Image source: (VIAINVEST, n.d.)

What is the digital economy? Who are its giants?

The phenomenon of the digital economy has been broadening roots and wideness in terms of clarity and implications to the world’s economy. Digitalization, itself, is becoming inseparable from economic growth as it is showing potentiality in reversing market interaction models, shifting consumers satisfaction, private and government institutes service delivery, and production processes. As of the UNCTAD indicatition, digitally deliverable service exports accounted for 50 per cent of the global services in 2018, which was equivalent to $2.9 trillion (UNCTAD,2018). Unlike other development sectors, digital economy is revealing a strong impact to the global market through its components including Artificial Intelligence, Blockchain technology, Internet of Things(IoT), Cloud Computing, Data Analytics, 3D printing, Automation and Robotics, and E-commerce, which most of them are relying on quality infrastructures, public and private legislations governing their applications. 

In line with the evolution of the digital economy throughout the modern era, analysts and researchers are yet to firmly define what it is the digital economy as it keeps expanding its concepts. The value of the digital economy is measured according to its reliability and its change in nature.  According to the UNCTAD narrow definition, the digital economy has a 4.5 per cent contribution to global GDP while the broad definition of GDP indicates that Digital Economy contributes 15.5 per cent (UNCTAD, 2018).

Figure 1. (UNCTAD,2018)

A narrow definition of the digital economy by VoxChina defines it in reference to the information and communications (ICT) sector only, such as internet, telecommunications, IT services, hardware and software, amongst other (Zhang, and Chen, 2019). While the broad definition of refer to digital economy as a hyperconnected economy composed of an increasing number of organizations, people, evolving manufacturing process and machines through the web and the application of digital technology (Daidj, 2019)

Today’ digital era is driven by two key players, including the US and China, which are developed and developing countries respectively. These two countries themselves account for more than 75 of the world’s cloud computing market, 50 percent of global spending on IoT, and an approximate 75 percent of blockchain-related registered patents (UNCTAD, 2018). The significance of these dominant countries in embracing the digital economy is boosted by the evolution of digital platforms, legislations about the digital economy, data manipulation, 3D printing technology, and the implications of artificial intelligence worldwide. Eventually, the dominance of these two uplift the growth of digitalization in their home continents. For instance, North America, topping the list, followed by the Asia Pacific and Western Europe account for about 90 percent of overall cloud traffic (UNCTAD, 2018).

Figure 2. (UNCTAD, 2018)

How did we get here?

Over the past years, cloud computing has transformed data storage models and simplified data accessibility in a way that organisations can remotely share and access information very often. Complimentary different industries have been leveraging on the potentiality of the internet in boosting production through a quick adoption of automation in industries, and quick access to the global market through different e-commerce platforms.

E-commerce has significantly transformed interactions between enterprises, customers, unlimited to governments. The internet, as a key component of interactions, has widened trading boundaries from regional level to worldwide extent. 

Figure 3: (UNCTAD, 2018)

Since the mid-1990s, when scientists and analysts coined digital economy and brought its concept in economy, technology and its use by enterprises, have indicated the essentiality of the internet in the world’s economy. It is still unfortunate that most countries are failing to take advantage of the trending digitalization. The UNCTAD report indicates that Europe’s share in the world’s 70 largest digital platforms is 4 percent of market capitalization while Africa and Latin America together share 1 percent only. Unsurprisingly, the US and China parent up to 90 percent of the shares via the super platforms including Microsoft, Apple, Amazon, Google, Facebook, Tencent and Alibaba which account for two third of total market value (UNCTAD, 2018).

What can Rwanda do to pace with giants?

Rwanda, amongst countries which are lagging behind towards the world’s vision of building knowledge-based economy, has been employing different strategic approaches towards a promoted digital economy. The review of Rwanda’s status in terms of 3D Printing, Cloud Computing, automation and robotics, digital platforms, and policy flexibility indicates a big gap compared to the world’s giants in digitalization. As an outcome, the country is struggling to adapt digitalization due to insufficient infrastructures and flexible legislations towards the digital economy. 

Even though Rwanda has done its best in improving internet penetration, there are still gaps in availing efficient platforms to facilitate the digital economy. In 1992,  Global Internet Protocol (IP) traffic, a proxy for data flows, grew from about 100 gigabytes (GB) per day to more than 45,000 GB per second in 2017 due to an increase in people coming online for the first time and growth of the Internet of Things (IoT) (UNCTAD, 2018). While reviewing different factors which can uplift digitalization, countries should consider improving internet accessibility and affordability. Today, Rwanda is doing great in increasing internet accessibility where, according to the ICT ministry, 92 percent of the country is rolled out with a fibre optic backbone for 3G network. Also, 96.6 percent can access 4G LTE (Xuequan, 2019). Nonetheless, internet penetration across the country was recorded at 52.1 percent in 2018, which is still a drawback to investors. Hypothetically, internet penetration eases the process of data retrieval as it supports investors to penetrate into the online market. Also, Rwanda is doing good in improving internet affordability compared to the rest of Africa.  Rwanda has the cheapest 1GB mobile internet in Africa, with an estimated cost of $0.53 (Rwf500)(Writer, 2019). Apparently, the internet should not be considered affordable at the country level as the GDP per capita is very low at 772.944 USD in 2018 (, 2020). Hypothetically, most people don’t consider the internet as costly due to their income statuses which eventually disqualifies from primary needs. If Rwanda is opting to integrate digitalization in primary economic sectors, they must invest in improving human development index first, which will support the quick penetration of technology.

Other than increasing internet accessibility, Rwanda has been investing in health-care by automating different activities. E-health services have improved health monitoring, reporting methods, henceforth, the country has been modifying policy formation model and operational planning by integrating technology in their processes. As evidence,  Babyl, in partnership with the Ministry of Health, is providing relevant technology to health and offering free online health-care services such as facilitation in booking doctors and consultations. Eventually, an increase in users has been a strong data input to administrations (Crouch, 2018). These acts are related to the ability of the state to enable changes in legislation. Since legal concerns have been amongst key drawbacks to Less Developed Countries(LCD) and developing countries to leverage the potentiality of digitalization, having a flexible policy, which favours changes inventions, can bring value to inventions, thereafter the growth of the digital economy. Similar to other sectors, there is a need for adjusting policies with the purpose of increasing the efficiency of digitalization.

Nonetheless, platforms themselves are not enough to boost the digital economy if infrastructures don’t satisfy the market demand. Rwanda is struggling to provide affordable technology devices such as electronic gadgets. These gadgets ease the market interaction process as they increase data input to stakeholders.

Figure 4: (UNCTAD, 2018): It is too costly to access databases due to inefficient infrastructures. 

Estimates state that an efficient technology has the potential to generate an additional global economic output of an approximate $13  trillion by 2030, an additional contribution of 1.2 per cent to annual GDP growth (ITU, 2018b). To achieve this, Rwanda needs to synthesize different resources and improve its digital platforms. Platforms help to provide essential mechanisms for digitalization such as data entry to stakeholders, quick access to markets, as they ultimately reduced in-person interactions. Platforms have shown potentiality in fastening cross-boundaries trading activities, provide quick support to customers queries through chatbots, facilitate transactions with reasonable costs, enable the efficiency of artificial intelligence, and speed up information exchange. Additionally, platforms have helped businesses to increase the quality of services and goods through proper manipulation of data. Data has been helping to predict customers behaviour, predict ideal locations, define users preferences,  and to define relationships between customers and enterprises. 

It is ideal for Rwanda to aim at improving infrastructures quality towards the vision of creating a knowledge-based economy (Rwanda Development Board, n.d.). Since the country considers ICT as a source of knowledge in education, it must as well consider investing in the future workforce as a key player in achieving future goals. Having a competitive workforce will help emerging innovators to compete in the global market and to promote the social value of citizens. Digitalization is expected to reverse the job market to automation and robotics, which will negatively affect today’s labour market. As the world expects a change in employment, having a skilled workforce will help to increase the job creation rate and to meet countries’ demand for human needs, including access to markets.


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