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Worldwide Expenditure on ICT4D

6 April 2009 6 comments

How much money is spent every year on ICT4D?

 

We can calculate this two ways: top-down and bottom-up.

 

Top-Down Calculation: World Development Indicators

 

The World Bank’s World Development Indicators provide an entry for ICT expenditure as a % of GDP.  For 2007 – the latest year available – this expenditure was 5.93% for low- and middle-income countries (covering pretty well all those we tend to call developing and transitional economies; those with GNI per capita of less than US$11,455).  Given the GDP of those countries was US$14,155bn, that means spending on ICTs in all developing/transitional economies is estimated at US$840billion in 2007.

 

Of course this encompasses a very broad notion of ICT4D: as a random example, what Russian giant Gazprom spends on its information systems.  If we exclude upper middle income countries, and set the GNI bar at US$3,705 per capita (around the level of Indonesia, Philippines); then the figure drops to US$500bn.

 

Including just low-income countries (GNI <US$935 per capita; akin to Paul Collier’s “bottom billion”), we have to extrapolate, and get a figure of US$57bn: about US$44 spent on ICT per head.

WITSA data (see comments) seems to confirm these calculations.

 

[Note: “Information and communications technology expenditures include computer hardware (computers, storage devices, printers, and other peripherals); computer software (operating systems, programming tools, utilities, applications, and internal software development); computer services (information technology consulting, computer and network systems integration, Web hosting, data processing services, and other services); and communications services (voice and data communications services) and wired and wireless communications equipment.”]

 

Bottom-Up Calculation: Individual Organisations/Groups

 

A bottom-up approach would look at the ICT4D expenditure of individual organisations or groups.  We can identify four main spenders: development agencies; developing country governments; the private sector; and consumers.  Unfortunately, data here is a threadbare patchwork.

 

I will present the data I have available: if you have other/new data, please comment in order to update.

 

Donor/Development Agencies

 

Data from the World Bank Group shows it invests around US$800m per year in specific loans and guarantees on ICTs and development, and US$1-1.5bn per year on projects with ICT components (at present, it cites a total of nearly US$8bn invested in such projects).

Some very rough estimates from personal contacts with USAID suggest perhaps something like US$800m being spent on all ICT components of development work per year.  Even rougher estimates from JICA’s annual reports suggest it is spending at least US$200m per year, and probably significantly more.

 

Data from various bits of the International Telecommunication Union Web site suggests an expenditure of around US$60m per year on its development activities (c.20% of total expenditure).  The EU’s 9th European Development Fund (2000-2007; focused on Africa, Caribbean, Pacific development) included about US$20m per year (c.US$150m in total) for ICTs.  There is also expenditure on ICT4D as research collaboration under the EU’s Framework Programmes.

 

Canada’s IDRC spends 15.8% of its budget on ICT4D; that budget spending was C$190m in 2008, meaning a total spend of around US$25m per year on ICT4D.  Korea’s International Cooperation Agency seems also to spend around US$25m per year on ICT4D; about 13% of budget.

 

SIDA appears to be spending around US$3m per year on ICT4D.

 

Delivery agencies with a specific focus on ICT4D have similarly small budgets, and will not make a significant dent on the overall figures.  Examples would include IICD which spends around US$6m per year, and the Global Knowledge Partnership which may spend about half that.  Quite a bit of this money would come from donor agency funds.

 

Developing Country Governments

 

Few if any developing country governments appear to compile comprehensive figures on their ICT investments.  Instead, they quote expenditure that is specifically identified as “ICT”; for example, the budget of the Ministry of ICT.  This will probably exclude the majority of what the government spends on ICT.  For example, Ghana seems to budget ICT spending on health and education under health and education respectively, not under ICT.

 

Quoted annual government expenditures on ICTs via this narrow definition for some “typical” medium-/large-sized developing countries are in the few hundreds of millions of dollars.  E.g. Indonesia (US$340m); Thailand (US$300m); South Africa (US$130m).  These are about 0.5% of total government budget; and just under 0.1% of total GDP.

 

Extrapolating that latter figure, for low and lower-middle income countries, that would suggest investments of about US$7.5bn per year, but the actual figure must be significantly higher than this.  As one example, the Indian government in the mid-2000s was already in the process of increasing its total spending on ICTs (i.e. not just that specifically allocated to the ICT heading) from 2% to 3% of budget: a figure of around US$3bn.  By comparison, its direct spending on ICT (mostly allocated to e-government) was around one-tenth of this.

 

Private Sector

 

Private sector investment levels in mobile telephony are, according to the GSMA, around US$10bn per year in Africa; very roughly US$10 per capita.  If at least that amount is also spent in the other developing country markets, that suggests a total investment per year of at least US$50bn.

 

Other ICT investments in computers, software, non-mobile-based Internet connectivity, and so forth, would be in addition to this figure.

 

The private sector also has specific development-oriented activities.  Examples would be Microsoft Research India, and parts of Microsoft’s Unlimited Potential programme, or Intel’s World Ahead.

 

Consumer Expenditure

 

Individual consumers spend money on ICTs that are part of ICT4D; for example, the amount they spend on mobile telephony, and on use of telecentres.

 

Extrapolating figures from Nigeria, which suggest an average per capita spend on all telecommunications of US$55 per year, would indicate spending of around US$55bn per year on telecoms in Africa.  Much of that, of course, would be spent by business rather than individuals, and that money then recirculates for further private sector investment.  If those same figures could be extrapolated across all developing countries, they would suggest a spend of around US$300bn per year, but that is likely a significant underestimate since Nigerian expenditure will be below developing country averages.  That US$55 per year is actually MORE than the US$44 figure indicated from the World Development Indicator figures, and yet it only covers telecommunications.

 

Alternatively, Mpogole’s work in Tanzania found rural mobile phone owners spending around US$22 per month (US$270 per year) on their mobiles.  Using ITU’s 2007 figures (21% subscription rate) and the corrector discussed in a previous blog, we arrive at a spend just on mobiles of US$43 per person per year.  At least, then, all these figures are not wildly dissimilar, given that spending on mobiles will be by far the major expenditure on ICT4D in developing countries.

 

Conclusion

 

The figures here cover some very different things.  Some cover a lot of what many would regard as outside the boundaries of ICT4D.  Nonetheless, it seems reasonable to conclude that hundreds of millions of US dollars per year are invested in ICT4D projects; and that tens of billions of US dollars per year are invested in ICT4D infrastructure, with consumers in developing countries spending even more on the use of ICTs, amounting on average to a few tens of US dollars per person per year.

 

As noted above, additions and updates are welcome.

 

Note: the SIDA source cited above contains, in its Chapter 4, a quick review of some of the main actors investing in ICT4D.

 

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