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Digital Control in Value Chains: Challenges of Connectivity for East African Firms

 

I'm happy to report on a new co-authored paper that I have out. The piece asks what difference changing connectivity has made for East African firms. The piece emerges from a multi-year study on Development and Broadband Internet Access in East Africa that evolved into my current 'Geonet' project.

Foster, C., Graham, M., Mann, L., Waema, T., and Friederici, N. 2017. Digital Control in Value Chains: Challenges of Connectivity for East African FirmsEconomic Geography. 94(1) 68-86.

Summary

In recent years, Internet connectivity has greatly improved across the African continent. This article examines the consequences that this shift has had for East African firms that are part of global value chains (GVCs). Prior work yielded contradictory expectations: firms might benefit from connectivity through increased efficiencies and improved access to markets, although they might also be further marginalized through increasing control of lead firms. Drawing on extensive qualitative research in Kenya and Rwanda, including 264 interviews, we examine 3 sectors (tea, tourism, and business process outsourcing) exploring overarching, cross-cutting themes. The findings support more pessimistic expectations: small African producers are only thinly digitally integrated in GVCs. Moreover, shifting modes of value chain governance, supported by lead firms and facilitated by digital information platforms and data standards are leading to new challenges for firms looking to digitally integrate. Nevertheless, we also find examples in these sectors of opportunities where small firms are able to cater to emerging niche customers, and local or regional markets. Overall, the study shows that improving connectivity does not inherently benefit African firms in GVCs without support for complementary capacity and competitive advantages.

Related work

Foster, C. and Graham, M. 2017. Reconsidering the Role of the Digital in Global Production Networks. Global Networks. 17(1) 68-88 DOI: 10.1111/glob.12142.

Friederici, N. Ojanperä, S., and Graham, M. 2017. The Impact of Connectivity in Africa: Grand Visions and the Mirage of Inclusive Digital Development. Electronic Journal of Information Systems in Developing Countries. 79(2) 1-20. 

Mann, L and Graham, M. 2016 The Domestic Turn: Business Process Outsourcing and the Growing Automation of Kenyan Organisations. Journal of Development Studies 52:4, 530-548, DOI: 10.1080/00220388.2015.1126251.

Graham, M., Mann, L., Friederici, N. and Waema, T. 2016. Growing the Kenyan Business Process Outsourcing SectorThe African Technopolitan. 5 93-95

Graham, M. 2015. Contradictory Connectivity: Spatial Imaginaries and Techno-Mediated Positionalities in Kenya's Outsourcing Sector. Environment and Planning A 47 867-883 (pre-publicaion version here).

Mann, L., Graham, M., and Friederici, N. 2015. The Internet and Business Process Outsourcing in East Africa. Oxford Internet Institute Report, Oxford, UK.

The Impact of Connectivity in Africa: Grand Visions and the Mirage of Inclusive Digital Development

My colleagues Nicolas Friederici, Sanna Ojanperä, and I have recently finished a paper in which we analyse ‘Grand Visions’ of how Internet connectivity affects development in Africa. In the paper, we contrast these visions with the actually available empirical evidence to support those claims. You will be able to read our full conclusions in the paper below:

Friederici, N. Ojanperä, S., and Graham, M. 2017. The Impact of Connectivity in Africa: Grand Visions and the Mirage of Inclusive Digital Development. Electronic Journal of Information Systems in Developing Countries. 79(2) 1-20. 

We show that the evidence base to support the claim that Internet connectivity has a vast positive or “transformative” impact on development in Africa is thin. More worryingly, once we see the techno-determinist and modernist assumptions at the core of many visions, visions of rapid development precipitated though ICTs might not just fail to achieve their goals (even on their own terms), they could actively undermine those very efforts in a world of scarce resources.

Here are some excerpts as a preview of the paper:

Development has always grappled with why some people and places have much more than others. Yet much of that conversation is lost within contemporary discourses of ICTs and development. As states and organisations rush to develop policies and plans to build drones and balloons, lay fibre-optic cables, and find other ways to connect the disconnected, much is said about the power of ICTs to positively transform the world’s most underprivileged people and places.

This is because ‘self-evident’ discourses of connectivity, like modernist visions before them offer a powerful, aspatial and ahistorical teleology (Graham et al., 2015). This allows policymakers to point to new technological fixes instead of focusing on how the political economy of any given context works to allocate power and wealth.

Visions and aspirations of transformation through connectivity are thereby able to drive concrete government projects and development funding. Hardly any dependable aggregate figures of funding and subsidies are available; many development actors are not accountable to tax payers (such as philanthropic organisations) and thus do not disclose their spending. Heeks (2009) uses official development assistance data as a proxy and concludes that ‘hundreds of millions of US dollars per year are invested in [ICT for development] projects; and that tens of billions of US dollars per year are invested in… infrastructure.’ The World Bank, as an example of a large development organisation, spent US$4.2 billion for ICT programming from 2003 to 2010 (Independent Evaluation Group, 2011), and is currently investing about US$1.2 billion in grants and loans for regional connectivity infrastructure programmes in Africa (Navas-Sabater, 2015). Rockefeller’s digital jobs programme, as an example of an initiative without infrastructure investments, provides US$100 million across Africa. Irrespective of how we measure the specifics, it is clear that huge sums have been, and continue to be, invested in the area.

Admittedly, it is impossible to establish a direct, causal connection between the discourses we have outlined and the myriad decisions that go into such ‘digital development’ spending. Still, our analysis highlights the ubiquity and assertiveness of discourses that are optimistic about the impacts and potentials of connectivity. It is clear that the productive power of these discourses provides a fertile ground for the argumentation of actors seeking to set up connectivity infrastructure, run Internet-related development projects, or sell equipment and services connected to the agenda (see (Graham, 2015) for an example of how Kenyan ICT firms strategically deploy visions of changing connectivity). As just one example, in a recent presentation, the World Bank summarized the rationale for investments in a fibre network in Central Asia in unequivocal terms: ‘Improved Internet connectivity = Economic benefits’ (Navas-Sabater, 2015, p. 4). Such a simple rationale can only be credible if the audience is sufficiently credulous, and this credulity is what discourse produces.

Discourses of development have always produced and reproduced the very objects of their ‘concern’ (Escobar, 1995). We can take a lead from Ferguson’s (1994) prompt to ask ‘what do aid programmes do besides fail to help poor people?’ Our worry here is not just that the significant resources invested in connecting Africa’s disconnected will be wasted. It is rather that the Grand Visions of connectivity will themselves lead to an exacerbation of the very things that they purport to solve. For instance, by framing inequality as something that can be effectively tackled with more connectivity, we might take away focus from the structural economic processes bringing about widening inequalities. What is worse than a developmental intervention not working is believing that an important issue has been effectively addressed when it, in reality, clearly hasn’t.

It is possible that contemporary Grand Visions of connectivity are truly reflective of a promising future for ICTs and economic development. But it is equally possible that many of those visions are hugely overblown. The current evidence base is mixed and inconclusive. We therefore need to ensure that we do more to ask the organisations and entities who produce Grand Visions to justify their claims, refusing that it is self-evident that ICTs will automatically bring about development.

(Cross-posted from Mark Graham’s blog.)

Related work:

Graham, M. 2015. Contradictory Connectivity: Spatial Imaginaries and Techno-Mediated Positionalities in Kenya’s Outsourcing Sector. Environment and Planning A 47 867-883 (pre-publication version here).

Graham, M., Andersen, C., and Mann, L. 2015 Geographical Imagination and Technological Connectivity in East Africa. Transactions of the Institute of British Geographers 40(3) 334-349. (pre-publication version here).

New publication: Who isn't online? Mapping the 'Archipelago of Disconnection'

Ralph Straumann and I have a new short publication out:

Straumann, R. K., Graham, M. 2016.  Who isn’t online? Mapping the ‘Archipelago of Disconnection.’ Regional Studies, Regional Science. 3(1) 96-98.

It is open access, so please head over to the journal to take a look at the full piece.

Abstract

For many people, internet access is an essential part of everyday economic, social, and political activities (c.f. Graham and Dutton 2014). Yet access to the internet is, and has always been, geographically concentrated (Graham, Hale, and Stephens 2012, 2011). As such, it is important to focus on the people and places that are largely left out of digital connectivity. This visualisation looks at these in terms of internet penetration (i.e. the share of their population that have “used the Internet (from any location) in the last 12 months” (source: UN 2015)). The map highlights all territories that either have internet penetration below 10%, or for which no data from the World Bank exists. A lack of data can exist for several reasons, for example: some of these territories are statistically grouped together with bigger entities, no data have been collected or inferred, or the territories lack widespread recognised statehood. The map ultimately highlights an archipelago of land whose population is mostly cut off from the internet. This Archipelago of Disconnection has its centre of gravity in Sub-Saharan Africa where 28 countries have internet penetration rates beneath the 10% threshold we applied. As the internet becomes ever more embedded into global economic flows (Malecki and Morisset 2011), to the inhabitation of urban spaces (Graham 2013), and to other facets of everyday life, those living in the Archipelago of Disconnection are largely barred from participating in the cultural, educational, political, and economic activities that it affords.

Kapuścinski Public Lecture - Uneven Geographies of Power and Participation in the Internet Era

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You can watch the whole lecture at the link above. For anyone interested in more about the topic, the following pieces could be of interest:

Graham, M., Straumann, R., Hogan, B. 2016. Digital Divisions of Labour and Informational Magnetism: Mapping Participation in Wikipedia. Annals of the Association of American Geographers. (in press) doi:10.1080/00045608.2015.1072791.(pre-publication version here)
Graham, M. 2015. Information Geographies and Geographies of Information New Geographies 7 159-166.
Graham, M., De Sabbata, S., Zook, M. 2015. Towards a study of information geographies:(im)mutable augmentations and a mapping of the geographies of information Geo: Geography and Environment.2(1) 88-105. doi:10.1002/geo2.8
Graham, M., Hogan, B., Straumann, R. K., and Medhat, A. 2014. Uneven Geographies of User-Generated Information: Patterns of Increasing Informational Poverty. Annals of the Association of American Geographers. 104(4). 746-764. (pre-publication version here)