automation of vehicles, AI, biotechnology, energy storage, and quantum science all of which will further digital divide and more misery to low skilled reliant industries.
Faced with fierce competition from social media platforms already attracting 30 percent of world’s population, traditional news channels’ scale of operations won’t remain the same.
These sophisticated innovations attract huge expenses from poor countries thus eroding savings and weakening investments critical to attainment of middle income status.
US based digital companies are becoming multi-billionaires at an alarming pace clearly signaling the largest beneficiaries of digital business will be innovators, providers of artificial and physical capital, shareholders and countries producing internet. The digital television products weakened African sports industry. Hotel business and others are affected by Zoom meeting services.
Aware of associated risks, some countries resorted to blockages. Nigeria blocked Twitter while Facebook faced a similar hurdle in Uganda. The application of AI has been halted in several developed world. The US technology at the heart of GMOs was blocked by EU and Russia. Ugandan President declined to assent to GMOs law passed by legislators last year.
Private crypto currency usage has been accepted in Salvador but rejected by power economic houses like China and others due its vulnerability to cyber attacks. The same affects error prone drones, digital money- mobile banking and mobile money. In 2020, According to Cybersecurity202, global cyber crime cost hit $1 trillion, and expected to reach $ 11 trillion in 2025. Failure to fix this problem might force users return to manual processes.
This has, however, not deterred multilateral entities promoting transparent policies and practices in governance and trade globally from pressurising for quick digitalisation.
Digitalisation is eroding massive revenues from developing countries whose economic woes continue to worsen following health and economic crisis triggered by Covid-19 outbreak and the question is how consumers shall bridge the trade imbalances with exporters.
This situation is likely to be worsened by the new taxation conditions proposed by Organisation for Economic Cooperation and Development aimed at barring countries from charging corporate income tax on foreign digital exporters without physical presence in consuming countries.
Therefore, for our economies to maximise positives and survive erosive challenges of digitalisation simultaneously, we must develop a self regulating digital mechanism with capacity to tax virtual services and stop unnecessary machinery automation and use of artificial intelligence.
Andrew Bakoraho
