OPINION; Digitalization is a double-edged sword for developing Countries

As pressure mounts on us to integrate digital innovations into our manual (analog) systems on an unprecedented and comprehensive scale with agility, the concern to establish whether the risks associated won’t outweigh anticipated benefits, in the long run, must not be ignored.

Touted as the engine for the fourth industrial revolution doubling as resource erosive digital technology which I view as a neocolonial tool should not be embraced at face value.

Forget about international border points which Customs used to rely on to monitor, control, and regulate the inflow and outflow of goods and services recognized under international trade, virtual internet-based transactions are occurring, and consumed massively and uncontrollably, the world over thus, eroding resources from undigitalised poor nations to rich high- tech ones unnoticeably.

Uganda alone has at least 20 million Internet subscriptions, and almost 50% of the Ugandan population, is connected to broadband (Uganda Communications Commission, UCC)

Across Africa, roughly 565 million people (only 27%) compared to the global online access rate of 63 percent.

African access according to Statist forecasts is also projected to reach 700 million by 2025.

With such numbers, Africa and Uganda in Particular should be able to estimate how much of her valuable and imperative it sends to Western-based innovators.

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, the privacy of persons, security of data and intellectual assets, cultural and traditional values, organic crops and animals, social interaction, management, the 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 the use of artificial intelligence.

Then the trade imbalances between exporters of the internet, digital services, and products and importers, the majority, of which are developing nations are critical too.

Also, given the high-tech-driven machines are not complementary to labor but substitutes, thus becoming not only potential displacers of workers but also powerful enablers of capital freight moreover untaxed from poverty-stricken nations to wealthy nations.

Researchers such as Andrew McAfee and Erik Bryn Jolfson, in their latest book Second Machine Age, note that the digitalization phase involves the automation of a lot of cognitive tasks that make humans and software-driven machines substitutes rather than complements unlike during the industrial revolution (First Machine Age) which helped make labor and machines complementary.”

The digitalization journey has already ushered in technology business-driven solutions to enhance efficiency and productivity in production, research, trade, and service delivery both in the public and private domains.

More gains in terms of new versions are expected in robotics, 3-D printing, the internet, automation of vehicles, AI, biotechnology, energy storage, and quantum science all of which will further the digital divide and more misery to low-skilled reliant industries.

Faced with fierce competition from social media platforms already attracting 30 percent of the 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 the 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 the internet. Digital television products weakened the African sports industry. Hotel businesses 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 worlds. The US technology at the heart of GMOs was blocked by the EU and Russia. Ugandan President declined to assent to GMOs law passed by legislators last year.

Private cryptocurrency usage has been accepted in Salvador but rejected by power economic houses like China and others due to its vulnerability to cyber-attacks. The same affects error-prone drones, digital money- mobile banking and mobile money. In 2020, According to Cybersecurity202, global cybercrime costs hit $1 trillion and are expected to reach $ 11 trillion in 2025. Failure to fix this problem might force users to return to manual processes.

This has, however, not deterred multilateral entities promoting transparent policies and practices in governance and trade globally from pressurizing for quick digitalization.

Digitalization is eroding massive revenues from developing countries whose economic woes continue to worsen following the health and economic crisis triggered by the 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 Organization for Economic Cooperation and Development aimed at barring countries from charging corporate income tax on foreign digital exporters without a physical presence in consuming countries.

Therefore, for our economies to maximize positives and survive erosive challenges of digitalization simultaneously, we must develop a self-regulating digital mechanism with the capacity to tax virtual services and stop unnecessary machinery automation and the use of artificial intelligence.

Andrew Bakoraho, is a Writer, Researcher, and Policy Analyst.