Financing ICT for development: the EU approach

This paper offers a brief overview of European Union financial support to ICT for development programmes, and relates this to the MDG process.

It notes that:

• most EU members support this approach, and ICT forms a significant part of many EU funded projects. ICT needs infrastructure, and the EU supports this as part of the new Infrastructure Partnership with Africa due to start in autumn 2005. But hardware alone does not make an effective information system, and many other factors also receive increasing support – such as training, policy and planning, development of applications and content, and improvement of environmental conditions such as energy and education.
• ICT infrastructure has largely been funded by the private sector, since the 1990s. The private sector has proved itself more efficient than governments in telecommunications service provision: private providers are more flexible and able to keep up with technological change, and competition keeps costs and prices lower. One role of governments, with donor support, is therefore to attract private investment. This sometimes requires financial support such as low-interest loans or risk guarantees; and always requires creation of the right conditions of regulation, competition, and start-up costs.
• it is not enough for governments and aid donors simply to say "leave it to the private sector". Areas in which government action is still needed, often with donor support, include:
  • creating an enabling legal and regulatory environment to attract investors
  • ensuring that the communication needs of the poorest and most marginalised people are met, often through innovative public-private partnerships
  • introducing ICT into government functions and services.
• donors also play a role in encouraging private operators to enter risky or less profitable areas, by supplying financial assistance and risk mitigation; and in international collaborations, for instance to build "backbone" infrastructure linking countries and regions across Africa.

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