The Ploonge Global Affairs Project examines the increasingly intertwined relationship between the technology industry and global politics.
Like almost every industry, international development has attracted the attention of technologists who believe they can code problems – and development professionals have encouraged them. From YOU SAID to the Bill & Melinda Gates Foundation and the United Nations, digital development programs are proliferating. While some initiatives are quite helpful, there are reasons to think that they are not as effective as the hype would have us believe; in some cases, they are actively harmful.
Digital development has some promises: providing digital products and services to poor people will undoubtedly lift some out of poverty. But while digital development is often portrayed as an absolute good, its costs are often overlooked. Data is now the world most valuable commodity, and the biggest untapped data sources are the 3 billion people who are not yet connected to the internet. When western development actors connect them to digital services, they also put their privacy and data at the mercy of tech companies eager to monetize they. The contradiction at the heart of digital development is that initiatives that ostensibly aim to reduce poverty also enrich tech companies and allow them to generate profits from data from marginalized populations.
Some might consider this an acceptable trade-off to lift people out of poverty. But generating data from all aspects of their lives can reduce the effectiveness of development initiatives and lock others in poverty creating data-driven justifications for discrimination and helping Big Tech undermine local businesses.
Digital financial services offer a window into this dynamic. Small loans, or “micro-loans”, which are usually disbursed through mobile money accounts, have become a popular method of providing capital to people in poverty. Although Muhammad Yunus, founder of Grameen Bank, won the Nobel Peace Prize in 2006 for his work on microlending, recent evidence has shown that microlending don’t reduce poverty.
Numerous randomized controlled trials essay found that in all countries and continents microloans have little effect on poverty and can simply replace loans from local banks and community members. In several Bangladeshi villages, microloans increased indebtedness in vulnerable communities and caused some to lose their land.
However, digital financial services are on the rise because they generate fees, investment opportunities and valuable data about people’s spending habits. microcredit is now a $60 billion industry that provides loans to more than 200 million people. Investors in the United States and China have more than doubled its holdings in digital financial services companies in Africa, and investments in digital financial services now represent 60% of total investment in African technology companies.
Despite the predictions of tech evangelists, there are no signs that increased investment in digital financial services will lead to corresponding reductions in poverty. On the contrary, financial services data have been used to assess the creditworthiness of individuals, exacerbating economic exclusion by denying people in poverty access to credit based on imperfect algorithmic decision making. Meanwhile, more effective financial services solutions such as money transfers have received fewer funds as they do not result in profitable interest payments.
It’s not just digital financial services that have significant drawbacks. Recently, advocates of digital development have been promoting the adoption of digital identification as a means of connecting people to government services. The biggest and most lauded effort of its kind is India’s digital identity system – called Aadhaar, or “foundation” in Hindi – which assigns a digital identity to people by recording their fingerprints and eye scans. Aadhaar has been used to to assign digital identities to over 1.2 billion Indians since 2009.
Among the most prominent proponents of Aadhaar is Bill Gates, who provided funding to the World Bank to replicate the program in other countries. Gates has called Aadhaar “an incredible asset” that “does not in itself pose any privacy issues” and is something that “has never been done by any government before, not even in a rich country.”
But Gates is wrong: Aadhaar excluded million people from government services in India. Subscribing to Aadhaar requires proof of identity and proof of address, so it’s no surprise that government records show that 99.97% of Aadhaar enrollees already have proper identification. Even for those few who obtain proof of identification for the first time through Aadhaar, digital identity can be unreliable in a country where stable internet access is often hard to come by. Unfortunately, Aadhaar’s databases are notoriously poor quality – “fingerprint authentication error” is rampantwith up to 30% of the people unable use your fingerprints to verify your identity due to faulty technology. As a result of these flaws in the Aadhaar system, more than 1 million children were denied school admission and 1.5 million people lost access to your government benefits in India.
Aadhaar also generates vast amounts of valuable data for tech companies in India while allowed companies to track individuals’ financial activity through their unique identification numbers and sell them to third parties, who then create targeted advertisements or use the data to select individuals’ eligibility for insurance and loans. In 2018, the Supreme Court of India ruled that it was unconstitutional for the private sector to sell Aadhaar data, but India’s central government quickly circumvented the decision with a revised law. As privacy activist Usha Ramanathan put it: “data is the new gold and Aadhaar is the tool to get it”.
As Aadhaar so amply demonstrates, there are often there aren’t enough guardrails to protect users from digital development initiatives. Most of the world’s poorest countries have no data protection or privacy laws, leaving its citizens vulnerable to surveillance and data mining by multinational corporations. Digital development practitioners argue that they can still conduct their work ethically in these countries, adhering to best practices such as Principles for Digital Development, which emphasize privacy. This misses the underlying dynamic at play: a core principle of digital development is to “simplify regulations for digital businesses”, which benefits multinationals in countries that do not have adequate protections for local businesses.
To make matters worse, Big Tech has consistently thwarted efforts to enact more comprehensive data protection laws around the world. For example, as Kenya negotiates a free trade agreement with the US, Amazon and Google pressed for the US government to insert measures that liberalize cross-border data flows in direct violation of Kenya’s Data Protection Act 2019. Such a move would be to allow Amazon and Google to outperform local companies in the competition to analyze individuals’ financial data for new business opportunities. despite kenya attempts to maintain its requirement that personal data be stored locally, the Biden administration supported these companies, stalling the trade deal until Kenya meets Big Tech’s demands.
Without adequate data protection and measures that require data minimization, users of digital development programs are at risk. Last week, the Red Cross revealed that it was hacked and that the confidential information of half a million vulnerable people was stolen.
Technology boosters can claim many successes, but their triumphalism cannot replace hard evidence and cannot justify putting the preferences of multinationals above those of local communities. The fundamental reality is that digital services alone will not solve global poverty and often lead to accidental harm. If tech leaders really wanted to end global poverty, they might consider a more direct path – redistribute less than half of their annual profits would provide the $200 billion a year more than 20 years it takes to eradicate global poverty. Digital development practitioners should advocate redistributing the gains of technology companies, not scaling up.
