36357 Background Document June 2006 THE SAR ICT TASK FORCE Table of Contents ACKNOWLEDGEMENTS ...................................................................................................................................... 1 PREFACE ......................................................................................................................................................... 2 CHAPTER 1: INTRODUCTION ............................................................................................................................. 3 Scope and Objectives ................................................................................................................................. 3 Basic Assumptions ...................................................................................................................................... 4 First the Basics: What are Information and Communication Technologies? ............................................... 4 What is the Role of ICT in Growth and Development? ................................................................................ 5 Structure of this Background Report ........................................................................................................... 8 CHAPTER 2: KEY ELEMENTS OF A SUCCESSFUL ApPROACH TO ICT DEVELOPMENT ......................................... 10 Above All, Leadership ................................................................................................................................10 Then, The Enabling Environment - Long Term Strategies ........................................................................10 Human Development I Skilled Labor ..........................................................................................................11 Information Infrastructure ...........................................................................................................................11 Legal and Regulatory Framework ..............................................................................................................12 Lastly, ICT Applications I Programs - Short Term Strategies ....................................................................16 (1) ICT Sector Det}elopment..................................................................................................................... 16 (2) Sector Specific Applications ................................................................................................................ 16 (3) E- Government .................................................................................................................................. 17 (4) /{nowledge Economy Det}elopment ....................................................................................................... 17 How can ICT projects be implemented? ....................................................................................................17 CHAPTER 3: THE WORLD BANK STRATEGY FOR leT DEVELOPMENT.................................................................20 What are the core elements of the World Bank ICT Strategy? ...................................................................20 (1) Broadening and deepening sector and institutional reform ......................................................................20 (2) Increasing access to information infrastructure ...................................................................................... .20 (3) Supporting information and communication technologies human capaary ............................................... 21 (4) Supporting information and communication technologies applications.....................................................21 (6) Selectivity and evaluation ..................................................................................................................... 21 How Will the Strategy be Implemented? ....................................................................................................24 · .. D tt'tSt011 f!; responStlFttttzes......................................................................................................................... .24 d' '1.:1' . Tools and organizational innovations for the World Bank Group ...............................................................24 How are other WB Regional Units addressing ICT issues? .......................................................................25 What are the roles of IFC and MIGA in ICT Development? .......................................................................26 Internal Bank initiatives in ICT Development.. ............................................................................................27 CHAPTER 4: COUNTRY ASSESSMENTS ............................................................................................................28 What are the general characteristics of the South Asia Region? ..................................................................28 What is the nature of the World Bank's involvement in ICT development in South Asia? ........................... 31 4.1 Afghanistan ................................................................................................................................ ,"', .......... 32 Introduction ..............................................................................................................................................32 Overall Country Assessment.. ................................................................................................................32 Overall Economic Development Objectives for Afghanistan ................................................................36 Government Related ICT Initiatives .......................................................................................................37 WB Related ICT Initiatives .....................................................................................................................38 Other ICT initiatives ................................................................................................................................40 Potential Areas for Future Involvement .................................................................................................41 K~v Contacts and OrganiZations................................................................................................................ 42 Table ofKIJ)' J)ocuments ......................................................................... ,.................................................. 42 4.2 Bangladesh ....... ,............................ ,.......................................................................................................... 44 Introduction. .............................................................................................................................................44 Overall Country Assessment.. ................................................................................................................45 Overall Economic Development Objectives for Bangladesh ................................................................48 Government Related ICT Initiatives .......................................................................................................50 WB Related ICT Initiatives .....................................................................................................................51 Other ICT initiatives ................................................................................................................................52 Potential Areas for Future Involvement .................................................................................................53 KIJV Contacts and Organizations................................................................................................................ 54 Table of KIJV DOctfllJents ............................................................................................................................ 54 4.3 Bhutan ........................ ,............................................................................................................................ 50 Introduction ..............................................................................................................................................56 Overall Country Assessment.. ................................................................................................................56 Overall Economic Development Objectives for Bhutan ........................................................................58 Government Related ICT Initiatives .......................................................................................................59 WB Related ICT Initiatives .....................................................................................................................60 Other ICT initiatives ................................................................................................................................61 Potential Areas for Future Involvement .................................................................................................62 KIJV Contacts and Orgatli'{fltions................................................................................................................ 62 Table of Key DOcl1!tlents ............................................................................................................................ 62 4.4 India .......................................................................................................................................................... 04 Introduction ..............................................................................................................................................64 Overall Country Assessment. .................................................................................................................65 Overall Economic Development Objectives for India ........................................................................... 73 Government Related ICT Initiatives .......................................................................................................74 WB Related ICT Initiatives .....................................................................................................................75 Other ICT initiatives ................................................................................................................................76 Potential Areas for Future Involvement .................................................................................................77 K~y Cotltacts and Organi'{fltiof1s................................................................................................................ 78 Table of K'!)I DOcuuJents ............................................................................................................................ 78 4.5 l'vIaldives ................................................................................................................................................... 80 Introduction .............................................................................................................................................. 80 Overall Country Assessment.................................................................................................................. 80 Overall Economic Development Objectives for Maldives .....................................................................83 Government Related ICT Initiatives .......................................................................................................85 WB Related ICT Initiatives .....................................................................................................................86 11 Other ICT initiatives ................................................................................................................................87 Potential Areas for Future Involvement .................................................................................................87 Ki?)' Contacts and OrgatliZatiotls................................................................................................................ 88 Table ofKq DocttlJlents ............................................................................................................................ 88 4.6 l'-: epal .... ,., ........... ,..................................................................................................................................... 9() Introduction .............................................................................................................................................. 90 Overall Country Assessment. .................................................................................................................91 Overall Economic Development Objectives for Nepal... ....................................................................... 94 Government Related ICT Initiatives .......................................................................................................97 WB Related ICT Initiatives .....................................................................................................................99 Other ICT initiatives ............................................................................................................................. 100 Potential Areas for Future Involvement .............................................................................................. 100 K~y Contacts and OrganiZations............................................................................................................. 101 Tabie ofK(iJ' Documents ......................................................................................................................... 101 4.7 Pakisran ................................................................................................................................................. 103 Introduction ........................................................................................................................................... 103 Overall Country Assessment.. ............................................................................................................. 104 Overall Economic Development Objectives for Pakistan .................................................................. 108 Government Related ICT Initiatives .................................................................................................... 109 WB Related ICT Initiatives .................................................................................................................. 110 Potential Areas for Future Involvement .............................................................................................. 113 Kry Contacts and Organizatiolls ............................................................................................................. 113 Table of Key Documents ......................... ....................................... ................................ ........ ...... ........... 113 4.8 Sri Lanka ............................................................................................................................................... 116 Introduction. .......................................................................................................................................... 116 Overall Country Assessment............................ ........ ......... ............. ..................................................... 11 7 Current ICT Related Initiatives Underway .......................................................................................... 122 WB Related ICT Initiatives .................................................................................................................. 123 Other ICT initiatives ............................................................................................................................. 123 Potential Areas for Future Involvement .............................................................................................. 124 Key Contacts and Organizatiofl .............................................................................................................. 125 Table of Kf!Y Documents ...... .................. ............ ..................................................................................... 125 Annex 1: Sector Specific ICT Frameworks ..............................................................................................127 Introduction ........................................................................................................................................... 127 Annex 2: CAS I PRSP Comparison .........................................................................................................133 AFGHANISTAN ICT DEVELOPMENT· TSS & Securing Afghanistan's Future Comparison ........ 133 BANGLADESH ICT DEVELOPMENT· CAS & PRSP Comparison ................................................. 136 BHUTAN ICT DEVELOPMENT - CAS & 9th Plan Comparison ....................................................... 139 INDIA ICT DEVELOPMENT - CAS & 10th Plan Comparison ........................................................... 142 MALDIVES ICT DEVELOPMENT· CAS &6th NDP Comparison ................................................... 147 NEPAL ICT DEVELOPMENT· CAS &PRSP Comparison .............................................................. 150 PAKISTAN ICT DEVELOPMENT - CAS & PRSP Comparison ........................................................ 153 SRI LANKA ICT DEVELOPMENT - CAS & PRSP Comparison * ..................................................... 155 111 Acknowledgements This complementary background report to the "eSAR: The South Asia ICT Strategy and Implementation Plan" is a result of the tremendous collaborative effort amongst various units within the \X'BG, including, SAR Sector Units, GICT, ISG, IFC, InfoDev and W'BI. The project team was led by Kareem Abdel Aziz (SASFP) who wishes to acknowledge the invaluable contributions the many individuals made to this report. The consultants who participated in performing extensive background research and helped to draft some sections of the report - Oluwatoyin Victor Abiola, Ashraf Siddiqui, Katrina Kanaan, and Subhash Bhatnagar all added to the quality and depth of the report. The members of the ISG team who directly contributed to drafting certain sections of the report as well as provided invaluable comments on the strategy, Deepak Bhatia, Jiro Tominaga, Seda Pahlavooni and Nagy Hanna. The members of the GICT team who provided invaluable support to the drafting team, Tenzin, Dolhma Nobu, Robert Schware, Rajesh Pradhan and Peirre Guislain. The members of the South Asia Region ICT Task Force who either contributed to the report or commented on the report at various stages, Meena Munshi (SASAR), Rosita Van Meel (SASHD), Nick Manning (SASPR), Anuja Utz (W'BI), Parmesh Shah (SASAR), Paul Asel (IFC), Kerry McNamara (InfoDev), Abha Joshi-Ghani (SASEI), Ngaraja Rao Harshadeep (SASES), Els Hinderdael-Forger (SARPS), Donna Thompson (SARFM). Lastly, but certainly not least, the project team is grateful to Joseph Del Mar Pemia (Sector Director), Simon C. Bell (Sector Manager) and Mark Dutz for their guidance and overall supervision of the project, Marjorie Espiritu for her assistance in formatting the report, as well as the dedicated support of Samuel Munzele Maimbo, Ismail Radwan, Riva Eskinazi and Magdi Amin who were consistently available for advice and provided invaluable direction to the project. 1 Preface This document contains the background research that was done to develop the \XTorld Bank South Asia leT Strategy and Implementation Plan (March 2005). The data and information contained in this document is as of July 2004, when the deyelopment of the leT strategy was initiated. The information contained in this document is targeted towards researchers, economic deyelopment practitioners and policy makers interested in information on how ICT has been integrated into the overall economic development programs for the South Asia Region countries. It also provides a snapshot of what role the various development organizations are playing in each of the countries in the leT for development agenda. This document also describes the analytical framework that was used to assess each country's leT related activities and opportunities for further development. This framework has been used as the basis for the World Bank's 3 year strategy and implementation plan called eSAR, and is being used in other strategy deyelopment initiatiyes within other \XTorld Bank departments. 2 Chapter 1: Introduction The use of Information and Communication Technologies (lCTs) to improve living standards in developing countries has been at the forefront of modern development policy debate for several years. Over this period, many countries have come to recognize the potential of ICTs as powerful tools that can help them achieve their socio-economic development objectives in a quicker and more cost effective manner. This is particularly true among countries in the South Asia, where there is now keener interest in exploiting the benefits of ICTs to achieve pro-poor growth and to increase employment of human and other resources. As a result, the question confronting these countries is no longer "\'V'hat are the benefits of using ICTs in development work?" Rather, the focus now is "How can the benefits of ICTs be realized to achieve national development goals and priorities?" In response, this Background document attempts to develop a framework within which the World Bank Group, through its Regional ~fanagement Team (RMT) for South Asia, can support its client countries to adequately harness the great potential of ICTs in reducing poverty and achieving overall socio-economic development. Scope and Objectives In order to put this document into context it is important to identify the scope and objectives of this Background document. It is important to note that this Background document is not: • An exhaustive study on how ICTs can be incorporated into our current sector work, • A detailed prescription of how to achieve lCT development in each of the World Bank's client countries in the region, or • An assessment of the various types and applications of I CT in development. Rather, it provides the SAR with a framework within which it can incorporate the use of ICTs in its work program in a more comprehensive and coordinated fashion. As such, the Background document provides: • A brief overview of what is meant by ICT development, • A framework '\.vithin which lCT development takes place on a country level. • lCT development strategies and goals that the Bank's clients in the region have set for themselves • Strategic options on how the South Asia Region can support the actualization of its clients' goals. Based on the basic assessment of the status of JCT development in the region and a review of our existing regional work program, the Background document aims to provide the Region a strategy and implementation plan that is responsive to the aspirations of our client countries in this regard. The Background document also aims to identify and clarify the potential roles of various internal units 3 Introduction actiyely working in the area of lCT development and provides a basic recommendation and framework within which the South Asia Region can leyerage these resources to achieve the goals set bv this exercise. Basic Assumptions In order to clarify the objectives of this document and to clearly provide recommendations to the South Asia Region that can be incorporated into the existing work programs it is important to state the basic assumptions that were made in developing this Background document. These assumptions are the guiding principles behind the propositions outlined in this Plan, and should be the basis for the discussion and use of this document. 1. The central objective of the \v'B South Asia Region's (SAR) regional work program is to assist its client countries in South Asia to achiedng the Millennium Development Goals (MDGs). The primary aim of the Background document, therefore, is to identify ways in which SAR can support the use of leTs to enhance current efforts in achieving the MDGs. 2. An Information Society is the basic platform with which MDGs can be achieved in a more effective and efficient manner. Therefore the long-term goals of a country's development should include the establishment of an information society. And in doing so, priority should be given to the development ofICTs as the driving force. 3. It is assumed that, if properly applied, the uses of ICTs have a direct, positive and significant impact on socio-economic development. Therefore, a strategic focus on the development of ICTs can have a profound impact on achieving any short, medium, or long-term development goals that are set by our clients. This expectation is based on the premise that the principles of economic development do not change with the use of leTs. Rather, leTs are important catalysts that can be used with the right economic principles to achieve extraordinary results. 4. Any World Bank regional ICT strategy should be consistent with the WB leT Strategy and implementation plan. First the Basics: What are Information and Communication Technologies? In this document, Information and Communication Technologies (lCTs) are defined as toolrfor the collection, acquisitiott, management, transmission, and use 0/ inJormation, which 11lhen appropriately applied, can suppmt atzd enhance the pace of socio-eCOl1omic growth and development. As the name implies, ICTs consist of hardware (televisions sets, radio, computers, network components and peripherals, etc), software and databases, infrastructure and networks, and other media for collection, storage, processing, transmission, and presentation of information (voice, data, text, images). This definition is consistent with the view that ICTs are a "key input for economic development and growth", and that they "provide a foundation for building up and applying knowledge in the public and private sector", as outlined in the World Bank Group I CT Strategy. 4 Introduction Before JCTs can be used effectively, to foster economic development on a large scale, certain complementary activities and capabilities have to be present. Farmers and other rural dwellers, for example, will be unable to use their radio sets without electricity or power batteries), students will be unable to learn from the internet without computers, small businesses can not automate their business processes without compatible sofnvare systems and databases, and awareness raising campaigns targeted at educating the public will be less successful without adequate local content channeled through appropriate media. Chapter 2 of this document discusses these elements more extensi"lrelv. What is the Role of leT in Growth and Development? In promoting socio-economic advancement, the debate in the 1990s over choosing between ICT and other development imperatives has now shifted from one of tradeoffs to one of complementatities. Questions such as: "Should governments invest in more schools, instead of computers? Or Should policy makers support the development of satellite networks instead of hospitals?" are becoming less relevant. Nowadays, it is less a matter of choosing between ICT and health, ICT and education, but of choosing the most effective war for ICT to help in the delivery of health, education, and small business development services. Policy makers need not wait until they achieve universal primary education, before they devote scarce resources into bridging the digital divide because ICTs themselves are creating new opportunities and ways of educating the poor. As a result, the implementation of these policy imperatives are no longer mutually exclusive. Figure 1 illustrates the modern perspective from which this Background document envisages the role of lCT in development. It shows that when properly deployed, ICTs can play an important and complementary role in achieving desirable socioeconomic development outcomes. In the pritJate sector for example, ICTs can help to stimulate economic growth and development by providing new and more efficient methods of production, bringing previously unattainable markets within the reach of the local entrepreneur. The availability of basic telephone lines alone improve the ability of businesses to communicate faster with partners, customers, and suppliers alike. The use of the internet, for example, has helped improve the efficacy of labor markets by linking job seekers quicker to job offers almost on a real time basis, and across geographic areas. Similarly, effective use of lCTs can enhance the volume of information in product markets, thereby making them more competitive. Firms and farmers can improve their internal institutional business processes such as asset management, accounting and procurement, through the use of automated systems. Nowadays, entrepreneurs are improving the efficiency of their production processes by tracking input supplies and sales electronically. Similarly, small and medium-sized enterprises (SMEs) in particular can take advantage of economies of scale by merging procurement deals with other SMEs online. And local companies can better access global markets through online information and strategic partnering systems. In sum, good use of lCTs can help firms to track information more effectively in a manner that will inform their capacity to redesign their businesses to become more efficient and competitive locally as well as internationally. This in tum \\Till improve private sector contributions to national income and gro\\rth. Moreover, the ICT sector itself can be a significant contributor to GDP and employment, as well as an active catalyst for industrial modernization. In the public sector, ICTs can contribute significantly to improving the efficiency, transparency, and delivery of government services. Many governments and support organizations, for example, have 5 Introduction used radios to augment the delivery of information about new agricultural practices and techniques to rural farmers. Automation, has helped social protection agencies to improve data gathering, enhance the management of benefits administration, improve the mobilization of domestic resources through better tracking and reporting of payments and claims, and to eliminate routine and repetitive tasks that are associated with red tape. Over time, lCTs can be used to integrate the functions of various government agencies into a one-stop interface through which citizens can access a ,Tariety of information and social services (e.g. application procedures, laws and regulations, registration of titles, securing drivers licenses, pension claims, file taxes, and so on) thereby reducing the time required to access the services provided by these agencies. Perhaps more importantly, lCTs can be used to create decision support systems that can enhance the capacity of policy makers to identify, define, develop or redesign their development policies and programs to suit changing circumstances prevailing in both domestic and international environments. Put together, the effective use of lCTs can greatly improve the quality of working and living conditions in a given society. Individuals can shop online, rather than travel over long distances, for needed goods and senTices. Consumers can access a greater variety of product choices and compare prices more effectively without incurring significant search costs. Employees can choose to work from home as effectively and ptoductively as they could from their offices, at lesser costs. lCTs are also providing news ways of providing basic health and education service to the public at affordable prices through the use of television, radio, and other media like the Internet. Most of these services are particularly beneficial to the very poor, especially those living in remote and inaccessible areas of the world. The time and cost savings, and associated productivity imptovements to the economy can be very significant. Returns on investment in lCT accrue to industrial and developing countries alike!. For example, Malaysia'S return on lCT capital (44.8 percent) is about three times higher than that for non-lCT capital (15.4 percent). In Korea, a comprehensive ICT strategy has been a key driver in the miracle rebound of its economy from the financial crisis; the ICT industry's contribution to GDP growth rose ftom a mere 4.5% in 1990 to an astounding 50.5% in 2000 2 • In India, the IT sector makes a significant contribution to employment generation, exports (27%) and the Gross Domestic Product (3.5%) of India. Many other countries in the region are keen to emulate India's example and develop the IT services sector. Recent United States, Australian, and OECD research findings indicate that economic and social transformations associated with the movement to a knowledge economy are driving productivity gro\\,Tfh in advanced economies, and that ICT plays a central role in that transformation. Using growth accounting estimates, OECD research has shown that lCT investment accounted for between 0.5 and 1.3 percentage points in GDP growth per capita per annum over a number of economies in the 1995-2000 period. Howet'er, though the benefits of lCTs are clear and desirable, the costs of implementing lCT programs can be high. Correspondingly, the risks of failure become higher as the ICT projects become complex and larger in scope and scale. A carefully crafted strategy and Action Plan can help the Bank in mitigating these risks. Given the variability of countries in South Asia in terms of size and experience with ICT use, the Bank's strategy of assistance should be broad-based and flexible, taking into account the differences in human capacity, infrastructure and resources across countries. 1 http://info.worldbank.org/ict/WSIS / docs/ comp_ICTGro'Ww.pdf 2 Why ICf Matters for Growth and Poverty Reduction. Nagy Hanna 6 Introduction Figure 1: The Role of Information and Communication Technologies in Economic Development Challenges Economic Sectors Potential Applications Outcomes » Tax Modernization Public Sector Capacity » Land & Property Registration )0> E-Government Agricultural & Rural III )0> Agriculture Commodity Trading !II Development -8' » Information and Early Warning Systems "6 I: c .c: o ~ Urban Development ~ » Land use planning and management 0> E .E I: o » Virtual Cadastre ~ "C -2 2.E ~ u jg -ffi g u 'c c£-E __0. 0 (/) .... E c Q) in g .Q :::l g~ I:! § § ~ __ uO>u-- dl c5 .g> -- u 8 1i :::l Private/Financial Sector ;. IT Parks and SEZs m;:JgC1>a. -;:,?::_dl!:: Development' o » E-Business ., fi5 ~ 0) 0 ~ o lLl;! '0 8 (.) O!I wo.g'Qi8 > .2-g-a1!~ O>"C .- "CwE~"C ic.~~~ ;:!:sg>5~ -~ 'Iii ~~8 ~w""1?:::l .... fl E 0 dl 0 ::Ja.a.E u Human Development' . E ;. );> IT Training Centers Environmental Health Patterns o l3 W 0>"C ~EOi:& • • • • • ~ • • • • • Infrastructure Development' );> Telecommunication / Networking » Internet Connectivity » Transportation/Road Planning Legal & Regulatory Environment 'Inputs in to applying Information and communication technologies. 7 Introduction Structure of this Background Report A diagrammatic representation of the structure of this Background document is presented in Figure 2. Following this introductory section: Cbapter 2 presents an introduction into the main pre-requisites and discusses the key elements of a successful approach to ICT development. It presents a comprehensive framework for developing an information society and outlines the basic aspects of the framework. It concludes witb an outline of a road-map of how ICT projects can be implemented in a scalable manner. Chapter 3 summarizes the core elements of the \'{'orld Bank ICT strategy, and the implementation plan developed for this strategy. The section also provides a preliminary assessment of what other regional departments within the World Bank are doing to develop and implement their own ICT strategies. The chapter concludes with a brief outline of the involvement of various units within the World Bank Group, in ICT development. Primary attention is given to the involvement of the IFC, MIGA ISG and GICT. Chapter 4 presents sector specific ICT frameworks that identify the basic platforms for the application of ICTs in a sector specific context. These frameworks should eventually become the basis for Sector Specific ICT strategies and programs. The sectors that are covered in this chapter include private sector, finance, health, education, agriculture and rural development, environment, public sector, and infrastructure. Chapter 5 provides a general socio-economic snapshot of eacb country in the South Asia Region, and atrempts to provide a basic assessment of each country's readiness for ICT development. It analyzes each country basic ICT enabling environment concerns, the overall development objectives and summarizes the nature of SAR's involvement in each country from an ICT perspective. This chapter also identifies the potential for future involvement in ICT related initiatives assesses the status and use of ICTs for development in all the South Asian countries served by SAR. These assessments provide insights into each country's readiness to use ICTs for development, and the strategic goals they have set for themselves. It also summarizes measures that have been taken by each country to advance the use oflCTs to meet their economic development objectives. The chapter concludes \v"ith some pointers on potential areas for future involvement that may be explored hy the World Bank. 8 Introduction Figure 2: Visual Table of Contents Introduction to Chapter 1: Introduction Information and Communication Technoloaies Chapter 2: What are the key elements to a 5 uccessful approach to IC T Development? I The ICT Development Framework , Chapter 3: The WBG Strategy to ICT Development The World Bank Group Strategy IFC IBRD MIGA How are other W B units I GICT ISG WBI E I t involved in ICT development? I I I I InfoDev I SSA I MENA I SAR I ECA 1 LAC I EAP I Wha t are the other regi onal unit strategies for ICT development? I f! Afghanistan 1: LJ 5 r:: CII 1: CII Bangladesh E 1: CII E a. CII .i:- E III 0 E 13 1: 0. 0 III Cli CII III III Bhutan > CII 1: 0. 0 '" 0. E Gi > ~ 0 .... CII E Gi > '" (.) .... a. 0 CII c -~ 1: ":::I 0 (.) India 0 t) CII I/} "i 0 0. 0 Cli > CII CII c "i .... :::I a:: t) "~ 0 CII I/} Gi > CII C ... II) "i "u 0 I/} 0 "" :::I Maldives 13 c :is I- ~ c '" '" "" ~ :::I t) :::I "i 1: ... r:: u:: E :::I .a Il. J:; CII - III ... Nepal :::t: 'S :iii w '" .... E J!! Q. III "" .!l (,,) ";:: ;f a:: Il. 1: I:: e "50 .t::. u Pakistan '" ~ c W Il. Sri Lanka 9 Chapter 2: Key Elements of a Successful Approach to ICT Development This chapter presents both short and long term imperatives that should be addressed for countries to make effective use of lCTs for development. Building on the four assumptions underlying this Background document (outlined in Chapter 1), a framework with which SAR can respond to the needs of its client countries in the region is developed. A diagrammatic summary of this framework is presented in Fig 3. The chapter also provides a basic framework that illustrates how lCT related projects should be developed and implemented. Above All, Leadership In order to achieve the benefits of any lCT-based transformation, elected officials and administrators who understand the technology and the policy goals are needed at all levels of government to champion the reform process. Experiences have shown that lCT programs, particularly in E- government, reguire strong political leadership in order to succeed. Leadership can also articulate a unifying theme that can propel the lCT initiative through all the necessary steps. For example, by declaring Internet access a "human right," the Estonian leadership created strong national support for the implementation of the Tiger Leap Forward Initiative, a multi-sectoral program that is aiming to create 300 Internet centers in Estonia by 2002 and whose eventual goal is to create a completely e- literate society. An impressive development of e-societ:y in Korea was achieved with strong leadership from the President. Chief Minister's personal commitment played a tremendous role in innovative ICT initiatives in Andhra Pradesh. Strong leadership can ensure the long-term commitment of resources and expertise and the cooperation of disparate factions. Then, The Enabling Environment - Long Term Strategies One of the central assumptions underlying this Background document is that ICTs are the driving force in the creation of an information society, which in turn, can support effective and accelerated achievement of the ~IDGs. There are many essentials required ro ensure that progress rowards the creation of an information society is successful. Broadly, these key elements include (1) an infrastructure system that facilitates connectivity amongst various groups and agents in the economy (2) the quality of social and human capital, and (3) a conducive legal and regulatory environment. Rapid improvements in these three broad areas are cardinal to long-term effectiveness of any ICT- based growth and development strategy. Similarly, weaknesses in national capacity in any of these areas will inhibit any country's ability to conceptualize, implement, manage, and benefit from the use of ICTs for development in the long term. 10 Human Development / Skilled Labor Human CapitaL There is a growing gap between the skills required for the operation of a modern economy and the available stock of human capital. This, in part, reflects the fast pace of ICT innoYations, but it also underscores the challenges faced by most educational systems in addressing the issue of "digital literacy." Some important areas for attention \V-ithin this category include the following: • Forntal education. There is a significant need not only to ensure proper training of teachers in the use of modern ICTs tools but to expose students to ICT tools to the extent possible. In Korea, the goyernment implemented a policy to connect all the schools from elementary to high school with the Internet to provide multi-media educational contents nationwide. • Capacity building. In order to create an environment to enable benefit of lCT to widest possible segments of population, there should be support for citizens to understand how they can use technology in their lives, and ensure they receive the training they need. Such support should also help citizens integrate technology into tbeir daily routines. • Socio-cultural factors. There should be measures to ensure that citizens are not discouraged from using technology or are limited in their use because of their gender, race, or other socio-cultural factors. • Trust. It is also important to help citizens trust technology and help them understand and be informed about things like electronic privacy, data security, and cyber-crime. Information Infrastructure Production and use of lCTs for development rely heavily on the availability and dependability of a well-integrated physical and information infrastructure network. In/ormation ittJrastructure (II) refers to the telecommunication and information networks through which information is transmitted, stored and delivered, as well as the embedded technologies and know-how. Types of networks include cellular, data, broadband, backbone, satellite, broadcasting, multimedia, the Internet, and other networks; they may be wireline, wireless, or a combination of both. Network components may include terrestrial wires, undersea cables, radio waves, satellites, towers, base stations, equipment (transmitters, repeaters, sv.ritches, routers), and related hardware and software. Networks may be independent, or interconnected and interoperable. They are "public" or "open" if they can transmit information from any source, or "private" or "closed" if they are restricted to members of a closed user group. Providers of II services include the operators of the various networks, as well as specialized network services such as Internet service providers (ISPs), web hosting companies, and data centers. In this paper, the term information infrastructure also encompasses postal networks. II is the foundation of the information or knowledge economy. In addition to II, the availability of complementary amenities like postal, energy (including electricity, water), and transportation facilities (e.g. rural access roads, inland water ways, etc) are also very important. These amenities are vital because they help to facilitate the increase in actual movement of goods and services that is precipitated by the use of ICTs. Therefore, the integration of information infrastructure with physical facilities is a necessary condition for tapping into the full benefits ofICTs for development. However due to the scope of this document these issues will not be discussed in great detail. Most developing countries do not possess an adequate information and communications infrastructure. As a result, aCCeSS to lCT-related services is limited and expensive. The development of the II needs to reach a certain threshold before the network effects begin to have an impact on 11 additional ICT investment3 • Therefore, governments must include in their strategies efforts to build their ICT infrastructure. The following are important concerns within this category: • Pb)'Sical access. Technology sbould be available and physically accessible to citizens in their communities and workplaces. • Appropriate tecbnology. The a,railable technology should be appropriate to how citizens need and want to pur technology to use, and fits within the reality of their daily lives. • Afjordability. Technology access and use should be affordable for citizens A number of approaches have been suggested to address the gap in ICT infrastructure. Some important elements include: • Develop ptojects that are compatible with the nation's telecom infrastructure. • Use public access kiosks and mobile centers if teledensity is low. • Introduce competition in the telecom and wireless segments and other digital technologies to accelerate their deployment. • Build on the micro enterprise model to bring connectivity to underserved areas and ensure sustainability. • Consider the government's current use of technology and learn from past successes and failures. • Establish an action framework at the beginning of the process to allow for a rational and coordinated investment effort down the road. It is also important to have a plan for partnership with the private sector as in any otber infrastructure development plan. Estonia, for example, partnered with the private sector to invest in programs that increase access and create an e-ready society. Legal and Regulatory Framework The effort to design and implement any ICT-based program e-government) must incorporate a holistic view, whicb is not just focused onJy on the requisite technology. The presence of a conducive institutional, legal, and regulatory environment is important for the benefits of ICTs to be realized. When the domestic legal and regulatory environment is plagued with vices such as archaic laws, old regulatory ref,,'lmes, weak institutional capacity, overlapping and conflicting roles of government agencies, the use of ICTs and associated benefits may be inhibited. Similarly, tbe risks of failure of ICT projects may also become higher. Moreover, new institutional, legal, and regulatory reforms and policy directives may have to be adopted to ease the development of an information society. First, a proper telecommunications regulatory environment is fundamentaL However, to fully engage in the networking revolution, countries have to go beyond traditional regulatory reform, and move towards more complex challenges of setting the rules needed for the expansion of e-commerce, competition policy and network convergence. Cross-country evidence strongly suggests that well regulated economies with a competitive climate for cultivating an information infrastructure beget lower costs, better service, wider access and greater diffusion of telecommunications and Internet services 4 • Brazil's telecommunication's deregulation, for instance, resulted in access costs dropping from $33.20 in 1998 to $14.70 in 2000, after deregulation for 20 hours of Internet dial-upS. Regulatory policies that ,3 Roller and Waverrnan 2001 4 World Bank 2002, Collecchia and Schreyer 2001) 5 Schneider 2002 12 promote competition are crucial to develop the infrastructure and to foster an environment conducive to higher levels of lCT investment and use. In addition, it is important to note that although market-oriented sector reforms are fundamental in lCT for development agenda, a pro-active engagement of governments in ICT development activities remains vital for most developing countries. The market alone could under-provide levels of access to infrastructure and content, from the point of view of both economic efficiency and equality of opportunity. And in order to fully utilize that access and content, users must have the necessary skills and education. Finally, market reforms do not guarantee that the government itself will use lCTs effectively in the full range of services that it provides. Below are some major areas to address so that investments in lCTs can accrue benefiting the widest possible segment of population. Privatization and Competition. The importance of privatization and compeutlon in promoting the development of modern information infrastructure is now widely accepted. Competition also can dramatically improve the quality of service and lower the costs of provision: in several competitive markets the average price of a call from a Global System for Mobile Communications (GS.M) handset is 40 to 50 percent lower than in markets with a single provider; and a recent study of Internet access pricing in Africa found that countries with the least liberal markets had access charges 700 percent higher than countries with the most liberal telecommunications regimes on the continent. The privatization of telephone services in Peru provides another example of how reform can also increase access for the poor. Regulatory Reform. In addition to traditional regulatory reform, it is increasingly important to pay attention to the elimination of regulatory barriers among communications sectors e.g., allowing competition between phone and cable television carriers. Such reforms are essential for a country to explore the convergence opportunities of the networking revolution. For the effective take-off of ICT enabled services such as e-commerce, a country has to address a number of additional elements in its broader legal/regulatory environment. Special attention should be given to issues such as: • adoption of non-discriminatory taxation policies; • management of intellectual property rights in "cyberspace"; • adoption of effective privacy and consumer protection policies; • well defined content policies; • access to encryption technologies; and • adoption of technologically-neutral authentication and certification rules. There is also a need to define: (1) how trading partners, service providers, and networks should divide risks for errors among themselves; (2) how governments should apply record-storage and control requirements for electronic communications; and (3) what replaces the hard-copy audit traiL Needless to say, such policies need to be developed with special attention to developing country realities in order to be relevant. Public Access. Policies and institutions to promote public access to communications services are a central element of "universal access" (or universal service) policies6. By focusing on providing public access, be it to a telephone line or to an Internet terminal, countries can aggregate demand and thus a large number of people can benefit from one or a few connections. From the operator's point of 6 http://www.infodev.org/library /WorkingPapers /NetworkingRevolution.pdf 13 view, payphones and telecenters can provide higher revenues compared to residential lines and, when strategically situated, they can be commercially feasible, thus ensuring continued pro'l'ision of service. In Senegal, for example, more than 6,000 pri\'ately operated telecenters have come into existence since the early 1990s. Public access to a telephone has more than doubled. India, Peru, South Africa, and Thailand have also seen dramatic growth in privately owned and operated telecenters providing rural inhabitants with new information sources and opportunities. Related to this, the possibility to create "digital divide" poses a tremendous challenge for policymakers to address. Two major aspects of the digital divide are: • E-Litera01 ensuring e-government programs help to create opportunities by educating those who have not used, do not have access to, or feel uncomfortable with technology. • Accessibility - making e-government programs available to the class, race, ethnicity, geography and other factors could lead to groups of people being disenfranchised. In many countries, content must be prodded in more than one language or dialect. E- gO\Ternment must also address the needs of those who are illiterate. Relellant content. To ensure that users extract full benefit from information made available through leT, efforts must be made to develop content that is locally relevant to citizens, especially in terms of language. \X1ithout appropriate content, the relevance of the networking revolution for developing countries will remain in doubt. Unless the private sector - particularly, small and medium enterprises - fully engages in exploring digital opportunities, the impact of the networking revolution on societies will be uneven at best. However, entrepreneurs in developing countries face a number of difficulties in their efforts to provide locally relevant content. In general, there is a lack of knowledge with respect to the new business models that characterize Internet-centered businesses. And people that combine skills and creativity in Internet site creation, business know-how, access to finance and knowledge of local community needs are rare worldwide, but particularly in developing countries. Other Poliry Issues. It is clear that outside the field of communications itself, there is also need for broader reform in areas such as investment policies and trade controls to encourage investment in and use of both basic infrastructure and advanced services. Financial systems in many countries also require significant upgrading and regulatory changes in order to meet the demands of e-commerce. The same applies to the availability of supporting services, in particular, the postal system. 7In developing a policy agenda for the networked economy, some useful lessons can be drawn from the experience with telecommunications reform over the last two decades. • First, governments must commit to sector reform, setting up credible independent regulatory authorities and allowing for active competition. • Second, the market, acting alone, will not be enough to ensure that the digital divide will be bridged. By engaging in partnerships with grassroots NGOs, donors, the private sector, and multilateral agencies, governments in developing countries can help bridge the digital divide. http://v-lww -infodev.org/library IW orkingPapers IN etworkingRevolution.pdf 14 Figure 3: The ICT Development Conceptual Framework* (1) Ultimate Goal The Millennium Development Goals are the ultimate goal for all the WB Enabling Environment development work and is conSistent with the objectives of leT Development Human Development - The development of the human capacity to effectively utilize information to further development objectives. Information Infrastructure - The infrastructure required to disseminate information in the society in an effective (2) Information Society - An Information Society is a society where manner. It primarily refers to, electricity, telecommunication information can be shared, and used instantaneously to reaCh economic networks, and internet infrastructure. objectives. This platform can clearly have a significant Impact on Information Society overall development goals of a country. Legal & Regulatory Framework - The framework that governs the use of leT for economic activity. This includes issues ranging from telecom reforms and liberalization to (3) Institutional Capacity I Leadership - A pre-condition to e-commerce and intellectual property rights. implement and sustain any reform prOj:lram. (4) Enabling Envlronment- In order to develop an ·This framework is based on the assumption that as a information society where information can be shari re-condition the institutional capacity exists to freely, there needs to be an enabling environme implement such a comprehensive program. that can assist in this regard. These are the b~c Human Development I Information Legal & Regulatory elements of an Information Society enablin Skilled Labor Infrastructure Framework environment (see box opposite). (5) ICT Applications' Programs - Various applications of ICT that can be implemented to E-Govemment leT Sector Sector Specific Knowledge Economy achieve a better Development Applications Development integrated information society. 00 til E-Government - A comprehensive ICT Sector Development - Sector Specific Knowledge Economy Development- C approach to government reform and This Involves the development Applications - Provides Provides specific focus on the use of .2 t i l _ modernization with a particular focus on of a leT private sectorfindustry specific focus on sector information throughout society, through Life 1\1 E ~ 1\1 the use of leTs in providing better public which can be leveraged to specific applications of leTs. Long Learning initiatives, innovation and Co .... Co !:II services to the society. provide the services needed to Examples would include other KE programs. This would also include «2 achieve the government's "Tele-Medicine" in the health programs that would address the diffusion of 1-11. overall development objectives. sector, "Distance Learning" in leTs across the private sector to enhance 2 the education sector etc. economic efficiency and productivity. §: 15 Tht .leT Lastly, leT Applications I Programs - Short Term Strategies Countries in South Asia vary considerahly in their size and experience with lCT usage. They also differ in their levels of resources, infrastructure, and regulatory environment for utilizing lCTs for development. Moreover, new knowledge, ideas and ways of doing things take time before they are internalized by different societies or groups. Therefore, in developing a National lCT strategy, governments are faced with the need to identify activity areas that can be explored in the short to medium term, with outcomes that can yield incremental success for long term grov.rth. Based on country level experiences, the main activity areas that have been identified include: (1) Developing the ICT sector itself (2) Promoting the use of ICTs in various sectors of the economy (3) Deployment and use of lCTs in Government (4) Employing lCTs, in broader sense, as a tool for life-long learning. Many countries chose to implement one or more of these activities sequentially. In a few cases however (e.g. in Sri Lanka), some governments have pursued all four activity areas simultaneously as part of an overarching national e-strategy. (1) leT Sector Development A domestic ICT production sector, such as manufacturing computers, may act as a catalyst for greater use of ICT throughout other sectors. This Background document refers to the ICT Sector in broader terms, which includes the underlying technologies, know how, products (e.g. IT hardware and software), and services (telecom services), as well as the companies (operarors, suppliers, producers), consumers, policymakers, regulators, and other institutions and partners directly involved in or affected by the production, delivery, and regulation of ICT products and seryices. This definition also encompasses broadcasting and postal services. The gro\V'th of telecom services is the basic building block for the deYelopment of the ICT industry. The adyancement of this industry into other business activities presents a great opportunity for countries to enhance economic growth, employment and offer products and services that can be deployed by other sectors of the economy. GiYen the growing trend in outsourcing, the software and ICT enabled services sector is seen as a major source of foreign exchange earnings, as has been shown by India. By introducing ICT products and services, leT sector can also help spread the use of ICTs in the rest of the economy. For example, Ireland, a major ICT manufacturer and exporter, has leyeraged its ICT production actiyities by offering professional services including outsourcing, network management, custom programming, software localization, call center operations, systems integration, and web development services. This service sector initially emerged as a by-product of ICT production, but now prospers independently, demonstrating the potential for positive spillover effects of a domestic ICT production sector. (2) Sector SpeciOc Applications Much of the gro"rtb of the ICT sector in Asian countries can be attributed to the deriyed demand for ICT products and services in other agents of the economy - particularly amongst public and private enterprises in trade, financial services, and manufacturing industries, who to need make use of ICTs to maintain domestic and global competitiveness. ICTs can drive down costs, connect suppliers to new markets, and enable organizations to design new products and services on the basis of an improved understanding of customers. This also includes the applications of ICTs in the delivery of 16 social services, particularly in Health and Education; such technologies can have a profound impact on the ability to reach underserved communities. (3) E- Governll1ent Traditionally, ICTs have been used by a few Government departments to automate clerical transactions. Governments also use management information systems (MIS) for monitoring performance, and to support decision making and planning. In many cases, these applications have little or no interface with external stake holders (e.g. citizens, firms, international agencies an so on). The creation of e-government systems is one way governments make use of ICTs to interface with these stakeholders. E-government represents an emerging trend in many countries whereby ICTs are deployed to improve the delivery of Government services to internal and external clients. Improvements in the delivery of Government services to citizens is an important issue for many developing countries, as the greatest cost of inefficiency is borne by the poor. Electronic delivery can improve efficiency, reduce service delays for citizens, lessen corruption, and increase transparency. Applications that focus on online delivery of services to citizens, businesses, employees and different arms of Government are covered within the broad definition of Electronic Government. (4) Knowledge Econoll1), Deve]0pll1ent This activity refers in a broader sense to the use of ICTs as tools that can help: (a) provide life-long learning opportunities for citizens, (b) enable workers to improve skills and capacity to innovate by improving access to knowledge via the Internet. ICTs such as the Internet, telephony, electronic media, and radio that promote communication within a society are seen as tools for empowerment. Individuals can be empowered in dealing with their Governments and service providers through improved channels of interactive feedback. Communities can be empowered to participate in planning processes through access to information and use of the Internet for advocacy of views. \X'ithin the ambit of this perspective, Governments also have to deal with policy issues such as the convergence of different technologies, private control over media, and censorship. Recent discussions at WSIS have given an impetus to this broader role for ICTs in a society. How can leT projects be implemented? Given the variability of countries in South Asia in terms of size and experience with ICT usage, the Bank's strategy of assistance should be rooted in country-specific contexts. The strength of commitment displayed by a Government to use ICTs for development, the current status of development within the country, e-readiness of the country, the current level of the Bank's involvement and experience \vith the involvement will collectively determine the potential opportunity for further support. The design of interventjons will need to take into account the differences in human capacity, infrastructure and resources, as well as the demonstrated comrrutment of the Government to undertake necessary structural reforms to facilitate the widespread adoption of ICTs. The strategic intent of a Government is signaled through the following indicators: 1. Demonstrated interest, but \vith no conceptual work accomplished. 2. Active planning: documents are available and have been discussed internally; ICT deployment is a part of PRSPs; e-readiness reports developed e.g. through an Infodev grant. 17 3. Establishment of a separate agency for ICT development, as counterpart for the dialog. 4. First steps in implementation taken with Government's own resources. The current status of ICT use can be gauged through indicators that measure achievements. An overall assessment can place the lCT for development activity in a Government in any of the five stages of evolution described below, comprising elements of the lCT Roadmap (see Figure 4). 1. Planning phase: Setting up task forces, strategy formulation, creating coordination structures. 2. \\Torking pilots that demonstrate value of I CT based development 3. Working projects/pilots that demonstrate successful scalable models 4. Replication on a wider scale (nation wide/ statewide) 5. Stage of maturity reflecting integrated functioning of lCT applications. Figure 4: How can leT projects be implemented? FUNDING INPUTS • ESW Grants • Funds for • Funds for scale • Funds for full • Self sustainable • Pilot Grants limited scale ups implementation model • Fund designed ups • ESW for fund for pilots • leT component design loans • TA -Readiness • Quick wins • Sharing Best • Design of Assessment Low hanging Practice Project Implementation • Planning Fruit Evaluation Design Plan • Frameworks • Pilot Evaluation • Partnership • Project • Good Practices Models Management • Procurement • Procurement • Training • Training TeCHNICAL ASSISTANce The figure identifies the kinds of inputs and technical assistance that can help a country advance from one stage to the next. The funding inputs and the design of vehicles to provide the inputs are placed above the stages in the figure. Technical assistance, knowledge products and capacity building activities are indicated below the stages in the figure. Two types of implementation approaches have been used: (1) a centrally coordinated approach and (2) a wholly decentralized approach. Countries often begin with a decentralized approach enabling different units/ agencies/ departments to build applications, without much central guidance or support. This is particularly true in the case of large countries. Many smaller countries first embark on the development of a national e-strategy, inspired by the success of such strategies in Singapore, Hong Kong and Korea. The choice of an appropriate approach will depend on the size of the country, its resource and the stage of progress in addressing long-term imperatives (e.g. human capacity, infrastructure, and regulatorY and governance environment). Generally, large countries \\rith a federated structure might begin with a decentralized approach and then bring in standardization and coordination through a 18 central agency. Small countries where national Governments are seen to be vested with a great deal of authority can embark on a centrally designed and executed strategy. Countries that lack any experience in deploying ICTs might benefit from allowing local initiatives to bloom for a while. Potential opportunities for Bank support will be identified based on the needs of the country, feasibility of successful implementation, comparative advantage of the Bank, and most importantly, their overall fit with the Bank's Country Assistance Strategy and broader goals of reform. In some cases where PRSPs and CAS have not included a role for ICTs, but where experiences in similar regions suggest a potential opportunity, the Bank would need to be proactive in promoting lCT use. In other cases the Bank would respond to opportunities that have already been identified, carefully selecting those which will deliver measurable value. Areas in which the Bank may not have a role to play will also need to be identified. The objective of the Bank's lCT strategy in a country should be to move the country to the next stage of evolution as identified above. For countries that are just starting out, potential deployment opportunities would first need to be identified where benefits are concrete and measurable and the payoff is commensurate with investments. Normally, these applications will represent the low hanging fruit. Given the uneven record of pay-off from ICT investments in the past, the Bank would have to assist the country in developing a strategy for implementation. For countries that are more advanced-i.e. have already implemented pilots-- the Bank can help in scaling up those areas that best fit within the CAS, PRSP and the Bank's reform agenda for the country. Progress through the stages would normally be slow, but some small countries could leap through several stages fairly guickly. The strategy will need to focus on those components that a country would like to emphasize and can build the capacity for. An implementation approach would have to be outlined to ensure success and sustainabilit:y. 19 Chapter 3: The World Bank Strategy for ICT Development The World Bank's strategy aims to improve access to Information and Communication Technologies (lCT) and to promote their use for stimulating economic growth, increase equality, and reduce povertys. To achieve this objective, the strategy proposes five main acti,-ity areas, namely (1) Broadening arid deepening sector and institutional reform, Increasing access to information infrastructure, Supporting ICT human capacity, (4) Supporting ICT applications, and Promoting program selectivity, backed by effective evaluation. These five elements dovetail with initiatives that can help address the long, medium and short term imperatives discussed in Chapter 2. A detailed synopsis of the main elements of the World Bank ICT Strategy is presented in this chapter. The chapter also discusses how the strategy will be implemented, given the division of roles and responsibilities of various units within the World Bank Group. A diagrammatic summary is also presented in Figure 3. What are the core elements of the World Bank leT Strategy? The strategy comprises action along five strategic directions for 'World Bank Group lending, and knowledge products related to ICT: (1) Broadening and deepening sector and institutional reform The scope of policy-based and technical assistance operations will be broadened from telecommunication to cover the entire information infrastructure sector. First, to deal with increasing convergence among technologies, lines of business and enterprises, all elements of the physical infrastructure-such as cable, wireless and satellite networks, optical fiber rings, Internet Service Providers, data storage centers, and broadcasting facilities-will be addressed within an integrated policy framework. Second, legislative and regulatory changes will be pursued as required to facilitate the commercial and social exploitation of the Internet through e-commerce and e-government applications. Third, policy reforms will include traditionally overlooked sectors such as postal and distribution logistics (media and content), which are particularly relevant to the poor due to their low cost and wide reach. Fourth, support for regulatory development and capacity building will be extended beyond initial reforms to ensure sustainability and effective development of competitive markets. (2) Increasing access to infonnation infrastructure The World Bank Group will promote private sector leadership in extending the reach of lCT through development of information infrastructure. To this end, the World Bank Group will increasingly focus on mobilizing and leveraging private sector investments and finance. It will exploit the potential for complementarities among existing World Bank, International Finance Corporation, and Multilateral Investment Guarantee Agency instruments, as well as apply them in innovative ways such as in incubators, joint privatization operations, and universal access packages. The World Bank 8 Information and Communication Technologies, A World Bank Group Strategy, 2002 20 fm Group will also support the development of soft infrastructure such as software development, enabling technologies, encryption software, and delivery and payment systems, which are the foundation for transactions on the Internet. To ensure that the benefits of sector reform are widely distributed to rural and marginal urban areas, the W'orld Bank Group will provide technical and investment assistance to extend access beyond what commercial providers are prepared to do on their own. It will encourage a "ariety of mechanisms to do this, such as universal access objectives and targets, specialized funds to provide onetime capital subsidies to promote access in liberalized markets, and local participation in nonprofit communication and information facilities. Wbere possible, universal access initiatives will exploit synergies with other rural infrastructure projects and with special initiatives such as World Links for Development and the Global Distance Learning Netvmrk. (3) Supporting information and communication tecJm%gies human capacity The World Bank Group will support the development of a human capital base for exploiting lCT through better-educated population. The benefits of access to information infrastructure can only be realized when potential users possess the skills to apply these tools for economic and social purposes. The most important use of ICT in education is as a pedagogical tool, when properly integrated into a broader educational program. However, there is also a need for lCT to be used to develop sector- specific skills and capacity. The shortage of lCT skills slows the process of development and exacerbates the lag that client countries are experiencing in joining the global knowledge economy. World Bank Group support for lCT human resources will be pursued at three levels. First, there will be support for rhe rollout of ICT (where appropriate) at the school, college, and adult education level. Second, private sector partnerships will be formed for technical skills training of the next generation of ICT workers, such as network technicians, computer programmers, web developers, and database managers. Third, advice and skills training will be provided for entrepreneurs and government officials seeking to develop knowledge economy applications and industries. (4) Supporting information and communication tecJmoJogies applications World Bank Group investments in ICT will support a wide range of business models and information technologies in operational projects. International Finance Corporation investments will focus on the use of lCT as a platform in applications that would enhance public administration and private sector development, as well as on those with a significant social sector development impact. Additionally, information ICT will continue to be included as a component of \Vorld Bank projects in most other sectors, especially in education, health, finance, small business development, and public sector management. It is important to ensure that information infrastructure and ICT applications are integrated into Sector Strategy Papers, Poverty Reduction Strategy Papers, and Country Assistance Strategy processes. In some cases, this will be as part of a knowledge economy strategy, in other cases, the role of ICT in helping to meet Country Assistance Strategy goals should be explored. The Global Information and Communication Technologies department (GICT) will support this process through support for economic and sector work programs. This will ensure that the development impact of the new technologies is fully harnessed. (6) Se1ecthity and evaluation In order to maximize development impact, the \Vorld Bank Group will concentrate its information infrastructure activities where discussion with country and regional teams suggest that information infrastructure is acting as a botdeneck to development. Two sets of countries are suggested where this might be the case: those at maximum risk of falling further behind and those with the greatest potential to benefit from the new information infrastructure technologies. Selectivity will also be exercised in terms of instruments -in International Finance Corporation "frontier" markets (the least developed countries and the least developed regions of middle income countries), for example, the focus \Vill be on connectivity while exploring the potential use of information technology for 21 economic and social development. In wealthier regions, support for policy reform, and investments covering convergence technologies and information technology services and applications will recehre greater attention. The \'{!orld Bank Group will also take part in the generation of global public goods-through research and dissemination of knowledge about JCT, mobilization of local and international information technology industries to focus more directly on poverty alleviation based on information technology, and support for developing country participation in international institurions related to lCT. In an area that is changing so rapidly and where the World Bank Group is rolling out a range of new products and instruments, monitoring and evaluation must be central. The World Bank Group will track a range of indicators of sector development and project success, and ensure the rapid integration of lessons learned into new project design. 22 TIl(' World H;mk Slratep'J {"!' leT Fg.re5: 'The Wa1d Bank~ICTStraIegy The Vision: For the WBG t() be a catalyst in improving access to information communication technologies and promoting their use for stimulating economic growth, increasing equality, and reducing poverty. PILLAR 1 PILLAR 2 PILLAR 3 PILLAR 4 PILLAR 5 Broadening and deepenIng Increasing access to Supporting leT human Supporting leT applications Selectivity and Evaluation sector and institutional information infrastructure capacity reform Through the use of WS, IFe and The WBG investments in ICTs The WBG will concentrate its Policy-based and technical MIGA Instruments and The WBG will support the will support wide range of info. Infrastructure activities assistance operations to be resources the WBG will: development of a human capital business models and where the info. Infrastructure is based on the following: base for exploiting ICTs through information technologies in acting as a bottleneck to • Promote private better-educated population, operational projects, by: development by: • Integrated policy sector leadership in through: framework to deal with extending the reach of • Including ICT • Focusing assistance >- C) all elements of ICTs through the dev. of • Support for the components into WB to those countries that physical infrastructure. information infrastructure rollout of ICTs at the projects in all sectors, have the maximum risk ~ • legislative and • Support the dev. of school, college and adult education level. especially in education, health, finance, small of falling further behind and those with the en regulatory reforms soft infrastructure such business dev., and greatest potential to -(I) ..c: o ~ required to facilitate the commercial and social explOitation of the internet through e-commerce and ec as softWare development, enabling technologies and delivery and payment systems. • Private sector partnerships will be formed for technical skills training of the next generation of ICT public sector mgmt. • Integrating ICT applications into Sector Strategy Papers, PSRPs, benefit from info. Infrastructure. • Research and dissemination of ..!!! gov. applications. • Provide technical workers. and the CAS process. knowledge about ICTs, and investment mobilization of local and 0:: .. Greater assistance to extend • Advice and skills • IFC investments will inter. Industries to focus attention to the use acceSs beyond what training will be provided focus on the use of ICTs as more directly on poverty of the postal sector commerclal providers are for entrepreneurs and a plalform in applications alleviation through ICTs. for the delivery of prepared to provide. gov. officials seeking to that would enhance ICT seMces and develop knowledge private, and social sector • Track a range of broadcast media in • EnCOurage economy applications development. indicators of sector development specialized funds to and Industries. development and project provide onetime capital success and ensure the • Regulatory dev. subsidies to promote rapid integration of lessons andbapacity blillding access and local learned into new project to be extended participation in nonprofit design. beyond Initlal communication and c reforms to ensure information facilities. o \ \ _\. ~ ! ; olcr to take a lead. role in Implementing these tWo pillars of the With the support of GICT the Implementing this pillar will T Implementing this pillar will be the E strategy, in coordination with region and sector units. WB Education Sector Units ultimately be the responsibility of responsibility of All WBG Units II) will take the responsibility for the WB Sectot Units, with the Ci Implementing this pillar. support of GICT. E 23 How Will the Strategy be Implemented? The Bank has a significant comparative advantage in supporting ICT for development work and is engaged in all components of ICT strateg\' in one country or another. It has large engagements in many States in India and Sri Lanka in the area of E-Government and the deployment of ICT in various sectors. Successful implementation of the proposed ICT strateg\' requires, however, a clear division of responsibilities across the \X:orld Bank Group, Unlike most sectors, ICTs have wide- ranging implications for all areas of focus, and their pervasive nature makes a coordinated approach throughout the World Bank Group all the more important. Division ofrespol1sibilities The Global Information and Communication Technologies department (GICT) will assume primary responsibility for the first two interrelated strategic directions: (i) helping to create the enabling environment and (ii) improving access to information infrastructure. GICT together with the regions and sectors will work to integrate broader ICT policy and instirutional reform work within country prot,'1:ams, as well as with activities in areas such as fiscal, trade, competitiveness, and financial sector policies. In some cases, GICT will also build linkages or partnerships with other Bank departments that possess specialized skills to more effectively deliver on these strategic directions, For example, the assistance of the Legal Operations department will be sought on the legal aspects of sector reform. To track World Bank Group performance as it relates to development effectiveness, a set of internal and external indicators will be monitored and evaluated jointly by GICT and the regions. Efforts to develop a human capital base to exploit ICT through training and education programs will remain the responsibility of the World Bank Group education departments. The respective sector units will develop ICT policies and applications in other sectors across the World Bank Group. The primary responsibility for using ICT to improve the development impact of sector-based programs will remain with the sector units across the Bank and International Finance Corporation. There is already considerable enthusiasm for, and investment in, ICT applications across the International Finance Corporation and the World Bank, and a few pockets of excellence are emerging, including ongoing application developments in Poverty Reduction and Economic Management, Human Development, and Private Sector Development networks. However, more sector units need to develop a greater capacity to incorporate ICT into project design. Tools and organizational innovations for the World Bank Group The demand by the client countries to harness ICT for development is accelerating and requires a Bank wide response. However, to competently meet country demand requires attention to a number of organizational innovations: • A1anagement development: Efforts will be made to support country and sector management units in integrating information infrastructure and ICT more broadly into Country Assistance Strategies, economic and sector work, and World Bank Group lending programs. GICT regional coordinators and economists will support analytical work and country dialogue to assist country teams in developing information infrastructure, and broader information and communication technologies strategies and projects. • Products and services innovation: The urgency of sector reform, rapid development of new technologies, and tightening of capital markets demand an expanded role for World Bank Group product lines, a more proactive approach, and a rapid project rollout capacity. Also, 24 in order to respond quickly to client requests for technical assistance that have been supported by World Bank country teams to resolve investment bottlenecks, a limited technical support capability will be developed and launched through such existing vehicles as the infoDev program, Finally, World Bank Group synergies to support a broader and deeper strategic approach will be enhanced by deploying new tools like e-readiness assessments, information and communication technologies country strategies, and e-government toolkits, • Kn01vledge and skills del'elopl7lent: The World Bank Group will enhance its skills and knowledge through an expanded ptogram of research on issues of ICT and economic development, and through systematic learning from its own operational experiences in the field, GICT wilJ also adjust the mix of staff skills to reflect the range of its activities from postal and distribution logistics and media to e-commerce, e-government, and business development, and will give a high priority in its work program to knowledge sharing with the World Bank Group's regions, and to facilitating stronger relationships with centers of ICT expertise outside the World Bank Group, The \XTorld Bank Group's ICT sector strategy will also include increased staff training in such areas as e-commerce, e-government, and e-learning. It will also introduce new techniques such as staff exchanges and mentor pro~rrams. • External partnerships: In line with Comprehensive Development Framework principles, external partnerships will play an important role in the implementation of the new strategy. The World Bank Group is already cooperating on information and communication technologies issues with United Nations organizations such as the United Nations Development Program, the International Telecommunication Union, the Universal Postal Union, the United Nations Commission on International Trade Law, and the \XTorld Trade Organization. Recently, the interaction between the World Bank Group and the Inter- American Development Bank in this area has increased. The World Bank Group will work on coordinating strategies with bilateral agencies in client country information and communication technologies sectors. Multilateral and bilateral relationships will be strengthened. At the same time, the \'Vorld Bank Group will work with nongovernmental organizations to move toward community-driven development in the sector with increasing focus on rural areas. The Development Gateway Foundation and its work in creating knowledge resources and supporting initiatives to diminish the digital divide will be a priority for new partnerships. InfoDev, for example, is already supporting the development of country gateways through grants. How are other WB Regional Units addressing leT issues? Sub-Saharan Mrica - GICT in response to a request from the Africa region has developed a strategy for \'Vorld Bank Group involvement in the ICT sector in Sub Saharan Africa. The strategy is composed of three pillars, all of which underpin a robust regional integration and connectivity agenda. Specifically, the World Bank Group will (i) continue to consolidate telecommunications sector reforms made over the past decade. Reform is required to further expand access to infrastructure and services at more competitive prices; (ii) intensify its effort to address market failures by helping countries devise innovative private - public sector partnerships to close infrastructure and service gaps in key areas; and (iii) intensify its support to SSA countries in developing the policy and regulatory frameworks that support "ICT for Development" applications, which both enable economic and social development, and foster the development of infrastructure in key areas. Middle East North Mrica The MENA region has a broad theme on "Knowledge economy" and knowledge sharing in its regional strategy, which comprises more of a strategic view and knowledge 25 product delivery aspect. The region has embarked upon a more systematic approach to the inclusion of ICT in projects by ensuring that all ICT lIT components are well defined in CAS discussions and in discussions related to PCNs and peer and that opportunities and entry points for such initiatives are consistently examined. Europe and Central Asia - ECA does not have a regional strategy for ICT De\'elopment Strategy, though policy discussion notes on the ICT sector development ha\Te been developed for specific countries. Further, a similar discussion note has been developed to provide a regional approach to potential ICT sector lending and investment in South East Europe. ECA has organized various learning programs on ICT IE-Government for their staff. Latin America A formal regional strategy to systematically address ICT Development in the LAC region has not yet been developed. However, regional sector strategies for education, private sector development, include ICT components. LAC region also invested resources in developing an E- Government Strategy for the region. East Asia and Pacific - A formal regional strategy for the World Bank Group to systematically address ICT Development in the EAP region has not yet been developed. However, in specific countries such as Vietnam, GICT has developed an issues paper to provide a foundation for ICT development assistance by reviewing ICT challenges and opportunities, with a view to use the foundational analysis to develop an outline of potential World Bank Group (\,{'BG) and other donor support in the sector. What are the roles of IFC and MIGA in ICT Development? IFC IFC has a significant role in ICT Development both in the ICI and IT arenas. The Communications Investment Division (ClTIN) provides long-term financing to private sector companies in emerging telecom markets, focusing on new private sector projects, sustainable private enterprises that are expanding or modernizing, and state-owned enterprises that are clearly on the path to privatization. Specifically, CITIN provides project financing to mobile and fixed-line service providers; supports advanced telephony such as broadband infrastructure and convergent technologies; promotes market liberalization and deregulation through support for the privatization of incumbent operators; encourages and supports competition and customer choice by working with alternative operators, networks and technologies; and supports the manufacturing of telecom equipment in developing countries. The IT Investments Division (ClTIT) operates effectively as a venture capital or private equity e,'1"OUp that invests in private sector information technology companies in the emerging markets. It is a stage-independent investor with an exclusive focus on building successful information technology businesses that promote the spread of information technologies to the emerging markets, with the ability to assist portfolio IT companies with strategic partnerships and the capacity to provide follow-on equity and debt financing as they grow. Further information may be found at http://info.worldbankorglict/ MIGA -The role of MIGA in ICT Development falls within its broad mandate of increasing FDI- in the pursuit of which, Investment Promotion Agencies (IPAs) are assisted in the use of lCT for attraction of investments. Programs are currently ongoing in East Asia and Pacific and with partners in South Asia for FDI Xchange. The Commonwealth Secretariat has also approached MIGA to collaborate on the development of an investment promotion strategy in the lCT sector within Bangladesh. In addition, FDI competitiveness benchmarking analyses are also being carried out in the East Asia region, which cover electronics and shared services I call centers. Further information may be found at http:/ hvww.ipanet.netl snapshotasial 26 Internal Bank initiatives in leT Development GICT (a joint World Bank/IFC group) combines the private sector investment capabilities of the IFC, the policy advisory and financing expertise of the World Bank, and the secretariat of agio bal donor funded grant facility, in/oDe'.' to serve as the World Bank Group's core department for ICT programs and policy. CITPO, the policy unit of GICT leads the Bank's operational, strategic and advisory work in the areas of telecommunications and postal sector reforms, including the design and implementation of rural ICT access programs and post-conflict infrastructure reconstruction. CITPO also serves as the Bank's ICT anchor unit \v1thin the Infrastructure Network. InfoDev has ptovided grants for governments, private businesses and civil society organizations for innovative ICT initiatives. The IFC divisions CITIN, CITIT and CITDR make and manage IFC investments in private sector telecommunications and IT firms. In line with the \Vodd Bank GtoUp'S ICT Sector Strategy, CITPO's primary focus has been to lead and support operational and advisory services in the areas of telecommunications and postal sector reform, policy issues related to the internet, convergence and e-strategies, and legal and regulatory reforms in the ICT sector. CITPO also focuses on the design of policies, regulatory instruments; institutional arrangements and financing that promote universal access to information and communications infrastructure. CITPO is active in 77 World Bank Group countries in all regions. In the South Asia Region, CITPO manages and supports operations and tasks in six (Afghanistan, Bangladesh, India, Nepal, Pakistan, and Sri Lanka) out of eight countries. CITPO manages projects which support governments in implementing telecommunications sector reforms, including rural access programs; contributes to postal sector reform dialogue in three countries (Afghanistan, India, Sri Lanka) and to the preparation of an access-to-finance project in Sri Lanka through the postal retail network to improve finance access to households and S~fEs. CITPO also provides advice on national ICT strategies, e-commerce, e-government, and issues related to information security. ISG - ISG has been supporting the design of ICT components in sectoral loans such as in the health, education and financial sectors WBI - WEI has carried out knowledge assessments in different countries. WEI has also undertaken a project to promote transparency in Municipal Government through E-Government applications 27 Chapter 4: Country Assessments This chapter begins with a synthesis of the general characteristics of the South Asia Region, as they relate to the deployment and use lCTs for socio-economic advancement. An assessment of country readiness, development and use lCTs is then provided for each of countries under the purview of SAR, including: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Each country assessment presented in this chapter covers five broad areas: (1) Overview of the socio-economic development context in the country (2) Synopsis of the country's development objectives and priorities, as outlined in core country planning documents (e.g. the National Development Plan, Poverty Reduction Strategy Papers, and the World Bank's Country Assistance Strategy, and others) (3) An assessment of e-readiness, including a brief on the goals and steps that have been taken towards the achievement of the long, medium, and short term imperatives discussed in Chapter 2. Here, particular attention is placed on the extent of development of IT infrastructure, human resources, and appropriate legal and regulatory environment that will facilitate the use ofICT to accomplish long-term growth and development objectives. (4) Summary of short to medium term goals, measures, programs, and projects that have been implemented by each country to advance the use of lCTs in meeting their economic development objectives. (5) The nature of the World Bank's involvement in each country through its country programs, analytical and advisory activities, and lending projects. The chapter concludes with some pointers on potential areas for involvement, which may be explored by the World Bank in future. A list of key contacts, organizations, and documents is also provided. What are the general characteristics of the South Asia Region? Next to East Asia, and with an average gtowth rate of about 5.9% all through the 19905 and a population of 1.4 billion, South Asia is one of the fastest growing regions in the world today. Some important socio-economic development variables that used to be extremely low in the 1980s have increased drastically over the last two decades. For example, mortality rates for children under the age of five have declined by over 25% in less than a decade. However, the region still lags behind others in many areas that are important for supporting an ICT-based growth strategy. For example, average illiteracy rates are still among the highest in the world, and the guality of human capital is still very low in many countries in the region. The guality of the legal and regulatory environment and the effectiveness of government and associated institutions are also very weak, when compared to East Asia. Similarly, IT infrastructure and access is still very limited. On average, for example, South Asian countries provide 626 telephones and 182 computers less than their East Asian counterparts for every 1000 persons. Similarly, the average person in East Asia is 3.6 times more likely to have access to a television or a radio set, than in South Asia. Research estimates also show that there are, at least, 28 reT 30 times more Internet users in East Asia than in South Asia despite the fact that the cost of telecommunications are about the same. Table 1 below provides a more comprehensive comparison of key indicators between the South Asia, East Asia and the G7 countries. Table 1: Some Comparative Indicators for a Knowledge Economy SouthA"ia G7 Variables actual 2.16 Human Development Index 0.56 0.93 Unemployment rate, % of total labor force 5.67 7.70 Tariff & nontariff barriers 2.80 6.73 8.00 Intellectual Property is well protected 3.17 3.94 5.61 Soundness of banks 4.67 4.54 5.79 Regulatory Quality -0.51 0.40 1.41 Rule of Law -0.34 0.39 1.51 Government Effectiveness -0.33 0.43 1.57 Voice and accountability -0.37 -0.01 1.31 Political stability -1.05 0.53 0.86 -0.51 0.21 1.58 57.00 51.00 18.43 120.71 1550.47 3151.60 Total expenditure for R&D as % of GNP 0.71 0.86 ......................... Entrepreneurship among Managers 5.48 5.86 Burden for Start-Ups 4.00 5.02 __ .__. ...._...__.. High.Tech exports as % of manuf. exports 2.25 38.03 Adult literacy rate (% age 15 and above) 56.34 93.10 4.16 7.66 J"l.()l1ual.y enrollment 48.26 74.28 Tertiary enrollment 6.12 30.85 Primary Pupil-teacher ratio, pupils per teacher 41.20 25.99 Public spending On education as % of GDP 3.04 3.98 Prof. and tech. workers as % of the labor force 5.82 15.33 667.02 'eleph,:me lines per 1,000 251.31 Mobile phone per 1,000 415.71 660.21 Computers per 1,000 188.76 405.36 TV Sets per 1,000 268.36 704.00 1137.71 914.61 4164.92 nICTmmU'"al tel'~co.mrnUJllClt1ClnS, cost of call 1.00 0.93 School enrollment, secondary, female (% gross) 110.31 Source: 2004 Knowledge Management IHethodology Database, World Bank Institute 29 Ths outlook that the region is far behind in advancing creating the necessary enabling environment factors with which an information society, or knowledge economy, can thrive. A lot still needs to be done in the in order to advance the use of the lCfs for development. Rapid progress needs to be made in addressing the long-term imperatives like human capital development, improvements legal and regulatory em;ronment, and the development of infrastructure that v.,jjJ suppon the scaling up of ICT- based initiatives, v.~thin the context of a knowledge economy, to accelerate growth and socio-economic development. It is important to note that the general weaknesses that have been highlighted for the region as a whole, may not appropriately reflect significant progress that have been made by countries like Sri Lanka, unique difficulties prevalent in others like the Maldives, or rapid advancements that have occurred in countries like Pakistan or Bangladesh in recent times. Variations in performance (see Table 2) may also derive, in part, from differences in capabilities, size, and experience ~th ICf usage, across countries in the region. To reflect the true nature of progress and differences across countries therefore, an assessment of each country is provided in the subsequent sections of this chapter. But first, a synthesis of the nature of the Wodd Bank's involvement on lCT development in the region is presented below. More details can be found in the indiv;dual country assessments. Table 2: Comparative Analysis of High Level Development Indicators Pakistan Bangladesh Sri Lanka India South Asia East Asin G7 USA Variable actual I actual / actual I actual I actual I actual I actual / actual I , normalized normalized normalized normalized normalized normalized nonnalized Average AnnualGDP 3.50/5.37, 5.40/8.68 4.16/6.56: 3.28/4.70: 2.16/3.07 3.00/4.21 0.50/1.58 O.59/2.0() 0.93/8.85 094/933 i 58.00/1.24 100.00/8.18' 72.62/9.751 1 SIJJin:e: 2004 M01JJ1edge Management Mtthodo/Qgy Database, If70& Bank Institute 30 What is the nature of the World Bank's involvement in leT development in South Asia? Next to sub-Saharan Africa, the South Asia is the largest regional recipient of concessional lending, provided to poor countries, from the International Deyelopment Associations (SAR regional brief, http://\\'WW.worldbank.org/ sar). Middle-income countries in the region also receive substantial assistance from the International Bank for Reconstruction and Development (IBRD). According to the S}\R Annual Report (2003), the Bank's support in the region focuses mainly on five interrelated objectives namely: (1) lmprol/ing gozlemance and redlJciftg corruption through smart partnerships (e.g. \\rith NGOs, local communities) that can foster local ownership and maximum benefits for the beneficiaries of development programs. Developing capacity to rapidly respond to crisis and post conflict reconstruction (e.g. post conflict reconstruction in Afghanistan and Sri Lanka), is also a key aspect of the Bank's work in this area. (2) Buildtitg a better itUJestment climate by improving macroeconomic performance, fiscal stability, and enabling the private sector to contribute to development, especially in the area of service delivery and the development of key infrastructure (3) Reducingpovert;, and empowering the poor by improving and the quality and availability of social services (including education, health, nutrition and social protection) to the poor. (4) Disease prevention and control. \\lith specific focus on HIV / AIDS and related diseases (5) Promoti1tg rfJectitle protection and sustainable use of natura! resources (e.g. water, land, forests, etc.) in a manner that will improve the livelihoods of the rural poor. As already discussed in several aspects of this paper, leTs can help in the achievement of many of these objectives. A review of the Bank's operations in the region carried out as part of this work, shows that there is already clear recognition of the importance of ILlS for development, within the Bank itself. 31 4.1 Afghanistan Introduction After more than two decades of war and chaos, and three years of drought in the late 1990s, Afghanistan's primarily agricultural economy is in very poor condition, although it has benefited greatly over the past year from increased rainfall, with agriculrural output expected to rise by 25% in 2004. During 2003, Afghanistan's overall economy is estimated to have grown by about 24%, with a projected 19% growth rate for 2004. An official but rough estimate by the Central Statistics Office puts the FY2002 GDP at $4.1 biWon; per capita GDP, using a population estimate of 21.8 million, is about $186. Agriculrure (crop production, horticulture, and livestock) accounts for about 52(10 of GDP and employs an estimated 80% of the economically active population. Industry and services each make up about 24% of GDP. Where available, social and poverty indicators are grim. Life expectancy is about 43 years and Afghanistan has the fourth worst child mortality rate in the world: one in four children die before the age of five. Only 13% of the population has access to clean drinking water and 12% to sanitation facilities. An estimated 70% are malnourished, with little or no medical care, insufficient food, clothing or jobs. General lawlessness, particularly in areas outside of the major cities of Kabul, Herat, Kandahar, Maraz-e-Sharif and Kunduz, complicates already extreme social challenges. Current period of relative stability is allmving the country and its people to recover and reconstruct for a better future. This is a crucial time in the country's history. As rebuilding efforts now will have lasting effects in the furure. To that effect ICT represents both opportunities and challenges for the country. In many respect the country is in a similar to the siruation in post-war Germany and Japan, where things could be build anew and more efficiently. Furthermore, the beauty of ICT is that much of it can be used 'off the shelP that is it can acquired and implemented almost immediately. So, in the respect Afghanistan can leap frog over old and redundant technologies and go straight for the top of the line technologies without any worries about the sunk cost of old technology. However, the main challenge lies in that the massive scale of devastation which has completely incapacitated the country's ability to implement any technology. ICT infrastructure is largely non-existent. The educational base has been completely decimated. There is hardly any culrure of ICT or experience in this field not to mention the lack of funds and resources. It is encouraging to note that the Transitional Authoriry realizes for the benefit of ICT applications in development of the country in terms of both social and economic indicators. Consequently, policies and strategies have been developed to ensure that ICT is part of the national development agenda across various sectors. At the moment a number of projects with strong ICT components are underway with the involvement of various donor agencies and countries with the view to improving on Afghanistan's status as one of least ICT developed countries in the world. Overall Country Assessment A basic overview of any country's "e-readiness" would require a basic understanding of some of the key factors that are required to develop and use ICTs in all sectors of the economy. These factors include adequately trained skilled labor, adequately connected information infrastrucrure, and a legal and regulatory environment that promotes ICT development. Using this criteria, a basic review of 32 ,-\fghanistan ICT Country Assessment Afghanistan's "e-readiness" was put together to focus on the main foundational priorities that are re'luired to sustain ICT development. Education & Skilled Labor Literacy is low. Before the war, the literacy rate was estimated at 11.4% (18.7% male; 2.8%). In urban settings the figure was 25.9% (35.5% male; 14.8% female) but in rural areas the rate was only 8.8% (15.7% male; 0.6% female, in some provinces 0.1%). After a decade of forced hibernation, children in Afghanistan finally went back to school in 2002. For most, it was the first time they had stepped onto a school campus. On March 23rd, 2002 1.5 million, only 33(/'0 of the estimated 4.4 million, students started schooL It is particularly important to note that over 50% of the Afghan population is under 18 years of age. Most under the age of 13 have never set foot on school grounds or received any form of education. First grade classes are filled with students ranging in ages from 5 to 12. The average number of schools per province was 50. Women and girls are going back to school after the restrictions imposed by the Taliban. However, the gender disparity instilled during the earlier Taliban rule is still 'luite sharp. At the tertiary level, 24,000 students were entolled in 2003. Only a very small number of students from the different provinces could entoll with the universities because of the stiff competition for places and the limited resources. The civil war in the country forced the universities to remain closed for much of the time during the duration of the conflict. This seriously affected the continuity of studies and the progress of students in the country. There are now eight universities in the country located in Kabul, Jalalabad, Herat, Mazar-e-Sharif, Khost, Kandahar, Badakhshan and Takhar. Each specializing in various degree programs, yet the 'luality of education varies greatly amongst the universities. Educational institutions in the country at present do not benefit from modern technologies, and their curriculum has not been updated for several years. Two of the universities have a Department of Computer Science. These are ICabul University which started its department in 1995 and the Islamic University for Science and Technology (lUST) located in Jalalabad which opened its Department of Computer Science in 2001. Both universities offer bachelor degree courses. The curriculum in these universities is not updated and is not of international standards to meet the re'luirements of the country in this era of information. Universities play a very important role in the human resource development, but only 19 students have graduated from the Department of Computer Science of Kabul University since 1995. There is no sign of the ICT related subject matter in the curriculum for high schools. After the Soviet invasion, many Afghans were forced to leave the country, and started living in the neighboring countries where they had very limited opportunities for education. The 'brain drain" from Afghanistan has been especially severe and the trained managerial and technocratic class is almost non-existent. While many talented Afghan expatriates have rerurned to assist v.rith reconstruction, the shortage of capable mid-level managers is one of the most intractable long-term development issues. Many of the Afghan IT professionals in the country received their training at private institutes in neighboring countries such as Pakistan and India. However, there is still a critical shortage of lCT professionals and even IT literate professionals in the country .. The capacity of government employees is modest, as the government ICT uptake is at its early stages. Some inroads have been made in ICT education. The Ministry of Communication (MOC) has embarked on the establishment of ICT centers across the county. The first of these centers opened in November 2002 and is located in the Telecom Training Centre of MOe. Its main role is to train government employees from Ministry of Communication and other ministries. Also, UNDP and CISCO 33 Afghanistan ICT Countrl< ~Assessment established the CISCO Academy, in l"-abul University, which started classes in September 2002< The first graduation class from the CISCO Academy consisted of 17 students, including 6 women. They were the first ever to earn industry-standard certificates in computer-networking skills in Afghanistan. There are plans to extend this program to outlying prmcinces. Approximately 200 students were expected to complete the training by the end of 2003. Furthermore, there are now private sector computer training centers in different main cities of the country like Jalalabad, I"-abul, Mazar-e-Sharif, Herat and lZandahar. However, there are concerns about the quality of the training and the depth of the material covered .. The present curriculum covers office automation and basic software. There are no centers which provide training on software development. Infrastructure & Connectivity Afghanistan's telecommunicarions sector is rapidly recovering from its dilapidated status at the end of recent hostilities. Prior to the hosrilities, Afghanistan'S telecommunicarions network operated approximately 57,000 lines in five major cities (two thirds of these lines were in Kabul). These largely survived the bombing, but many were old analogue equipment in need of overhaul. Maintenance, operation and billing systems had largely collapsed and international links had been damaged or destroyed. Country teledensity was on the order of two telephones per 1,000 people compared to 24 per thousand in Pakistan, 35 in Tajikistan, 68 in Uzbekistan, and 83 in Turkmenistan. The fixed analogue, fixed digital and wireless digital networks present in Kabul were not interconnected. Towards the end of 2003, two years after the fall of the Taliban, full mobile services have rapidly taken off, passing 135,000 subscribers in December 2003. Confidence in the sector has resulted in private sector investments in excess of $80m. Afghan Wireless Communications Corporation (AWCC) has been operating a GSM service in Kabul and in the five other major cities Herat, Kandahar, Mazar-e-Sharif, Jalalabad and Kunduz. A new mobile operator, Telecom Development Company Afghanistan was given a license in January 2003. The second operator was selected through a process of competitive bidding. The second operator has launched its services under the brand name of ROSHAN and offers services in Kabul, Jalalabad, !\lazar-e-Sharif and Herat. The MOC has begun restoring and expanding the fixed network, largely utilizing fixed wireless solutions. The MOC operates a digital service mainly in I"-abul, Herat and Mazar-e-Sharif where national and international satellite links have now been established. Recently, 12,000 fixed line digital switch with 7,000 active lines was installed in Kabul. Herat also got a 7,500 fixed line digital system, most of which are active and Mazar-e-Sharif now has a capacity of 4,000 lines, most of which are also active. The MOC also operates an analogue network mainly in Kabul with an estimated 8,000 active lines although the switch does have a capacity of 15,000 lines - work is currently underway to convert these lines to digital. There is a VSAT network between lZabul and the four of the five "Tier 1" cities, with work currently underway to expand VSAT connections to the other provincial capitals. Recently, tenders have been awarded for the expansion of digital phone services by 120,000 new digital lines in 23 pro\cincial capitals (Kabul, "Tier 1", and "Tier 2" provincial capitals). Additionally, with World Bank support, the MOC is extending basic communications services to government at the Ministry and provincial capital level; improving international connectivity through a microwave link to Pakistan; and repairing of the satellite system in Kabul. Work is also underway to install simple communications facilities in all 355 districts across the country, as well as developing a number of telekiosks in key provincial centers. There are further plans to expand provincial and district services in the medium term. The UN offices, embassies and certain NGO's were the first to be connected to the internet using satellite connections with 1.2 and 1.8 meter dish antennae operating on the KU band. Some of the offices were also connected using satellite telephones. 34 Afghanistan leT Assessment Currently, A \'VCC is the only ISP, and licenses have been issued for others to enter the market. Also, the VSAT links being installed by the MOC in the five main cities of the country will soon make it possible to provide the people in these cities with Internet access through telekiosks. In 2002, the internet penetration rate was 0.00227 in the country. Most of the users having access are in Kabul. Internet cafes have become increasingly popular in the main cities. Internet access from interior is only available via two methods ~dialing out to an ISP in Pakistan, or using a satellite link. Legal and Regulatory Policy Responsibility for telecom sector planning and regulation lies with the 1\1inistry of Communication, Its responsibilities include sector regulation, policy formation, licensing, license compliance, tariffs, service quality monitoring, and so on. Afghanistan at present has no statutory legislation for telecom. In October 2002, the Ministry published a national Telecommunications Development Strategy that outlines the key infrastructure development initiatives the government seeks to accomplish9 O. The Strategy is a roadmap of principle objectives for the sector, and forms the basis for the government's appeal to the international donor community for funding. The primary goals of the nationaJ telecommunications sector strategy are to: • Provide the people of Afghanistan with access to high~quality telephone, data communications, Internet and postal services, and • Enable rapid growth of affordable communications to all so that they may experience the Digital Age wherever they are and whoever they may be. In October 2003, Afghanistan approved a comprehensive Telecommunications and Internet Policy that was ratified and published by the cabinet. The Policy was developed through an engagement process that brought together a wide range of constituencies from official Afghan government sources, multilateral funding agencies, bilateral donors, non governmental organizations, expatriate Afghan-Americans, and concerned Afghan citizens. The themes and substance of the Policy thus reflect a broad spectrum of discourse, and are calibrated closely with the government's overall economic development and market liberalization goals. General principles adopted in the Policy include creation of a legal and regulatory environment that nurtures and accelerates industry growth; engaging private investment; market liberalization; establishing a level playing field for competition; and encouraging the usage ofICT. A Telecommunications Act is being finalized and the government is presently working to set up an independent Telecommunications Regulatory Authority of Afghanistan (TRAA). Afghanistan will ensure that the TRAA is completely independent of any operator or service provider in the ICT sector. For the coming months, an interim Telecommunications Review Board has been established in the MOC to prepare the ground for the establishment of the TRAl\ by the middle of 2004. During the 5-year period covered by the existing policy, the government's clear intention is the corporatization of the MOC's fixed telecommunications operations. The corporatization process (supported under a proposed cotporatization project) has commenced with the creation of the new corporation in the middle of 2004 The MOC is planning to invite a strategic partner to manage Afghan Tel post-corporatization. Plans for eventual privatization will be augmented by an institutional strengthening exercise to ensure administration procedures and accountability to meet all international quality and performance expectations. Although foreign investors are invited and encouraged to demonstrate their commitment by forming joint ventures with local partners, there is no minimum requirement for local equity partners. 9 http://www.moc.gov.af/mocdoc/TelecomsDevStrategy-IGoct02.pdf 35 Afghanistan - JCT Country Assessment The cellular market has two prh'ately run nationally licensed operators. For long distance and international telephony, the government is investing in a developing capacity, but all mobile and fixed licensees also have the right to operate long distance and international serv-ices independently of the ~fOC-controlled operator. International (facilities) licenses are also available for internet usage subject to separate VSAT licensing, where appropriate (presently only on a temporary basis). A Telecommunications Development Fund (TDF) \vill be established to help support the rapid development of universal access in areas that may be perceived as uneconomic by the market. The Fund will be utilized to support the most beneficial investments and services in locations most in need of communications infrastructure. Use of the Fund will also be coordinated with other public service projects, such as educational and health facilities Overall Economic Development Objectives for Afghanistan The National Development Framework (NDF) was drawn up in April 2002 provide a long term structure \\'ithin which short term and emergency interventions need to rehabilitate and stabilize the country could be formulated and implemented. )JDF had three pillars: 1. Overcoming the humanitarian crisis and building human and social capital 2. Reconstructing physical infrastructure and hamessing available natural resource use. 3. Developing the private sector. However, many reforms remain to be carried and increased harvests of poppy highlight the need for more concerted effortS in this area. There were concems about the difficulties in terms of both cost and the need for a more systematic and sustainable approach to the investments being proposed, and in some cases implemented, by Afghanistan's development partners. These evolving circumstances drew the attention of both the Government and its partners; and forged a consensus around the state-building agenda as the only one that promises a sustainable Afghanistan and offers a long term exit path for the partners. With that in mind, in March 2004, Securing Afghanistan'S FUfilre, a national development plan \\1th a focus on self- sustainability was drawn up. This calls for action in five broad areas for social and economic development of the country. • Human Capital This calls for mobilizing resources for the refilm of refugees. Improving and expanding the education system and addressing the gender imbalance in enrolment are high on the agenda. Effort will be made to expand the Basic Package of Health Services to improve the currently low health indicators. Steps \vill be address livelihoods and social protection issues. • Physical Infrastrucrure This can be subdivided into four broad categories - transport namely roads and airports; power generation, transmission and distribution and public investment to lay the foundation for major private investment in the oil, gas, mining and telecornmunications; natural resource management, mainly inigation; and investment in urban management in the ateas of water supply and sanitation. • Security and Good Governance - This would strengthen instirutions and increase the outreach and influence of the central government. General law and order situation would be improved through formation of a national armed force and local aw enforcement agencies supplanting the myriad of militias which ate not accountable to anyone. • Regional Issues - These involves movement of people and goods in the region. Issues include movement of refugees and economic migrants. There ate also issues with regards 36 Afghanistan lCT Country Assessment to overland transit of goods to and from neighboring countries and the possibility of transnational gas pipelines and power grids. • Private Sector The government sees the private sector as the eventual engine of growth and development in the country. With that in mind the government is pursuing strategies to create enabling environment for the private sector. Government Related leT Initiatives The overriding objective of the government's national communications policy is to achieve modernization and rapid expansion of telecommunications networks and services, and to aim for universal access to telecommunications across Afghanistan. 'The govemment also views ICT as an important tool for development. ICT is a sector that can create opportunities for disadvantaged groups. \Vith this in mind there are ICT specific policies have been outlined in Securing Afghanistan'S Future. Furthermore, the Telecommunications and Internet Policy has also been drawn up clear set of objectives in mind. ICT priorities from Securing Afghanistan's Future are as follmving: • Capacity building: construction and operation of facilities for the training of both management and technicaJ staf£ • Restructuring: support to the regulatory and legaJ frameworks and the corporatization of both the postal and telecommunications operator. • Telecommunications infrastructure including (potentially): 0) a fiber optic ring following the route of the major ring road building project, as well as microwave spurs to link towns and cities not on the major road route; (li) a district communications initiative to bring connectivity to district capitaJs; (ill) an expansion of the Afghan Tel's fixed wireless network; and (iv) other items including billing systems, spectrum management and the rollout of telekiosks and related ICT initiatives. • Postal infrastructure: development of 0) post code system; (li) an express mail service; (ill) postal banking; and Ov) postal stamps;. The policies outlined in Telecommunications and Internet Policy are as following: • Create a legaJ and regulatory environment that nurtures and accelerates industry growth: The Government intends to rapidly introduce a Telecommunications Law of 1382 that will define the rights and responsibilities of market participants in the telecommunications sector. It will also create an independent telecommunications regulator, the Telecornmunications Regulatory Authority of Afghanistan (fRAA), to implement the Government's commitment to international best practices for sector modernization and reform. • Engage private investment to the greatest extent possible: Afghanistan's capital requirements for telecommunications infrastructure are tremendous. Neither the state nor the international donor community can provide the vast financial resources necessary to quickly provide for the communications needs of the nation. The participation of private investors is essential and encouraged. 37 "",fghanistan - ICT Country Assessment • Establish a level playing field for competltlon: The role of the state in providing telecommunications services \\,j] be steadfastly reduced in favor of fair, transparent and market- based competition among commercial enterprises. • Introduce market liberalization: Afghan consumers \N111 benefit from healthy competition in all aspects of telecommunications networks and senices. Market opening \\,111 lead to a wider range of suppliers and products, lower costs, and establish a senice industry that is responsive to customer demands. New entrants \\,j] bid competitively for market opportunities based on open and transparent international tenders. In the near term, the Government \\,,j] introduce a framework of limited, managed competition to ensure stable market conditions for strategic infrastructure projects. Aggressive liberalization of the sector is anticipated after three years, or commencing in 2006. • Encourage the usage of ICT: Widespread adoption of modern information technology tools \vill create new educational opportunities for the young, improve the efficiency of government departments and private companies, and help Afghanistan to "leap frog" into the Digital Age. Recent technological advances have unleashed a range of new alternatives for bringing powerful and affordable voice and data sen1ces to consumers. The Government is committed to pursuing an open, flexible, and technology-friendJy regulatory strategy to encourage the deployment of the latest technologies throughout Afghanistan. we Related leT Initiatives The Transitional Support Strategy for Afghanistan outlines 4 strategic areas for IDA assistance: 1. Improving livelihoods 2. Fiscal Strategy, Institutions and Management 3. Governance and Public Administration Reform 4. Enabling Private Sector Development. The Afghanistan TSS specifically mentions I CT applications under the Strategy for Enabling Private Sector Development. The focus is on telecommunications, with assistance focused on helping the government to implement its new telecommunications policy which supports the introduction of private-sector led competitive provision of infrastructure and services as the primary tool of sector investment and growth, and to support the rollout of communications services to meet public and private sector communications need. Bank assistance is provided through be through an investment and TA credit, analytical and advisory Activities as well as with support for investments and capacity building pwvided through special funds (ARTF & PPIrj. A review of the current active W'B projects that have been implemented over the years indicates that some of these programs have some ICT applications imbedded in them. While ICT can be a very useful tool for Afghanistan'S recovery and development., Afghanistan'S poor or rather lack of telecommunications infrastructure and high levels of illiteracy, make implementation of ICT based development programs very difficult. The following is a summary of the relevant \,('B projects that met some of the developmental goals outlined in the CAS as well as some of the ICT development goals outlined in the country's ICT Policy. Communications Emergenq Communications Development Prryed - The objective of this project is to support activities designed to improve the delivery of communication services to the government and to the people. This project had three components each with its own ICT related activities. 1) Emergency Government Communications 38 Afghanistan lCT Country Assessment Network: (i) Supply, installation, and commissioning of a communications network that will integrate an existing network constructed by the Bank and the UNDP, as well as improve and extend coverage to Ministries and other key Government organizations in Kabul as well as provincial capitals and selected other sites, and (li) Operations and maintenance and training of Afghan Tel staff 2) MOC Institutional Capacity Building: Sub-components would provide support to (i) separate MOC's policy, regulation, operational and ownership functions, (li) strengthen the MOC's policy and project management capacity, (iii) further establish and "bed down" independent regulatory capacity, (iy) establish the monitoring equipment required to properly administer the ~fOC's spectrum pIan, and (v) establish Afghan Tel as an efficient State owned corporation. 3) Postal Sector Reform: (i) Development of a Business Plan that would evaluate the potential for expanding current operations to include new offerings such as e-services. (li) Rehabilitation of facilities and modernization of postal equipment including information systems. Infrastructure Emergmry Transport REhabilitation Project - The development objective of this project was to facilitate the country's economic and social recovery through improved physical access to goods, markets, and administrative and social services. This project had four components, of which one had ICT related activities and this was the provision of communication and radio navigational aids for Civil Aviation. Emc1J!,enry IJifrastmcture REconstmction Project - The objective of this project was to improve selected infrastructure service delivery in order to enhance the quality of life, health status, and the welfare of the population and to support the economic recovery of the country. Of three components, one had ICT embedded in it. This component \vill provide urgently required policy and regulatory advice, training and additional engineering support to key infrastructure services including telecom. Human Development National Emergenry Empl()Jment Program (NEEP) - This project was designed to reduce rural poverty reduction and to facilitate economic social recovery of the country. The project achieves this by embarking on labor intensive rural roads rehabilitation and maintenance projects, whereby not only are roads made useable but employment is generated in doing so. One of the two components had an lCT sub- component. This was for a possible funding for a national database and MIS for NEEP. National Community Empol1)crment Program - The objective here was to recapitalize villages and neighborhoods so that they can return to normal levels of activity within their usual economic and trading systems. Dual component with one involving ICT. For the purpose of Labor Intensive Public works (i) Foreign consultant will be used to prepare IvrrS. (li) Computers, related IT support and basic office equipment will be funded at the central and provincial levels. Health Sector Etnergenry Rehabilitation - This project was aimed at assisting the Ministry of Health in improving the basic health indicators while at the same rime strengthening the Ministry's stewardship in the sector and also building the capacity of Afghan health workers. Four components to this project with one involving ICT. This called for Capacity Building and Training by strengthening the communications within and between provincial, regional, and central health offices by provision of solar-powered high frequency radios and computers for voice-data communications. Strengthening Higber Education - This project was desiS>ned to support government's commitment in human resource development to meet long-term reconstruction and development needs of the country by improving the higher education system. The third component has lCT related activities. This would be the Human Resource Development component with overseas post-secondary professional training and education to gualified Afghans in the public and private sectors to fill critical skill gaps and develop future leaders of the country. Priority will be given to skills and knowledge which have high development impact (e.g. engineering, public and business administration, agricu1mre, IT, etc.). 39 Afghanistan - rCT Country Assessment Emergenf:/ Education Rebabiiitatiol1 & DelJeiopment Pl1?lec/ The objective here is to selectively support the government's emergency education program. Of its three components the Education Secror Management Reform had lCT sub-components in it. ICT would be used to strengthen the capacity of the government and Afghanistan Assistance Coordination Authority by accelerating planning, implementation, and monitoring of the reconstruction process. Furthermore, here would be a facility for distance learning which will support the management reform and capacity building. Government EmergenlJ! Customs Modemizatio1l and Trade radii/ati0l1 Project - The purpose of this project was to prm;de assistance in establishing a more efficient customs and transit regime. One of the three component involved lCT. This was for provision of Technical Assistance to automate customs data and M1S. Other leT initiatives Private Sector Initiatives Biggest private sector lCT involvement in Afghanistan is in the area of 'wireless phone services. At present there are two service providers operating nationally. There are plans to introduce a third provider after 2006. There are no ISPs in Afghanistan private or otherwise [???], although a Pakistani ISP, Liwal Group, offers connectivity to internet via satellite telephones. There are only two internet cafes in the country at this time, both are located in Kabul. In terms of IT education there is some private sector involvement. There are now private sector computer training centers in different main cities of the country like Jalalabad, Kabul, IVlazar-e-Shatif, Herat and Kandahar. The main problem regarding these centers is the lack of a standardized curriculum [??? See above]. The present curriculum covers office automation and basic software. There are no centers which provide training on software development. There is a small, fledgling computer hardware market in Afghanistan at present (2002). This comprises of a few computer shops in Kabul, Herat, Kandahar and Mazar-e-Sharif. The total turnover is estimated at US$800,000. The hardware being sold at the moment include: desktop computers, printers, scanners, uninterrupted power supply units, and networking equipment (hubs and switches). There are a number of organizations and companies which provide software development, networking, website development, consultancy and other services. These include Afghan Computer Science Association, Asia Soft, Center for Research and Technical Support and The Afghan Computer Center. NGO & Donor Initiatives The following is a brief summary of the nature of the ICT development work that has been commissioned by the various NGO and donor organizations in the country. Mghanistan Reconstruction Trust Fund (ARTF): A US$6 million ARTF investment operation in support of the l\1inistry of Communications operational arm (the future Afghan Tel) has three components: (i) rehabilitation of satellite earth station: (li) expand and improve microwave transmission links to neighboring states; and (ill) support toward the creation of a billing system. Public Private Infrastructure Advisory Facility (PPIAF): Resources totaling US$481,000 are being used to provide consulting services over the course of the year June 2003 to February 2004 in order to support the initial creation of minimal, transparent regulatory institutions, support the 40 Afghanistan - lCT Country Asses,ment creation and functioning of the regulatory unit and map a process of further development of the regulatory body. International Telecommunications Union (ITU): The ITU has offered support totaling US$ 630,000 in the areas of telecommunications law and spectrum management and monitoring. In cooperation v.1th the United Nations Development Program (UNDP) and Universal Postal Union (UPD), the ITU has launched a pilot project to provide connectivity to a number of post offices around KabuL U0JDP in cooperation with the French aid agency has provided US$ 1.8 M for the establishment of ICT training centers and telekiosks in Kabul and 6 provinces. Government of the United States of America (US): The US government is providing over CS$ 1 M for feasibility study, building renovations, emergency radio communications etc. Additionally, the USAID is providing technical support through Bearing Point for policy and strategy, regulation and corporatisation. Through different agencies and consultancies, the CS Government is also supporting or has promised some support in the areas of utilities law, regulation and reform, short term assistance in corporatization strategy and internet policy, and support for a feasibility study for the national fiber-optic backbone. This included support for six consultants to support the MOC in various areas of its work. The US may also support the district communications project. The Asian Development Bank (ADB): Through an infrastructure loan administered by the MOF, the ADB has provided US$ 9.3 M investment support for the expansion of the digital switch and Wireless Local Loop networks in Kabul and a number of provinces, to be operated by Afghan Tel/MOe. UNDP: The UNDP has provided support in cooperation with the ITU and UPU (see above). It has also provided assistance in the drafting of an ICT policy, helped set up a Cisco Learning Academy and provided limited connectivity to selected ministries. CNDP has also established an ICT centre in MOC, established the .af domain framework, provided training for the IT team, and assisted in running extensive training courses for all MOC staff. Iran: Iran has provided US$ 4.3 M support to the MOC for the rehabilitation of the ICT Institute. France: The French Government has supported the development of telekiosks in Kabul and provincial capitals (through the U0JDP). The French Government has also offered scholarships to MOC staff to to study at French tertiary institutions. JICA: lICA has provided technical assistance, including the assessment of a range of institutional reforms. ]lCA is also likely to support the national fiber optic backbone network. UNAMA: UNA1viA is supporting the rollout of a pilot project to bring connectivity to remote districts, as a first stage of a project to bring connectivity to all districts. India: Has provided US$ 13.5M in support of the provincial digital networks project in 11 provinces. Potential Areas for Future Involvement Infrastructure. In order to facilitate the spread and use of ICT necessary infrastructure has to be present. Availability of electricity and telephone lines are a must if ICT is to be implemented and utilized. At the moment both are lacking in Afghanistan. Most of the country is not served by power grid and the teledensity is one of the lowest in the world. So, it is imperative that these basic infrastructure issues are remedied. International experience suggests the most rapid rollout of 41 ICT Country Assessment telecommunications infrastructure occurs under a competitive, private-sector led regime. Support in this area will continue to be provided under the Emergency Communications Development Project (ECDP). Basic Education. Afghanistan's education system is highly inadequate in terms of its coverage (enrollment is still low despite vast improvements in the rates in last few years) and in terms of availability of resources (there are not enough schools and teachers to serve the needs of the currently enrolled students). Without good basic education, the new generation of Afghans will fall behind in terms of technical education, which is essential for development of ICT skilled personnel. There is an urgent need to both increase the quality and quantity of basic education. Support for basic education will continue to be provided by two \'{'orld Bank education projects. Technical Education: Provide support for university level ICT training to alleviate the shortage of IT professionals: In order for Afghanistan to fully reap the benefit of ICT, it will require skilled IT professionals to implement various programs. However, there is an acute shortage of such skilled personnel. So, there is an urgent need to expand and deepen the scope of IT training at the university level to ensure ICT development and implementation is no derailed by lack of skilled professionals. Beyond, the public sector there is scope for technical education in ICT in the private sector. There are already a number of privately run ICT training institutes in the larger cities of the country. By providing incentive and support for such initiatives, the country can increase valuable ICT skilled human resource without putting strain on scarce public resources Provide technical assistance in the area of lCT regulation: ICT developmenr can not take place without private sector participation. And also in many instances investment from abroad may be necessary. However, in order for private parties to invest, there must first be a regulatory and legal framework for them to operate in. Afghanistan is currently lacking in this area. It is imperative that this is remedied urgently. Bank support in this area will be provided through ECDP.] Key Contacts and Organizations Ministry of Communication, Afghanistan UNDP, Afghanistan URL:http:hwww.moc.gov.af! URL: http://www.undp.orgIafghanistan e-mail: Khand.Saleem@moc.gov.af e-rnaH: registry.af@Undp.org ADS, Afghanistan USAlD, Afghanistan URL: ht!p:llwww.adb.orglafrm URL: http://www.usaid.gov!contaclhtml e-mail: vgnanathurai@adb.or:g Table ofKey Documents Telecommunications Telecommunications Sector Report (Annex to Securing Afghanistan's Future, 2004), World Bank and Ministry of Communications, 2004 Telecommunications Development Strategy, Ministry of Communications, 2002 Afghanistan Telecom Brief, Network Dynamics Associates, 2004 leT Strategy Telecommunications and Intemet Policy, Ministry of Communications, 2003 Draft Information and Communication Technologies Policy Paper, UNDP & Ministry of Communications, 2003 National Development Plans Securing Afghanistan's Future,Ministry of Finance, 20004 The National Development Framework, 2002 Other UNESCO: Revitalizing Education - the Key to Afghanistan's Future, May 2003 42 Overall Country Assessment for Afghanistan Education & Skilled Labor Infrastructure & Connectivity Legal & Regulatory Framework ,., • Literacy Rate: 29% • Electrical connectivity very poor, particularly in • Weak legal and regulatory environment • Illiteracy rate for women higher rural areas. • New laws are being developed to liberalize the ... r:: • • Illiteracy rate in rural areas higher Severe shortage of teachers • Teledensity at 2 per 1,000 (Pakistan at 35 per 1,000) market and to allow for greater private sector participation GI • Poor quality of education • Wireless connectivity growing rapidly, yet • Historical absence of a viable legal and E en • Tertiary enrollment approx. 31,000 remains low and concentrated in urban areas. regulatory environment III GI en • Virtually no IT training at the primary and • Computer penetration rates virtually zero. • Government has introduced new laws governing en secondary level • Television penetrations rates very low telecommunication, and internet policy - October -< ... • Limited IT training at the tertiary level • Radio penetration rates relatively higher 2003. .. ! r:: :::! <.> • Emerging IT training centers in the urban areas, but lack quality standards • Institutional strengthening at the MOC is required • Most of the trained IT professionals acquire • Development of a regulatory authority required. training in neighboring countries " ... " • Education and overall human development is top • Expansion of the fixed line network • Recent ratification of the Telecommunications priority for the Government • Priority has been placed to expand fixed line and Internet Policy - October 2003 • Significant progress has been made, student digital services to 23 provincial capitals • Telecommunications Regulatory Authority of en enrollment in primary school has dramatically • Work is underway to develop simple Afghanistan is being developed - GI .2!: increased communications facilities in all 355 key districts • Telecommunications Act is being finalized III • SAF calls for a comprehensive approach to across the country. :e education development and universal primary • Wireless connectivity is expected to continue to • Plans to corporatize the governments fixed line telecommunication operations for eventual ... .E r:: enrollment by 2015. grow. privatization ~ • SAF calls for the use of IT for administration and • Licensing of long distance and international :::! teaching. telephone operators is currently underway <.> • Plans to establish a Telecommunications Development Fund to help support universal access to areas perceived uneconomic by the market. ) ...... ---- ./ • Ongoing WB assistance through two Education • Ongoing WB assistance through the Emergency • Ongoing WB assistance through the Emergency Projects Communication Development Project. Communication Development Project. • Continued support for incorporating IT into • Continued support for the development of the • Opportunity to assist in the creation of a legal f school administration and teaching. power grid and the telecommunications network. and regulatory framework for private investments ~1: • Opportunity exists to identify ways to assist in • Continued support for rural access initiatives, in infrastructure. 't~ the development of private technical training particularly for electricity and telephony . .2~ in stitutes. ~g • Long-term opportunity to develop public access r:: r:: centers in rural communities. GI- 15 a.. 43 4.2 Bangladesh Introduction Bangladesh has made great strides in improving the liyes of its people since gaining independence in 1971, yet it remains one of the poorest countries in the world. Its progress over the past two decades is proof of a great potential that is, however, still far from being realized. Health and education levels in Bangladesh have improved remarkably, and poverty has been declining. Reducing population growth and attaining gender parity in school enrollment rates are notable achieyements of recent years. Economic performance has been relatively strong in the past decade, with annual GDP gro\ iii 0 school administration and teaching - particularly => c C G)- in the secondary education and in rural areas. '0 11. 55 4.3 Bhutan Introduction \\fith a population of approximately 700,000 Bhutan is one of the smallest countries in South Asia. Estimates are that almost half of the population lives in remote areas without access to roads, electricity, piped water or telephones, and far from schools, health clinics, markets and public transportation. 85% percent of the population is rural and agriculture accounts for 38% of GDP. In addition, most recent estimates indicate that the illiteracy rate is approximately 54%. Given this context, Bhutan faces considerable developmental challenges. From an ICT perspective, the absence of adequately skilled labor, adequate infrastructure, and a legal and regulatory framework that promotes ICT development, significantly limits Bhutan's ability to capitalize on ICT development. The need develop an adequate enabling environment, one that addresses these constraints should be top priority for the country at this stage. To this end the government has taken steps to address these challenges through the ICT J\laster Plan that was developed my the J\1inistry of Communication's Division of Information Technology. The Master Plan outlines the government's approach to addressing these challenges, primarily through the increased use of ICTs in government agencies and through further development of the national telecommunication infrastructure, particularly a data network that would promote greater access of ICTs throughout the country. Although the government's ultimate goal is to develop an IT industry that could export services abroad, similar to the India model, it recognizes that through this process it can achieve many of the other developmental goals that are top priority for the government such as, improl'ed access to education, improl'ed quality of health care de/il't1)I, enhancedpOl'er!:), monitoring and assessment, and improtJed rural del'elopment Overall Country Assessment A basic overview of any country's "e-readiness" would require a basic understanding of some of the key factors that are required to develop and use ICTs in all sectors of the economy. These factors include adequately trained skilled labor, adequately connected information infrastructure, and a legal and regulatory environment that promotes ICT development. Using this criteria, a basic review of Bhutan's He-readiness" was put together to focus on the main foundational priorities that are required to sustain I CT development. Education & Skilled Labor Clearly with a population of approximately 700,000 and an illiteracy rate of approximately 54%, Bhutan faces considerable challenges in developing an adequately trained labor force that can be the base for the use of ICTs across all the economic sectors. These challenges are compounded by the fact that almost fifty percent of the population lives in rural areas and does not have adequate access to telecommunication networks and other basic infrastrucrure needed for adequate ICT development. 56 In addition to these factors, a survey of the ICT educational and training facilities in the country show that there is a critical shortage of sufficient ICT training facilities in the country to meet the estimated needs of the market. Currently there is only one higher education facility that has initiated a bachelor level degree program in Computer Applications, Information Technology, and general Computer Science. The program currently has a total enrollment of approximately 20 students. In terms of vocational and non-degree training the Royal Institute of 11anagement (RlM) plans and coordinates diploma programs on information technology and also administers short tailor-made courses mainly for RGoB personneL A total of 72 trainees have formally graduated from the RIM leT related subjects. The bulk of the IT training in the country is provided by 17 private sector training institutes mainly based in Thimphu which deliver a variety of course from basic introductory courses up to diploma level, focusing mainly on IT office training. They have a collective annual intake of approximately 2,000 places. Despite these various training institutions, private and public demand for ICT professionals outstrips supply. 80l Yo of respondents to the Department of Information and Technology (OIT) survey requested additional IT personnel, mainly database developers and network administrators. In addition, regulatory obstacles to importing leT professional impact upon the in-country human capacity in leT. Further most of the leT trainees from the training institutes are unemployed, indicating a mismatch between training curriculum and the job market demand. With regards ro primary and secondary education, the Education Master Plan (1999) aims to provide computers to all schools, as well as incorporate basic introductory courses on IT as a subject in the High School curriculum. (What is the number of primary and secondary schools that have computers that access the internet?). InJr;lstrUCtllre and Connectivity Although infrastructure development remains one of the main developmental challenges facing Bhutan, particularly since approximately 50% of the population is about a half a days walk from the nearest motor road, the government has made significant progress with this regard. In terms of Information Infrastructure, Telephones, Personal computers, Mobile phones, and Internet access, urban areas in Bhutan fare better than the rural areas. According to the latest estimates there are approximately 25 telephone lines per 1,000 people, and there are approximately 5.8 computers per 1,000 people, all consistent with the already low averages for South Asia. According to the government's ICT 1-faster Plan, the current telecommunications network is optimized for voke rather than data transmission. There is a critical need to expand the bandwidth of the cutrent telecommunications network to accommodate the future data needs of the country. If the bandwidth constraints are not dealt with, this constraint could seriously hinder the ability for the country to achieve its goal of increasing e-business and other internet based activities throughout the country. In addition to the band'N1.dth constraints, the cost of internet connectivity is high and is actually approximately 4 times the cost of the average for the rest of the South Asian countries. The government plans to address these issues by expanding the current data bandwidth, and installing a second international satellite connection as a backup to the already existing one. 57 Table 1 - Monthly Fees for Leased Lines, Selected countries. (Source: World Bank Investment Climate Assessment for Bhutan) ~try Connection Speed Monthly F~ (USD) France 512 kbps 20 India 128kbps 734 Madagascar 28.8kbps 800 Bhutan 128 kbps 1,500 Nepal 128 kbps 4,500 Legal and Regulatory Policy From a legal and regulatory perspective, the government has assigned the DIT as the lead agency for developing an leT policy framework. The government has already passed a Telecommunication Act of 1999, a National Radio Regulations of 1999, and a draft leT and Media Bill. The leT legislation aims to create a technology neutral enabling endronment for creation and application of leTs. According to the leT Master Plan, the government will focus its efforts in formulating laws that \1.;1.11 cover general IT and Internet related policy issues such as, Accessing indecent material on the internet, Hacking web sites, accessing unauthorized email, spamming and distributing computer viruses. These initiatives will be the primary responsibility of the DIT to draft and enforce the related laws pertaining to these issues. As for IT regulation the government's primary concern has been to ensure that there is adequate quality control on IT products and services and health competition in the private sector. Therefore DIT will be responsible for the regulation of IT business start ups and the regulation of tendering of IT projects. Overall, the government recognizes that a complete and consistent IT policy and regulatory framework is required to promote further leT development in the country. The government may require further assistance in this regard, to ensure that the IT policy framework is conducive for the development and disbursement of leTs throughout the country, in a manner that is consistent with the governement's overall development goals. Overall Economic Development Objectives for Bhutan Given the fact leTs have broad applicarions in development work, it is important to consider the overall economic development objectives of the country, and to identify ways in which ICTs can be used to enhance the efficiency and effectiveness of the country programs. The RGoB's Ninth Five Year Plan outlines the development objectives for the country and details some of the sector specific initiatives that will be used to achieve the goals set in the plan. The following are the five overall objectives set forth in the Ninth Plan for Bhutan: 1, Improving the quality of life and income, especially for the poor 2. Ensuring good governance 3. Promoting private sector growth and employment generarion 4. Preserving and promoting cultural heritage and environment conservations 5. Achieving rapid economic growth and transformation These objectives will be achieved by the following approaches: 58 • Infrastructure expansion The plan accords high priority to infrastructure expansion, such as e:h.'Pansion of the road network particularly the feeder roads to improve rural access, pruvision of electricity to at least 15,000 rural households, pruvision of rural telecommunications and urban infrastructure. • Sound macro-economic policy Appropriate macroeconomic and fiscal policies 'Will be formulated to ensure stable economic growth of 7-9 percent through private sector participation. Continued efforts 'Will be made to increase domestic resources through improved ta:'i. administration and the introduction of new taxes to broaden the revenue base. • Ensuring good governance Efforts to strengthen good governance would continue through administrative and political reforms and creation of new structures and processes. Most significant \Vill be the adoption of a written national constitution. • Improving access and enhancing social services.- It is observed that communities that are closer to roads are better off in terms of economic and social well being than those further away. Therefore, improving access through infrastructure expansion is a key strategy for poverty reduction, enhancing the quality of social services and increasing economic opportunities. Government Related leT Initiatives The government has taken ICT development very seriously as it is reflected in the development of an leT Master Plan for the country. The plan is quite comprehensive and addresses the use of ICTs to meet the overall developmental objectives of the country. It also emphasizes the need to develop an ICT industry that can generate employment and income for the country. To this end the government's comprehensive plan for ICT development involves 7 broad areas for development, they are: • Infrastructure Infrastructure development ""ill consist of improving national telecommunications infrastructure, specifically a data network, installing computer networks in all government agencies and Dzongkhag administrations, installing a government-wide Intranet, and consolidating the existing Internet Service Provider. • Institutional arrangements - All national bodies regulattng IT-related issues \Vill coordinate their efforts closely, and IT coordinating bodies \Vill be created in each government organization. • Human Resources and Training ~ Employees, high school dropouts and unemployed youth \Vill be given IT training, and schools and training institutes \Vill be given the responsibility to train IT specialists and provide computer literacy training to all students. • Information management and content development ~ The Royal Government 'Will shift to electronic communication wherever possible, and will provide on-line information and e- services through a one-stop access point. • Regulations, guidelines, and legislation ~ The government 'Will enact an IT Law and implement digital signatures. The government will also ensure that a regulatory body coordinates all IT activities. 59 • Public access and awareness - Public access points ",ill be established throughout the country. This ",1ll be accompanied by IT promotional and awareness programs to inform the public about the benefits of IT. • Private sector development . The government ",1ll encourage the establishment of IT companies, computerization of private businesses, export of IT services and the development of e-commerce. It is clear the government has a comprehensive view of ICT development and recognizes the interdependencies of the various sectors and issues on overalllCT development. It is also clear that the government plans to use an e-government strategy as a platform to achieve many of the ICT development goals set forth in the ICT Master Plan. Ultimately the DIT will be responsible for overseeing the Q\'erall implementation of the ICT Master Plan and its related initiatives. WB Related leT Initiatives The Country Assistance Strategy for Bhutan outlines 4 broad categories for IDA assistance, 1) Human Development, 2) Balanced and Equitable Del!e/opment, 3) Govemance and 4) Em'ironmental/y Sustainable Del!elopment. These 4 categories encompass sector specific initiatives that will receive the support of IDA funding and assistance. The sector specific initiatives include the following: • Education - Achieve universal enrollment as soon as possible, continually improve the quality and relevance of education, improve access to education, develop private schools. • Health - Provide primary health care services for all, improve quality of health care, introduce innovative methods of financing health care. • Economic Growth and Development - Maintain momentum of development, diversify the economy so as to promote self reliance, generate productive employment. • Private Sector - Continue to create an enabling environment for the private sector. • Transport, Communication and Infonnation - Further development of physical infrastructure guided by detailed assessment of environmental & social impact assessment, develop ports at strategic locations on the border with India, improve international air services, expand telecommunication service to the rural poor. Prepare and actit'ate an l!iformation & Technology Strategy. • Urbanization - Focus on rural development, further commercialization of agriculture, establish four regional growth centers as focal points for social infrastructure and services as well as for government services. • Resource Mobilization and Development Financing Explore new sources of revenues and kvy user fees for social services on an ability to pay basis, private schools, health. • Forest Regeneration and Biodiversity - Forest protection and regeneration remains a priority, make full inventory of biodiversity resource base. Although the Bhutan CAS does not mention specific ICT applications in implementing some of these developmental programs, a review of the current active and pipeline WB projects that have 60 been implemented over the past few years indicates that many of these programs have included some use of lCT applications. The following is a summary of the relevant W'B projects that met some of the developmental goals outlined in the CAS as well as some of the ICT development goals outlined in the countries ICT Master Plan. Education Edtlcatio12 Det'clopment Pro/ect The ICT component of this project involved four sub components, 1) Curriculum development for the secondary school to include more IT related coursework., 2) The supply of computer and IT related equipment to the secondary schools, 3) IT training of the educations professionals in computer education and 4) Upgrade and the capacity of the education stores with computer hardware and software systems to manage basic operations. Second Education Pro/eet The ICT component for this project was specifically targeted to improve the quality of teaching and learning processes through the use of lCTs such as radio and audiovisual programs, with a particular focus on schools in remote areas. Health HIV!AIDS & STI Prellen/ion ~'" Control Pro/eet This project's focus was to reduce the risk of HIV and STI transmission among the general population, in particular among groups with high risk sexual behaviors. One component of the project include an institutional strengthening component that provided for the development of a laboratory information system for the collection of laboratory data at the central and local levels. This component included training of laboratory personnel and technicians. Rural Development &Infrastructure FJtral Access Project This projects focus was to address the need for improved access of rural communities to markets, schools, health centers and other economic and social infrastructure. Although this project did not have specific lCT components that directly addressed the projects main goal, it did however, include a component to upgrade the capacity of the Division of Roads office equipment, by providing computers and accessories needed for project implementation. Other leT initiatives Private Sector Initiatives - Overall, the majority of the private sector lCT actlv1t1es are all concentrated in the urban areas where there is the greatest demand for lCT related products and services. There are approximately 16 lCT vendors in the country providing mainly hardware and limited IT services. There are also approximately 17 lCT training institutes providing basic lCT training, predominately concentrated in Thimphu. In terms of internet access, there are a number of internet cafes that have sprung up in the capital city. NGO & Donor Initiatives - The following is a brief summary of the nature of the ICT development work that has been commissioned by the various NGO and donor organizations in the country. UNDP: Capacity building and policy support for the Ministry of Communications, Information Network for Good Governance, E-Commerce for women, Pilot for expansion of access to information at local levels 61 JICA: Establishment of digital communications networks, hardware and capacity building assistance of Bhutan Broadcasting Services, Grassroots Fund (telemedicine) Swiss Development Co-operation: Promoting decentralization process by providing hardware in outlying districts DANIDA: Hardware and technical support to a number of government agencies and institutions Netherlands: Computerization and information systems for isolated part of the country UNICEF: Supporting the National Institute of Education \vith hardware, promoting sofnvare development, local level installation, Planning Commission of Bhutan Info/Child Info software and training Potential Areas for Future Involvement Rural Infrastructure Development and Connectivity - Given the rural connectivity challenges that Bhutan there may be an opportunity for the WB involvement in innovative Rural Connectivity Projects that can provide greater access to rural communities, which constitute a vast majority of the population. It is also consistent with the RGoB's ICT Master Plan that emphasizes public access and awareness through "public access points through out the country. This can be done in coordination with the UNDP and ]ICA who are already involved in this area. E-Govemment Assistance - The RGoB has used an e-government platform as the basis for its ICT Strategy for the country. Through this initiative the government plans to connect the local communities by first connecting local government offices, in hopes that this local infrastructure can be used by the local communities. Continued Assistance in Education and IT - Building on the W'B's existing work program in the country, the Bank can continue to provide assistance with connecting primary and secondary schools with the appropriate infrastructure and equipment to promote greater IT education through out the school system. There is also an opportunity to assist in developing lCT learning programs at a higher education level at the college and technical institutes. Continued Assistance in Health and IT - Given the high number of people living in rural neighborhoods, telemedicine may be one approach to providing the basic health services at an affordable cost to rural communities. Key Contacts and Org.miz8tions Department of Information Technology, Ministry of UNDP, Bhutan Information & Communications e-mail: chris.fariS@undp.org URL: http://www.dit.gov.bt Table ofKey Documents ICT Strategy ICT Master Plan, Department of Information Technology, Ministry of Information & Communication National Development Plans Ninth Five Year Development Plan - Department of Planning. Ministry of Finance Country Assistance Strategy - Bhutan - World Bank Group (2000) ICTCountry Assessments UNDP Bhutan - Position Paper - Information Technology for Development UNDP Bhutan - Discussion Paper - Bridging the digital divide in Bhutan 62 Overall Country Assessment for Bhutan Education & Skilled Labor Infrastructure & Connectivity Legal & Regulatory Framework • Literacy Rate: 46% • Electrical connectivity poor in rural areas. • DIT is the lead agency for developing an ICT • Illiteracy rate for women higher • Teledensity at 25 per 1,000. policy framework. - E C Ql 1/1 • • • • Illiteracy rate in rural areas higher Severe shortage of ICT professionals. No IT training at the primary and secondary level Higher education limited to only one university. • • • • 5.8 Computers per 1,000. Television penetrations rates very low. Radio penetration rate, 90% of all homes. Digital telecommunications network covers all • Telecommunication Act passed in 1999. • National Radio Regulations in place since 1999. • Draft ICT and Media Bill has been drawn up. • ICT Master Plan has been drafted. 1/1 • Bachelor program in ICT related course has only districts and urban areas. • Development of a regulatory authority required. 0« 20 students enrolled at the moment. • Single ISP provider, with internet available C= • Vocational and non-degree courses are provided where ever there are phone lines. ~ ... by the Royal Institute of Management. • The cost of internet connectivity is high and is ::I • Bulk of IT training is provided by 17 private actually approximately 4 times the cost of the (.) centers, mostly in Thimphu. Collective annual average for the rest of the South Asian intake is about 2000. Courses are mostly on office IT applications, countries. • No cellular phone service available, _y • Improving access and enhancing of social • Electrification of rural areas is one of the top • Ministry of Information and Communications has services, which includes education and overall priorities in the infrastructure development goals embarked on developing an ICT White Paper for human development, is top priority for the of the government. the country based on the Digital Opportunity 1/1 Government • Enhancing the capacity of nation Initiative. ~ • Education Master Plan drawn up in 1999, telecommunications backbone is a top priority, • The ICT and Media Acts will be submitted to the E provides the framework for enhancing education as the current network is optimized for voice National Assembly Session in 2004. - ;!:: .E at all levels. rather than data transmission. • The Act contains Policies and e-Strategies c • The plan calls for provision of computers to all • Possibility of a submarine link to regional optical provisions for an independent regulatory body ~ schools. fiber submarine cable systems and a Bhutan Communications Appellate ::I • The plan also for introduction of basic IT course Tribunal. (.) in high school curriculums. • The Act also contains a provision for privatization of Bhutan Telecom, a fully government owned and the only telecom and ISP in the country. • Ongoing WB assistance through two Education • Support for rural access initiatives, particularly • Opportunity to assist in the creation of a legal Projects for electricity and telephony. and regulatory framework for private investments • Continued support for incorporating IT into • Support for upgrading the national in infrastructure. ~ school administration and teaching. telecommunications backbone and increasing ::I '!;-e • Opportunity exists to identify ways to assist in international connectivity. 't~ the development of private technical training .2 ~ institutes. ~g • Opportunity exists to assist in developing ICT c C Ql- learning programs at a higher education level at '0 the college and technical institutes. a.. • Opportunity to develop public access centers In ~_ rural communities. I ..... 63 4.4 India Introd uction In recent decades, India has significantly improved the well-being of its people. Since the 1970s, India's economic growth rate has risen, poverty has declined, and social indicators have improved. Despite remarkable progress in education, however, India still is home to the world's largest number of illiterates. India accounts for 20 percent of the world's out-of-school children and for 20 percent of the gender gap in elementary education. Poverty reduction remains India's most compelling chalJenge despite good progress in the 1990s. India has developed a diversified industrial base and a relatively large and sophisticated financial sector. Its information technology sub-sector--one of the most dynamic in the world-has shown tremendous growth in recent years. The Information Communications Technology (lCT) sector in India is the single largest contributor to incremental market capitalization in India. However, the sector is still small in terms of contribution to GDP (3.15% of GDP) especially wben compared to other large sectors of the economy like agriculture and manufacturing. As per the National Association of Softv.lare & Service Companies of India (NASSCOM), the contribution of the software and IT industry to GDP is estimated to increase from 2% in 1998-99 to about 7 % by the year 2008. The sector is expected to employ 2 million people directly and create indirect employment for an additional 2 million people. The Indian software industry has been growing at the rate of 27- 30% over the last few years with total revenues of about US$ 12 billion. However, the focus of this sector has been outward - mainly through exports to the US and Europe. Exports of software and IT services are expected to account for 25% of foreign exchange in flows by the year 2008. De-regulation of the telecom sector has resulted in the addition of significant bandwidth and a decline in Telecom costs of up to 85 % over the last three years. The Government has also implemented some other important initiatives on capital markets, venture capitalism and the companies act. However, to realize the full potential of ICT as a tool for development, a lot stilJ needs to be accomplished. Government initiatives are required for creating the ideal regulatory environment, establishing a vibrant domestic market through country specific initiatives including launching effective e-governance initiatives, proactively working on the problems in development of infrastructure and working on issues related to security, quality and intellectual property rights. The strengrhs in the private ICT sector have not positively impacted the pace at which the Indian Government has adopted new technologies to make its services more user - centered, transparent and efficient. First, the size and complexity of government operations make it difficult to implement the new e-government practices. Secondly, the ptoblem of limited access to computers and internet for general citizens of the country acts as a barrier to their adoption; and thirdly, organizational and cultural factors would require enormous efforts in change management and training of the large government machinery. In addition, the difficulties are compounded by the lack of telecommunications infrastructure, poor general and computer literacy levels, high levels of rural and urban poverty and, finalJy, the upfront investment required by the government to implement such automated citizen services systems and to build community information centers/kiosks. Similarly, the 64 use of ICT in the domestic industry, banking and services sectors has been slow, but has now started showing signs of improvement over the last couple of years. As a result, India is still very low on the e-readiness index as compared to developed nations. A number of stakeholders are playing an important role in supporting the current ICT initiatives within the country. The chief amongst them is the Government of India which has supported ICT proliferation within the country and the expansion of the ICT industry, and is embarking upon an ambitious National E- Governance Action Plan (NEGAP) covering citizens services delivery systems for both state goyernments as well as central government departments. Institutional investors are supporting the ICT infrastructure within the country. The ICT industry itself has been the most promising, with India fast becoming one of the main centers for knowledge based services in the world. Global donor organizations and bilateral and multilateral agencies are supporting the current initiatives in the areas of e-governance. All these efforts are also being supported by Non Government Organizations, Research & Development units and Educational Institutions. There is enormous potential for ICT in supporting the seven priority sectors as identified by the new government in India agriculture, water, education, health, employment, urban development and infrastructure. However, there is a great disparity between the states in terms of ICT development and capacity to benefit from the nation-wide potential. The 'India: E-Readiness Assessment Report 2003'31 indicates that the majority of states are below the country's average in preparedness to provide governance equitably and cost effectively. In this line, one of the major concerns highlighted in the India's Tenth Plan is that of the widening disparities between states. As expected and in some extent, states with better infrastructure attract, in a much larger scale, more private sector investments than those states with inferior infrastructure offerings. A bold strategy is thus needed to accelerate the development of less developed states in back"Ward regions, and the country is undertaking the challenge to narrow down these disparities. This scenario sustains that Bank support is recommended for initiatives which are being undertaken across key domains of the economy including initiatives at the state level. Some of these initiatives are for land reforms management, citizen service delivery through information Kiosks, agriculture information services, citizen services through urban and rural local bodies, income and commercial taxes, insurance, citizen databases etc. Bank support may also be considered for ICT interventions with exceptional merit, even if they are in non priority sectors. Overall Country Assessment The Economist Intelligence Unit ranks India's e-readiness environment at 46 in a list of 64 nations assessed32 (China is at Malaysia is at 33, Brazil at 35, and Russia at 55). According to the Networked Readiness Index (2003-2004), which measures the degree of preparation of a nation or community to participate in and benefit from ICT developments, India ranks 45 out of 102 countries assessed.33 The Index is a composite of three components: the environment for ICT offered by a given country or community, the readiness of the community's key stakeholders (individuals, businesses, and governments) to use lCT, and finally the usage ofICT amongst these stakeholders. However, a single country level ranking for a large and diverse country like India conveys little sense. Based on the country's scale and contrasting developmental stages of different regions, GoI through the Ministry of Communications and Information Technology and the InfoDev program from the 31 India: E-Readiness Assessment Repott 2003 - Deaprtment of Information technology, J\;linistry of Communications and Information technology Government of India. In collaboration with the InfoDev program from the World Bank Group, April 2003. 32 http://graphics.eiu.com/ files/ ad_pdfs/ERR2004.pdf 33 http://vilvlw.weforum.org/pdf/Gcr/GITR_2003_2004/Framework_Chapter.pdf 65 World Bank prepared a state level assessment identifying the different stages of e-readiness within the country's 35 states. The assessment classifies the states also based on a composite index which quantify the level of achievement each state obtained in terms of preparedness regarding the network access, learning, society, policy, e-Governance and Economy. The assessment indicates that states like Karnataka & Andhra Pradesh are far ahead of states like Bihar, Orrisa, Assam, Jharkhand etc. (A study to evaluate the e-readiness status of different states within India was conducted by the Department of IT, Gol please see ran kings (1 highest - 5 lowest) in the table below) Categorization ofStates based on Index ofE-Govemance E-Governance Level Name of the States Number of States Level 1 Kamataka. AP, Tamil Nadu, Gujrat 4 HP, UP, Rajasthan, Uttaranchal, Kerala, Level 2 9 Delhi, MP, Maharashtra, Goa West Bengal, Punjab, Chandigarh, Level 3 4 Haryana Tnpura, Bihar, Assam, Pondichen, Level 4 Orissa, Chattisgarh, Meghalaya, 8 Anseman, & Nicobar Islands Lakshdeep, J&K, Aruneal Pradesh, Level 5 5 Mizoram, Sikkim Dedara & Negar Haveli, Manipur, levelS 5 Daman & Diu, Nagaland Jharkhand A basic overview of any country's "e-readiness" would require a basic understanding of some of the key factors that are required to develop and use ICTs in all sectors of the economy. These factors include adequately trained skilled labor, adequately connected information infrastructure, and a legal and regulatory environment that promotes leT development. Using this criteria, a basic review of India's "e-readiness" was put together to focus on the main foundational priorities that are required to sustain ICT development. Education & Skilled Labor The 1990s could be called the watershed decade as far as basic education is concerned. Provisional results of the 2001 Census show the highest jump of 13.17 per cent in the literacy rate since 1951, with the average literacy rate going up from 52.21 per cent in 1991 to 65.38 per cent in 2001. (Ibe male literacy rate is 75.85 per cent and female literacy rate is 54.16 per cent.) However, India's educational development is a mixed bag of remarkable successes and glaring gaps. Out of 200 million children in the age group of 6-14 years, 42 million children do not attend schools. There are problems relating to high drop out rates, low-levels of learning achievement and low participation of girls. Coupled with this are various systemic issues like inadequate school infrastructure, high teacher absenteeism, large-scale teacher vacancies, inadequate equipment like teaching-learning material etc. The policy focus and public intervention in provisioning of educational services has not been given the attention it deserves. Even after 50 years of planned effort in this sector nearly one-third of population or close to 300 million persons in the age group 7 years and above are illiterate. The literacy rates for the SC and ST population is much lower than the rest of the population. As against the overall literacy rate of 52.2 per cent in 1991, the literacy rate for 66 SCs and STs was only 37.4 per cent and 29.6 per cent respectively. There is also rural urban variation in the literacy rates (59 per cent in rural areas as compared to 80 per cent in urban areas as per 2001 census). In addition, inter-State variation in literacy rates also persist. The Govt. of India is committed to universalizing elementary education. As per the Sixth All India Educational Survey, 1993, 94 per cent of the total rural population was seryed by primary schools. Concerted efforts towards Universalisation of Elementory Eduction (UEE) have resulted in the manifold increase in institutions, teachers and students. During the period 1950-51 to 1999-2000, the number of primary schools increased by more than three times from 2,10,000 in 1950-51 to 6,42,000 in 1999-2000 whereas the number of upper primary schools increased 15 times from 13,600 in1950- 51 to 1,98,000 in 1999-2000. The population of children in the 14-18 age group (the age for secondary and senior secondary level education) has been estimated at 96.6 million, as projected by the National Sample Survey Organization in 1996-97. However, enrolment figures show that only 27 million children were attending secondary schools, which means that two thirds of the eligible population remains out of the secondary school system. Number of High1 Higher Secondary Institutionsl Students and TeacheTS{1950~2000) High I Higher Secondary Year Schools linter I Pre-degree Students Teachers I Junior Colleges 1950-51 7,416 1,500,000 127,000 1990-91 79,796 19,100,000 1,334,000 1995-96 90,134 24,900,000 1,493,000 1998-99 112,438 27,760,000 1,747,000 1999-2000 116,820 28,210,000 1,720,000 Over the past 50 years, there has been a significant growth in the number of new universities and institutions of higher learning in specialized areas. There are now 273 universities/deemed to be universities (including 18 medical universities and 40 agricultural universities) and 12,300 colleges (of which 4,683 are in the rural areas). The University and Higher Education Sector also needs attention. Although the number of universities has expanded and many of the universities continue to maintain high standards of education, it is a matter of serious concern that there has been a fall in academic standards. The academic results have not risen consistently in relation to increase in numbers of universities/ colleges. Modernization of syllabi, examination reforms and greater attention to issues of governance of universities and colleges all require urgent attention. 67 Number of Institutions of Higher Education, Enrolment and Faculty Number of Number of Year Students (in OOOs) Teachers (in OOOs) colleges universities* 1950-51 750 30 263,000 24,000 1990-91 7,346 177 4,925,000 272,000 1996·97 9,703 214 6,755,000 321,000 1998-99 11,089 238 7,417,000 342,000 The modern economy, which is the knowledge-economy, requires highly educated people. For running a knowledge society and a technology intensive economy, the country needs renewed efforts to build institutions of higher education of the highest quality, upgrade and modernize Indian Institutes of Technology (UTs) and Indian Institutes of Management (1IMs) and other professional colleges. There is a need to step up capabilities and capacities in new technology areas like biotechnology, nano-technology, bioinformatics, etc. This is likely to lead trained manpower demand for more than 3 million knowledge workers by 2010. Higher education, general and technical education must have links with all industrial and societal endeavours. Towards this end, a number of centers of excellence to turn out quality manpower in areas relevant to industry and society need to be established with a triangular partnership of academia, industry and government. Education through technology-based learning making full use of developments in ICT such as video- conferencing, web-based learning will accelerate the pace of learning. Infrastructure & Connectivity At the end of 2003, India had a total of 70.5 million phones of which 42 million were landline and 28.2 million were mobiles. During 2003, 17,5 million mobile subscribers were added. Wbile GSM operators added 11 million subscribers, the two main CDM.,;\ operators added 6.2 million subscribers. With the recent expansion, India has reached the tele-density target of 7 per hundred in 2003, 15 months ahead of the March 2005 target set by the New Telecom Policy 1999. As of March 2004 the total mobile market has reached 31.4 million, of which 24.65 million subscribers are GSM and 6.75 million are CDMA (excluding BSNL and MTNL). Of these totals, Reliance Infocomm has 6.822 million (6.065 CDMA and 0.757 GSM), Bhatti is 6.199 million (GSM), BSNL is 4.954 million, (GSM) Hutch is 4.826 million (GSM) , and Idea Cellular is 2.584 million (GSM). Mobile connections are expected to reach 56 million by the end of 2004, representing a 96per cent increase over 2003, according to Gartner. The pace of growth will accelerate with the introduction of "full mobility" CDMA loop services and the adoption of unified licenses. The market for telecom services in 2002-03 has been estimated to be Rs 503.58 billion ($11.5 billion), as compared to Rs 479.08 billion ($10.9 billion) in 2001-02. The equipment market is estimated to have reached a turnover of Rs 282.37 billion ($6.47 billion) in 2002-03, up from Rs 257.06 billion ($5.89 billion) in 2001-02. The telecom industry comprising services and equipment is expected to increase to $24.29 billion by 2006. 68 Private players are steadily acquiring an increasing share of the telecom serYices market. Ten years after the sector was opened to private participation, they account for more than a third of the total subscriber base in India. Private players play the largest role in cellular mobile services, where the 6-7 companies that own 75 licenses operate in 23 service areas (there are six operators of mobile services in each circle). BSNL's existing market position -- particularly its dominance in remote and rural areas -- has made it harder for private players to operate. BSNL's nationwide presence is also allowing it to catch up with private players in the mobile market, where the state operator provides the most comprehensive coverage. Initially, as noted earlier, the government permitted only two operators in each circle. But the government has now moved to untestricted entry and unlimited completion in all types of services. As a result, there are now multiple operarors in each service and in each license area. The entry of additional operators (typically BSNL or MTNL) had led to drastic tariff reductions. Indeed, the competition was so intense that TRAI stopped setting the price for mobile services and allowed the market to set prices. As the battle between the GSM and CDlViA.. operators shifted from the courtroom to the marketplace, consumers reaped the benefit of lower prices. Reliance has already signaled its aggressive intentions by announcing nationwide roaming at no extra cost. This has prompted Hutch and Bharti to reduce their high roaming rates. The recent lowering of license fees should also result in lower tariffs for the consumer. International and domestic long distance services are still not competitive despite all the reforms in the Indian telecom sector. Gartner has rated voice in the NLD and ILD category as having limited competition, since the competition is limited to access carriers and not to end-users. There is also limited competition in leased line services, but no competition in frame relay, ATM, and IP-VPN. New operators are still tolling out their networks and infrastructure. There are three types of players in telecom services: • State owned companies (BSNL and MTNL) • Private Indian owned companies (Reliance Infocomm, Tata Teleservices,) • Foreign invested companies (Hutchison-Essar, Bhatti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications) • BSNL On October 1, 2000 the Department of Telecom Operations, Government of India became a corporation and was renamed Bharat Sanchar Nigam Limited (BSNL). BSNL is now India's leading Telecommunications Company and the largest public sector undertaking. It has a network of over 45 million lines covering 5000 towns with over 35 million telephone connections. The state-controlled BSNL operates basic, cellular (GSM and CDMA) mobile, Internet and long distance services throughout India (except Delhi and Mumbai). BSNL will be expanding the network in line with the Tenth Five-Year Plan (1992-97). The aim is to provide a telephone density of 9.9 per hundred by March 2007. BSNL, which became the third operator of GSM mobile services in most circles, is now planning to overtake Bharti to become the largest GSM operator in the country. BSNL is also the largest operator in the Internet market, with a share of 21 per cent of the entire subscriber base. BHARTI - Established in 1985, Bhatti has been a pioneering force in the telecom sector with many firsts and innovations to its credit, ranging from being the first mobile service in Delhi, first private basic telephone service provider in the country, first Indian company to provide comprehensive telecom services outside India in Seychelles and first private sector service provider to launch 69 National Long Distance Services in India. Bharti Tele-Ventures Limited was incorporated on July 7, 1995 for promoting imrestments in telecommunications servkes. Its subsidiaries operate telecom services across India. Bhatti's operations are broadly handled by tVlO companies: the Mobility group, which handles the mobile services in 16 circles out of a total 23 circles across the country; and the Infotel group, which handles the ~LD, ILD, fixed line, broadband, data, and satellite-based services. Together have so far deployed around 23,000 km of optical fiber cables across the country, coupled with approximately 1,500 nodes, and presence in around 200 locations. The group has a total customer base of 6.45 million, of which 5.86 million are mobile and 588,000 fixed line customers, as of January 31, 2004. In mobile, Bharti's footprint extends across 15 circles. Bharti Tele-Ventures' strategic objective is "to capitalize on the growth opportunities that the Company believes are available in the Indian telecommunications market and consolidate its position to be the leading integrated telecommunications services prmrider in key markets in India, with a focus on providing mobile services". MTNL MTNL was set up on 1st Aptil 1986 by the Government of India to upgrade the quality of telecom services, expand the telecom network, and introduce new services and to raise revenue for telecom development needs of India's key metros - Delhi, the political capital, and Mumbai, the business capital. In the past 17 years, the company has taken rapid strides to emerge as India's leading and one of Asia's largest telecom operating companies. The company has also been in the forefront of technology induction by converting 100% of its telephone exchange network into the state-of-the-art digital mode. The Govt. of India currently holds 56.25% stake in the company. In the year 2003-04, the company's focus would be not only consolidating the gains but also to focus on new areas of entetprise such as joint ventures for projects outside India, entering into national long distance operation, widening the cellular and CDMA-based \V'LL customer base, setting up internet and allied services on an all India basis. MTNL has over 5 million subscribers and 329,374 mobile subscribers. \X'hile the market for fixed wireline phones is stagnating, MTNL faces intense competition from the private players- Bharti, Hutchison and Idea Cellular, Reliance Infocomm-in mobile services. MTNL recorded sales of Rs. 60.2 billion ($1.38 billion) in the year 2002-03, a decline of 5.8 per cent over the previous year's annual turnover of Rs. 63.92 billion. RELIANCE I~FOCO:M... \1 Reliance is a $16 billion integrated oil exploration to refinery to power and textiles conglomerate (Source: http://www.riLcom/newsitem2.html).ltis also an integrated telecom service provider with licenses for mobile, fixed, domestic long distance and international services. Reliance Infocomm offers a complete range of telecom services, covering mobile and fixed I1ne telephony including broadband, national and international long distance services, data services and a wide range of value added services and applications. Rel1ance IndiaMobile, the first of Infocomm's initiatives was launched on December 28, 2002. This marked the beginning of Reliance's vision of ushering in a digital revolution in India by becoming a major catalyst in improving quality of life and changing the face of India. Reliance Infocomm plans to extend its efforts beyond the traditional value chain to develop and deploy telecom solutions for India's farmers, businesses, hospitals, government and public sector organizations. Until recently, Reliance was permitted to provide only "limited mobility" services through its basic services license. However, it has now acquired a unified access license for 18 circles that permits it to provide the full range of mobile services. It has rolled out its CD1\1A mobile network and enrolled more than 6 million subscribers in one year to become the country's largest mobile operator. It now wants to increase its market share and has recently launched pre-paid services. Having captured the voice market, it intends to attack the broadband market. 70 TATA TELESERVICES - Tata Teleservices is a part of the $12 billion Tata Group, which has 93 companies, over 200,000 employees and more than 2.3 million shareholders. Tata Teleservices provides basic (fixed line services), using CDMA technology in six circles: Maharashtra (including Mumbai), New Delhi, Andhra Pradesh, Tamil Nadu, Gujarat, and Karnataka. It has over 800,000 subscribers. It has now migrated to unified access licenses, by paying a Rs. 5.45 billion ($120 million) which enables it to provide fully mobile services as well. The company is also expanding its footprint, and has paid Rs. 4.17 billion ($90 million) to DoT for 11 new licenses under the IUC (interconnect usage charges) regime. The new licenses, coupled with the six circles in which it already operates, virtually gives the CD:\1A mobile operator a national footprint that is almost on par with BSNL and Reliance Infocomm. The company hopes to start off services in these 11 new circles by August 2004. These circles include Bihar, Haryana, Himachal Pradesh, Kerala, Kolkata, Orissa, Punjab, Rajasthan, Uttar Pradesh (East) & West and W'est Bengal. VSNL On April 1, 1986, the Videsh Sanchar Nigam Limited (VSNL) - a wholly Government owned corporation - was born as successor to OCS. The company operates a network of earth stations, switches, submarine cable systems, and value added service nodes to provide a range of basic and value added services and has a dedicated work force of about 2000 employees. VSNL's main gateway centers are located at Mumbai, New Delhi, Kolkata and Chennai. The international telecommunication circuits are derived via Intelsat and Inmarsat satellites and wide band submarine cable systems e.g. FLAG, SEA-ME-WE-2 and SEA-ME-WE-3. The company's ADRs are listed on the New York Stock Exchange and its shares are listed on major Srock Exchanges in India. The Indian Government owns approximately 26 per cent equity, M/ s Panatone Finvest Limited as investing vehicle of Tata Group owns 45 per cent equity and the overseas holding (inclusive of FIls, ADRs, Foreign Banks) is approximately 13 per cent and the rest is owned by Indian institutions and the public. The company provides international and Internet services as well as a host of value-added services. Its revenues have declined from Rs.70.89 billion ($1.62 billion) in 2001-02 to Rs.48.12 billion ($1.1 billion) in 2002-03, with voice revenues being the mainstay. To reverse the falling revenue trend, VSNL has also started offering domestic long distance services and is launching broadband services. For this, the company is investing in Tata Telservices and is likely to acquire Tata Broadband. All in all on the infrastructure front, India stands poorly as compared to some of the developed nations of the world. The PC penetration in India is at a low of 9 pes to every 1000 citizens. Internet penetration is comparatively better, mainly due to Internet Cafes which have mushroomed even at village levels, thereby making internet accessibility easy. A number of large intranets now connect the offices of large corporations across cities and towns, and a significant number of banks now provide a network of ATMs and the facility to operate internet banking. However, the digital divide issue still plagues the country- the divide exists between the rich and the poor, the rural and the urban, the young and the old and private and government institutions. Legal and Regulat01)' Policy Indian telecommunications today benefits from among the most enlightened regulation in the region, and arguably in the world. The sector, sometimes considered the "poster-boy for economic reforms," has been among the chief beneficiaries of the post-1991 liberalization. Unlike electricity, for example, where reforms have been stalled, telecommunications has generally been seen as removed from "mass concerns," and thus less subject to electoral calculations. Market oriented reforms have also been facilitated by lobbying from India's booming technology sector, whose continued success of course depends on the quality of communications infrastructure. 71 Despite several hiccups along the way, the Telecom Regulatory Authority of India (fRAI), the independent regulator, has earned a reputation for transparency and competence. \XTith the recent resolution of a major dispute between cellular and fixed operators (see below), Indian telecommunications, already among the most competitive markets in the world, appears set to continue growing rapidly. \X'hile telecom liberalization is usually associated ,vith the post-1991 era, the seeds of reform were actually planted in the 1980s. At that time, Rajiv Gandhi proclaimed his intention of "leading India into the 21 st century," and carved the Department of Telecommunications (DOT) out of the Department of Posts and Telegraph. For a time he also even considered corporatizing the DOT, before succumbing to union pressure. In a compromise, Gandhi created two DOT owned corporations: Mahanagar Telephone Nigam Limited (MTNL), to serve Delhi and Bombay, and Videsh Sanchar Nigam Limited (VSNL), to operate international telecom selyices. He also introduced private capital into the manufacturing of telecommunications equipment, which had previously been a DOT monopoly. These and other reforms were limited by the unstable coalition politics of the late 1980s. It was not until the early 1990s, when the political situation stabilized, and with the general momentum for economic refonns, that telecommunications liberalization really took off. In 1994, the government released its National Telecommunications Policy (NTP-94), which allowed private fixed operatots to take part in the Indian market for the first time (cellular operators had been allowed into the four largest metropolitan centers in 1992). Under the government's new policy, India was divided into 20 circles roughly corresponding to state boundaries, each of which would contain two fixed operators (including the incumbent), and two mobile operators. As ground-breaking as NTP-94 was, its implementation was unfortunately marred by regulatory uncertainty and over-bidding. A number of operators were unable to live up to their profligate bids and, confronted with far less lucrative networks than they had supposed, pulled out of the country. As a result, competition in India's telecom sector did not really become a reality until 1999. At that time the government's New Telecommunications Policy (NTP-99) switched from a fixed fee license to a revenue-sharing regime of approximately 15%. This figure has subsequently been lowered (to 10%-12%), and is expected to be reduced even further over the coming years. Still, India continues to derive substantial revenue from license fees ($800 million in 2001-2002), leading some critics to suggest that the government has abrogated its responsibilities as a regulator to those as a seller. Another, perhaps even more significant, problem with India's initial attempts to introduce competition was the lack of regulatory clarity. Private operators complained that the licensor - the DOT was also the incumbent operator. The many stringent conditions attached to licenses were thus seen by many as the DOT's attempt to limit competition. It was in response to such concerns that the government in 1997 set up the Telecom Regulatory Authority of India (fRAI), the nation's first independent telecom regulator. Over the years, TRAl has earned a growing reputation for independence, transparency and an increasing level of competence. Early on, however, the regulator was beleaguered on all fronts. It had to contend \-vith political interference, the incumbent's many challenges to its authority, and accusations of ineptitude by private players. Throughout the late 1990s, TRAI's authority was steadily whittled away in a number of cases, when the courts repeatedly held that regulatory power lay with the central government. It was not until 2000, with the passing of the TRAl Amendment Act, that the regulatory body really came into its own. Coming just a year after NTP-99, the act marks something of a watershed moment in the history of India telecom liberalization. It set the stage for several key events that have enabled the vigorous competition witnessed today. Some of these events include: • The corporatization of the DOT and the creation of a new state-owned telecom company, Bharat Sanchar Nigam Ltd (BSNL), in 2000; 72 • The opening up of India's internal long-distance market in 2000, and the subsequent drop in long- distance rates as part ofTRAl's tariff rebalancing exercise; • The termination of VSNL's monopoly over international traffic in 2002, and the partial pri,-atization of the company that same year, with the Tata group assuming a 25% stake and management control; • The gradual easing of the original duopoly licensing policy, allO\ving a greater number of operators in each circle; • The legalization, in 2002, of IP telephony (a move that many believe was held up due to lobbying by VSNL, which feared the consequences on its intetnational monopoly); • The introduction in 2003 of a Calling Party Pays (CPP) system for cell phones, despite considerable opposition (including litigation) by fixed operators; • And, more generally, the commencement of more stringent interconnection regulation by TRA1, which has moved from an inter-operator "negotiations-based" approach (often used by the stronger operator to negotiate ad infinitum) to a more rules-based approach. All of these events have created an impressive forward-momentum in Indian telecommunications, resulting in a vigorously competitive and fast-growing sector. India has also suffered from its fair share of regulatory hiccups. Many operators (mobile players in particular) still complain about the difficulties of gaining access to the incumbent's (BSNL) network, and the government's insistence on capping FDI in the telecom sector to 49% (a move made in the name of national security) limits capital availability and thus network rollout. In addition, ISPs, who were allowed into the market under a liberal licensing regime in 1998, continue to hemorrhage money, and have been pleading with the government for various forms of relief, including the provision of unmetered phone numbers for Internet access. Despite initially impressive results, the growth of Internet in the country has recently stalled, with only 8 million users. Broadband penetration, too, remains tiny. Overall Economic Development Objectives for India India's Tenth Five Year Plan outlines the overall development objectives for the country and details some of the sector specific initiatives that ,vill be used to achieve the goals set in the plan. The broad national development objectives are as following: 1. Reduction of poverty ratio by 5 percentage points by 2007 and by 15 percentage points by 2012; 2. Providing gainful and high-quality employment at least to addition to the labor force over the Tenth Plan period; 3. All children in school by 2003; all children to complete 5 years of schooling by 2007; 4. Reduction in gender gaps in literacy and wage rates by at least 50 per cent by 2007; 5. Reduction in the decadal rate of population growth between 2001 and 2011 to 16.2 per cent; 6. Increase in Uteracy rates to 75 per cent within the Plan period; 7. Reduction ofInfant mortality rate (IMR) to 45 per 1000 live births by 2007 and to 28 by 2012; 8. Reduction of :Maternal mortality ratio (MMR) to 2 per 1000 live births by 2007 and to 1 by 2012; 9. Increase in forest and tree cover to 25 per cent by 2007 and 33 per cent by 2012; 10. All 'villages to have sustained access to potable drinking water within the Plan period; 73 11. Cleaning of all major polluted rivers by 2007 and other notified stretches by 2012. The 10 th Five Year Plan calls for a three pronged strategy for attaining equity and social justice along \1.1.th high rates of growth and achieving the above objectives. These are: • Agricultural development must be viewed as a core element of the Plan, since growth :in this sector is likely to lead to the widest spread of benefits especially to the rural poor. The first generation of refonns concentrated on the industrial economy and refonns :in the agricultural sector were neglected. This must change in the Tenth Plan. • The grO\vth strategy of the Tenth Plan must ensure rapid grO\l,rtb of those sectors which are most likely to create gainful employment opportunities and deal with the policy constraints which discourage grO\1.rth of employment. Particular atrention must be paid to the policy en'vironment influencing a \1.i.de range of sectors which have a large employment potential. These include sectors such as agriculture in its extended sense, construction, tourism, transport, SSI, retailing, IT and communication-enabled services, and a range of other new services which also need to be promoted through supportive policies. • There will be a continuing need to supplement the impact of growth with special programs aimed at special target groups which may not benefit sufficiently from the nonnal growth process. Such programs have long been part of our development strategy and they will have to continue in the Tenth Plan as well. However, it is important to ensure that they are effective in achieving their objectives. Government Related leT Initiatives The Government's hitherto hands-off policy with regard to the IT sector would continue in the Tenth Plan. It \1.1.\1 confme itself to being a facilitator and a catalyst for accelerated grm"\rth of the sector. It plans to take major initiatives in the area of e-govemance with a view to ensuring balanced and orderly grov;rth. The major objectives em1.saged for the IT sector :in the Tenth Plan are: • To ensure the sustained growth of software and IT-enabled services and :increase India's share in the global market. • To put :in place the basic policy framework for making India a major force in the hardware- manufacturing sector. • To devise appropriate policy interventions for the greater use of IT for promoting more efficient, transparent and responsive governance. • To promote the development and use of software in Indian languages to meet local requirements and expand the domestic market. • To take necessary steps for taking IT to the masses by making it affordable, easy to use and useful :in day-to-day life. • To put in place the required policy framework to improve the quality of manpower, skills and R&D :in IT. 74 The Department of Infonnation Technology (DI1) is meant to act as a nodal institution for the promotion of the sector, facilitating and coordinating the various initiatives of the central and state governments and the private sector. Objectives and targets envisaged for the sector in the Tenth Plan, the major thrust areas are: • Software development and eA-ports and IT-enabled services. New markets for software eA-ports would be developed. • Priority will be given to e-governance, development of software in Indian languages, IT for masses, distance education, e-commerce, cyber security and HRD. • Postgraduate education and research in IT would be pursued as will R&D in the emerging areas of bluetooth technology, e-commerce, nano-technolo,§,'}' and bioinfonnatics solutions. • Foreign investment in the sector \vill be encouraged by further simplifying policies and strengthening and upgrading telecommunication and IT infrastructure. WB Related leT Initiatives The latest Country Assistance Strategy (CAS) document has been recently published in July, 2004. This strategy aims at scaling up the Bank's assistance program so as to help India achieve its Millennium Development Program. Towards this end, the Bank shall apply three strategic principles; namely Focusing on outcomes, Applying selectivity and Expanding the Banks role as a knowledge provider. Keeping the above strategic principles in mind, the Bank is seeking to expand its volume of lending to India. This expansion will essentially be in Infrastructure (Roads; Transport; Energy; \'~/ater Supply and Sanitation; Irrigation; and Urban Development) Human Development (Education, Health, and Social Protection) and Rural Ilvelihood with an emphasis on Community Driven approaches. The World Bank seeks to work along with the Government of India as well as with some of the larger poor states to re-enforce fiscal management, governance, service delivery and improved investment climate. The broad areas within the sphere of ICT for development that are currently being served by the Bank are: E-Government Service Delivery: It is expected that the governance climate in India will improve with the effective use of electronic governance tools. GoI is in consultation with the Bank for providing support in e-enabling government service delivery to citizens, to employees and to the business community. The Government of India has embarked on an ambitious National E- Governance Action Plan (NEGAP) covering citizens' services delivery systems for both state governments as well as central government departments. NEGAP shall include the scaling up of a number of successful pilot projects which have been initiated over the last four or five years. These initiatives include citizen services at state level as well as services delivered by central government departments. GoI is in the process of consultation with the Bank for providing technical and lending support to this national level initiative. 75 The Bank is engaged with several projects including urban sector projects in Tamil Nadu and Karnataka to facilitate deployment of ICTs for better citizen service delivery by the government agency. The country procurement strategy has recommended web enablement of gm'ernment procurement processes. A major seminar on E- procurement was organized in the New Delhi office, for the entire SAR Procurement group. E-procurement is expected to bring in greater efficiency as well as transparency in the procurement process of the participating states and the central government. Creation of a Knowledge Society: India is aiming to emerge as one of the major knowledge economies of the world. To be able to build on these strengths is clearly a strategic challenge for India's future growth. The Bank's World Bank Institute is making an important contribution in this area through its work in the India -I ~ • A special program for elementary education initiated. • Community Information Centers set up in the North East and Sikkim different service providers, particularly between fixed line telephony service and cellular service. E'" • The National Literacy Mission is engaged in the • Extending and developing rural • IntrodUCing promotional policy of taxes and task in providing functional literacy to the non- telecommunications infrastructures through use regulation for the telecom sector with a view to ... .E c literates in the 15-35 age group. of new technologies such as wireless and by ensuring optimum growth in the coming years. ~ • Upgrading and modernization of Indian Institutes encouraging competitive private sector • Enhancing TRAl's capacity to regulate ~ of Technology and Indian Institutes of participation. increasingly competitive and complicated o Management and other professional colleges. market • Use of ICT in teaching at all levels initiated • Plugging gaps in regulation and legislation, • Strong emphasis put on technical and vocational particularly with regards to e-commerce. training with industry participation, particularly to develop knowledge workers for ICT sector. • Ongoing WB assistance through a number of • WB is already involved in a number of rural • Technical assistance in the area of regulation ongoing projects with particular emphasis on electrification projects. covering new technologies such as primary and secondary education with the view • Support for rural access initiatives, particularly interconnectivity, number portability and e- to expand enrolment of girls and other for electricity and telephony. commerce. ~ .a_ c disadvantaged groups and keeping the retention • Opportunity to develop public access centers in ~ U-cu rates high. rural communities. .. E • The Bank is also involved in improving the ~~ ~> quality of technical education in a number of states. c c cu- • Continued support for incorporating IT into t) school administration and teaching - particularly Q. in the secondary education and in rural areas. 79 4.5 Maldives Introduction The Republic of Maldives is an archipelago consisting of about 1,200 coral islands in the Indian Ocean. One hundred ninety-eight of the islands are inhabited by a total population of about 280,000 people. Per capita GDP in 2003 was estimated at $3,900 on PPP basis. The Maldives has achieved buoyant growth over the past two decades. The development of the tourism and fisheries sectors, favorable external conditions, large inflows of external aid, and good economic management contributed to a steady rise in the gross domestic product (GDP), averaging 9 percent since the late 19705. However, from 1997-2001, GDP growth slowed to an average of 4.6 percent. Global security concerns had a negative impact on the economy by impacting the important tourist sector. The Maldives' social indicators have shown significant improvements over the past two decades, as reflected in a falling infant mortality rate, expanding school enrollments, and rising literacy rates. As a country with limited natural resources and with widely dispersed communities ICT can playa vital role in development efforts and in reducing the impact of geographical isolation and physical separation that exists between the island communities of Maldives. Compared to most counrries in the South Asia Region, Maldives is in a better position in terms of telecommunications, with a fully digital network. It has the highest teledensity in the region, with telephone access available to all inhabited islands since 2000. With a small population it has the advantage of easily increasing ICT awareness and use among the population and at the providing more IT enabled services to the population. At the same time such small population might prove to be bottleneck to ICT development due to lack of skilled labor. Scale issues may also crop up. However, Given Maldives' small and dispersed communities, ICT is the ideal tool, in terms of both cost and technical issues, for providing services such as e-government, telemedicine and distance learning. The government has put leT development on its top agenda and sees lCT as a vital tool for achieving the economic and social development objectives envisaged in the Vision 2020 of l\laldives. Overall Country Assessment A basic overview of any country's "e-readiness" would require a basic understanding of some of the key factors that are required to develop and use leTs in all sectors of the economy. These factors include adequately trained skilled labor, adequately connected information infrastructure, and a legal and regulatory environment that promotes leT development. Using this criteria, a basic review of Maldives' "e-readiness" was put together to focus on the main foundational priorities that are required to sustain ICT development. Edllcation & Skilled Labor With population of less than three hundred thousand Maldives has the advantage in that human development issues are more manageable. A testament to that is its exceptionally high literacy rate of about 97 % and equal, remarkably, between men and women. But, at the same time such a small 80 ,';[aldh'es lCT Country Assessments population base poses unique challenges in achieving a critical mass needed to develop an industry base that can compete in the global market. For example, country's small population base works against the establishment of university, constraining higher educational opportunities. This is particularly important since the development of an ICT industry requires advanced skills. In 1999 entollment in lower secondary education, prior to O-level, stood at 14,531.The government recently established a goal of making all the O-level graduates "computer literate" by the year 2002, To this effect, the computer labs in 11ale are now used not only for the students in Computer Studies, but also for all students to gain computer literacy. Furthermore, the h1inistry of Education has contracted out the management of computer laboratories in the government primary schools in Male to private parties since July 2000. Currently there are five private companies managing the computer laps in the six government primary schools in Male. A range of technical and professional training courses (Certificate-level, Diploma-level and above) is offered by the eight institutes within the Maldives College of Higher Education. The enrolment capacity for the Diploma in IT course offered by the Institute of Management and Administration was 50 in 2000 with only 44 actually enrolling. Given the limited scope for higher education, many Maldivians go abroad to pursue higher education. For example, from 1995 to 2000, a total of 876 students have been sent by the Government to study abroad (Ministry of Human Resources, Employment and Labour, 1999). These students include 477 diploma level students, 307 degree-level students, 82 Masters level students and 10 candidates to pursue doctoral studies. They are sent abroad on scholarships received from donor countries and through loan assistance from international banks and agencies. Furthermore, an increasing number of private candidates are studying abroad. The most popular destinations are Malaysia, India, Sri Lanka, Australia and the United I<:ingdom. It is estimated that over 3,000 Maldivian students are studying abroad, and for a developing nation with 260,000 people, this is a significant number of students. The economic base of the Maldives is very narrow while the human resources of the country are not sufficiently developed to sustain a dynamic, knowledge-based economy. There is a serious shortage of skilled Maldivians, and the economy's growing need for qualified workers and professionals is being met by expatriate workers. At the same time, the number of educated (with 10 years schooling), but unskilled, young men and women is increasing and will continue to increase. TI1e Maldives has one of the lowest labor force participation rates in South Asia, particularly for women. The appreciable advances being registered in the human resource base of the Maldives is not adequate to meet the needs of the country. The very pace of economic growth and the development has opened up resource gaps in the areas of upper and middle management, medical and education senrices, other professional services, intermediate skills and even unskilled labor. This niche has been readily filled by an influx of expatriate labor, largely form the countries of South Asia. At the end of year 2000 there were over 27,000 expatriate workers in the country; about half employed in semi- skilled, skilled and professional positions. Expatriates make up most of the teachers in secondary education, many of the doctors and medical staff, and business professionals such as accountants and managers. Infrastructure & Connectifdty Prior to 1995 telephone service was available only to a few islands, with a total of about 3000 subscribers. By the mid 1990s - beginning at approximately the time C&W negotiated its extended period of exclusivity - infrastructure expansion advanced rapidly. In terms of overall infrastructure - fixed and mobile telephones. the Maldives' rank has risen by 30 positions (from 133 to 93) over the last quarter century. 'While the country's telephone density was 22 times less than the world average in 1970, this gap had been reduced to just one and half times by 2002. By 2000 all 81 i\faldiyes - rLi Country i'l.ssessments inhabited islands had access to basic telecom service and Internet connectivity. Maldives has a total of 30,056 phone lines as of December 2003, of which 21,858, or 73 percent, are in the capital and next four largest towns. Teledensity is estimated at 11.13, among the highest in the South Asia region as well as among the LDCs. It is on target to catch up with middle-income countries in terms of telephone penetration fulfilling one aspect of its aspiration of Vision 2020 to become a middle- income developing nation. Switching capacity is about 34,000 lines, with infrastructure supplied by NEC and Ericsson. An Advanced Mobile Phone System mobile network was introduced in 1997 and GSM in 1999. By the end of 2003, "DhiMobile" GSM service reached 19 of the 20 Atolls in the country covering 73% of the population, including all 88 resort islands. The subscriber base is already double that of the fixed network. There are a total of 66,466 mobile customers, about a fifth of which are prepaid subscribers. The Maldives has the highest telephone subscribers per capita in South Asia The backbone network has been expanded from the capital to the north include Shaviyani, Haa Dhaalu and Haa Alifu, and to the south to Gaafu Alifu and Gaafu Dhaalu, Gnaviyani and Seenu, connecting a total of 20 atolls. Maldives is connected to the outside world via satellite links mainly using standard A satellite earth station through Intelsat. A second satellite link was established in 2003 to Singapore Telecom's Satellite. The government and Dhiraagu are planning a feasibility study to determine the viability of a submarine link to regional optical fiber submarine cable systems. The International Telecommunication Union launched the Digital Access Index (DAI) in November 2003 as a new way of measuring the ability of nations to provide access to ICT. The DAI is based on four factors that have an impact on access: infrastructure (fixed and mobile telephone subscribers), affordability (Internet access costs), knowledge (literacy and school enrolment) and quality (international Internet bandwidth and broadband subscribers). A fifth factor, Internet user penetration, matches the theory of the index with actual usage. The Maldives ranked 92nd out of 178 countries and was the highest-ranking LDC and South Asian nation. Its overall score of 0.43 places Maldives in the medium access category. It is useful to compare how Maldives fares in the various factors to see its strengths and weaknesses. In terms of infrastructure it matches the medium access category average while knowledge, quality and usage are above the average. The area it does less well is in affordability Wben compared to the top-ranking medium access countries, the Maldives needs to raise its level of infrastructure and lower its costs. The country should aim for the goal of moving into the next category, high access (DAI value above 0.49). Another important issue is the disparity in the availability of telephony and internet services between Male and the rest of the country. For example, Male has an average of 1 telephone for every 3 persons while the ratio in the rest of the country is 1 to 50. This is also true in terms of costs. The telecommunications service fee charge in Male is lower than the fee charged in the rest of the country. Legal and ReglllatoIJ- Polic.v Responsibility for telecom sector planning and regulation lies with the Ministry of Communication, Science and Technology (MCS1) C"lww.mcst.gov.mv), and specifically, the Post and Telecommunication Section, which handles registration and licensing of telecommunication equipment. Its responsibilities include sector regulation, policy formation, licensing, license compliance, tariffs, service quality monitoring, and so on. Maldives has no statutory legislation for telecom. A draft Telecommunication Law has been proposed but no action has been taken; the legislation is believed to focus primarily on administrative issues (such as the separation of government and private sector activities) and rules for radio frequency allocations. 82 MaldiYes ICT Country Assessments The key guiding documents for the sector are the Telecommunications chapter of the Science and Technology Master Planl, and the ~\laldives Telecommunications Policy2, both prepared by MCST. The Master Plan is a detailed and well-structured analysis of the government's strategic assets and goals for the sector; the Policy identifies specific tactical changes expected to be addressed from 2001-2005. The restructuring of the Maldivian telecommunications sector began in 1988 with the incorporation of the Maldivian Telecommunication Company, Dhivehi Raajjeyge Gulhun Private Limited, known as "Dhiraagu". Dhiraagu is a monopoly joint venture company, owned 55 percent by the Government and 45 percent by the British firm Cable and ~'ireless pIc. The firm's exclusivity over basic services was renewed in 1995 and is not currently scheduled to expire until 2009. Some question if Maldives will follow the example of other small nations that sought to break long-term exclusivity agreements with C&W (such as the Caribbean island states), but the prospect seems doubtful. A significant portion of state revenues are believed to be derived from Dhiraagu revenue sharing and taxation, and the government is wary of rocking the boat. According to the Master Plan, "Before any broad reform (regulatory or market) can be introduced, it will be necessary to analyze the "cross-subsidization" that occurs among Dhiraagu services and for the Government to decide whether it can substitute other revenue sources for reduced profitability in Dhiraagu." Dhiraagu's monopoly rights do not extend to other services areas, such as mobile and the Internet. It is likely that meaningful competition in basic services will be introduced through VoIP, especially for toll voice. Lowering the cost of services in communities outside of Male is a political issue, and VoIP is seen as a viable solution for dropping service costs. Not surprising, with no effective competition, the cost of high-margin services such as cellular and long distance remains high relative to Maldives' current average level of incomes. Internet access services have until recently also been prohibitively priced for the academic community. The government has specifically stated that it does not want to block competition in Internet-based services in order to encourage technological innovation and lower consumer costs. The Policy states further that even though ::\1aldives is a small market, there is sufficient demand to sustain more than one operator. While no specific details are available, the government is believed to be preparing to introduce competition in GSM mobile services, possibly as early as 2004. A Regulatory Authority is also in the process of its formation. The structure of the Regulatory Authority will consist of a collegial body, an executive head of the Authority, the secretariat and special services sections such as spectrum management and standards. To separate government from private sector operations, MCST expects to have its interests in Dhiraagu represented by a separate organization other than the Regulator or the :Ministty, perhaps by transferring shares to a independent ownership vehicle. While the current status is not known, the intention is to prevent representation of any member of the government or regulatory authority to sit on the board of any telecommunications enterprise. Overall Economic Development Objectives for Maldives Maldives' Sixth National Development (NDP) Plan outlines the overall development objectives for the country and details some of the sector specific initiatives that will be used to achieve the goals set in the plan. The broad national development objectives are as following: 1. Diversify and expand the economy by further developing existing industries and by exploting new economic activities, while ensuring the sustainability of physical and natural resources. 83 Maldh'es ref Country Assessments 2. Increase the role of private sector in development process, particularly in expanding the economic base of the country. 3. Improve the guality and relevance of educational, health and social services, while ensuring that the benefits of development are shared eguitably among the population. 4. Increase the human resource capacity and producti\'itJ by providing relevant training and employment opportunities. 5. Pursue legislative, regulatory, governance and administrative reform to facilitate rapid economic and social development 6. Develop a sustainable and cost-effective transportation and telecommunication infrastructure to facilitate economic, social and regional development. 7. Ensure socio-political stability and democratic participation of all in the development process, while upholding the national unity and social cohesiveness based on share social, cultural and religious values. The 6d1 NDP identifies four thrust areas for achie\ring the above objectives. • Economic Diversification ~ This calls for establishing a specialized unit, "i.th the necessary professional capacity, to research and propose actions to focus on economic diversification, economic growth and economic change. Furthermore, ways to introduce additional value added activities into the two main pillars of economy, tourism and fisheries, would be considered. Also, studies uJould be conducted to identijj the possible uses oller in economic dilJersijication. • Human resource development and employment - A number of strategies have been prescribed for this including preparing national Human Resource Development Master- plan; raising the profile of vocational and technical education; increase awareness of all participants in the job market; increase skill levels through training programs both at home and abroad; establishing employment centers; training career counselors and initiating career counseling at secondary schools; r!XIucing dependence of expatriate workers; increasing labor market participation by young people and women; and establishing regulatory bodies for professionals. • Financial sector reform - This would strengthen the use of market based instruments in monetary management. Reforms would also strengthen Maldives Monetary Authority and legislations regarding monetary management and the financial sector. Furthermore, increased competition within the banking sector would be promoted. Also, steps would be taken to develop a capital market and facilitate and development of non-ban financial institutions. • Land reform Prevailing tenurial rights would be reviewed and necessary changes would be incorporated. The land tenure system would be reformed to facilitate real estate development sector. A legal framework for the ownership of land would be created so that land could be utilized fully as an economic resource. 84 Maldives - lCT Country Assessments Government Related leT Initiatives The government views ICT as an important tool for development. ICT, particularly telecommunications can playa vital role in linking l\1aJdives' dispersed communities and reducing the impact of the geographical isolation and physical separation that exists between the island communities. With this in mind there are ICT specific policies in the 6tr NDP. Furthermore, the Maldives Telecommunications Policy Z001-2005 has also been drawn up clear set of objectives in mind. leT policies from the 6th NDP are as following: • Government Use ICT to increase the efficiency in the provision of Government services to the public: This would involve networking government offices, promoting efficiency through ICT and e-government initiatives. Appropriate legal and regulatory framework would also be prov'ided to foster development of ICT. • Private Sector - Increase the dynamicism of commercial and business sector of Maldives through ICT: Strategies to this effect include creation of enabling environment for e-commerce, promotion of e-commerce and other commercial use of ICT among businesses. ICT would also be used to manage, monitor and exchange information on various aspects of the economy. • Telecommunication Enable the use of telephone and internet services at costs comparable internationally: This calls for regulation of internet service pricing to ensure commercial viability to users. The telecom sector would be further liberalized to promote private sector investment. • Policy Reform liberalize the Information Technology Sector and create a knowledge based economy: This would see formulation, enactment and enforcement of laws and regulations to facilitate a conducive environment for a knowledge-based economy. Competition would be introduced in the provision of internet and web-based services. The policies outlined in Maldives Telecommunications Policy 2001-2005 are as follO\ving: • Reduce charges for all telecommunication services: Studies have shown d1at the telecommunication services in Maldives are generally expensive. Especially the charges for international calls and internet services are unteasonably high. Furthermore, there is a significant disparity in telecommunication charges between l\1aJe and the rest of the country. And studies show that there is a significant room for reducing these charges. • E:lc'Pand telecommunication services and to reduce the disparity in service prov;sion between Male and the other islands: Despite reasonable developments in telecommunication services in the country, significant differences still exist in sen.;ce provision between lYlale' and other islands. So far, provision of mobile telephone serv;ce has been targeted at Male' and the tourist resortS, where most of the economic and commercial activities are concentrated. A majority of the population is deprived of the Internet service due to unavailability of residential telephone lines as well as public Internet access centers, such as cyber cafes, in most of the islands. Hence, priority will be given to expanding the telecommunication sen;ces and reducing the existing disparity in service provision between Male' and other islands. • Provide the necessary means and powers to the Regulator through an appropriate legislative framework to strengthen the telecommunication sector: The absence of an appropriate legislative framework is a serious impediment to regulation of the telecommunication sector. The Regulator's role should be to protect the rights of consumers and service prm;ders, as well as to 85 Maldires ICT COUnt1\, Assessments promote policy objectives for sector development while maintaining a fair and le,'el playing field for all stakeholders. To make the role of the regulator more effective, a Telecommunication Act that gives the necessary legal powers to the Regulator would have to be formulated and enacted. • Open the telecommunication sector and encourage competition: Introducing competition in telecommunication services '.XriJllead to, lower telecommunication charges, expansion of services, improvement of quality and introduction of new services. In the l\1aidives, the absence of competition in the telecommunication sector has resulted in expensive and slow expansion of services. Therefore, it is important to open the sector for competition. • l'vIake Government revenue from the telecommunication sector less dependent of the profit of the sector: Telecommunications is a very profitable business. At present, a large part of the government's revenue from the sector is dependent on the profits of the telecommunication company. The profit of a company may vary from year to year for reasons such as reduction in tariff or investment in infrastructure. In order to minimize any negative impact on the government's revenue from this sector, it would be prudent for the government not to be too dependent on the profits of the sector. • Facilitate the use of info-communication technology in all areas of development: If the l'vIaldives is to reap the benefits of info-communication revolution, then it has to acquire the necessary skills in this field. The introduction of info-communication technology and its proper use would result in a society that would utilize the information and knowledge to enhance productivity and improve its socioeconomic status. WB Related leT Initiatives The Country Assistance Strategy for ivIaldives outlines 5 development challenges and priorities for IDA assistance: 1) Protecting the Environment, 2) Strengthening the l'vfacroeconomic Framework and Public Expenditure l\'ianagement, 3) Strengthening Human Development, 4) Improving Business Environment, 5) Addressing Sectoral Issues/Priorities in Tourism, Fisheries, Land-use and Urban Development. The Maldives CAS does not mention specific ICT applications in implementing some of the developmental programs, a review of the current active ~'B project that have been implemented over the past few years indicates that some of these programs have some ICT applications imbedded in them. Given l'vIaldives' strong basic telecommunications infrastructure, small population and high levels of literacy, lCT based development programs can easily be implemented. Also, as mentioned earlier, ICT also represents the most cost effective tool for reach l'vIaldives' widely dispersed and small communities. So, all the more reason to incorporate ICT in development programs to improve the country's socio-economic status. The following is a summary of the relevant ~'B projects that met some of the developmental goals outlined in the Ci\S as well as some of the lCT development goals outlined in the country's ICT Policy. Human Development Integrah!d Human Development Pro/ect This project had four components each with its own ICT related acO·v1ties. 1) Education Service Delivery: expanding education facilities such as lCT centers for students and teachers and on-site internet based teacher training on primary islands. 2) Health Service Delivery: improve access through telemedicine and create a nutrition information system. 3) Employment Services: creating national jobs information system. 4) Community Services: develop broadband networks on each focal 86 ]\[aldh'es - ICT Country Assessments island to facilitate exchange of information, reduce communication costs and use IT enabled sernce deliven', Third Education and Training PIr!iecf - This project had three components, of which 1:\,vo had leT related acti,;ties, 1) Increase Equitable Access: construct 8 science and computer laboratories and provide additional training to teachers in computer skills, IT and library science. 2) Strengthen Institutional Capacity: develop Education Management Information System at the M.inistry of Education, Other leT initiatives Private Sector Initiatives - Currently all basic network senrices are provided solely by Dhiraagu, a joint venture between the Government and Cable and Wireless, In the mid 1990s Dhiraagu extended its period of exclusivity until 2009, but the government hopes to progressively introduce competition in alternative service areas such as mobile and Internet. Voice over Internet, especially, is encouraged so as to help reduce the high cost of domestic and international toll service to consumers. A second mobile operator and ISP may be introduced by Focus Computers, a local company. In terms of IT education there is some private sector involvement. In July 2000, Ministry of Education contracted out the management of computet laboratories in the government ptimary schools in Male to five private companies. Under the initiative the private companies prm;de all hardware, equipment and supporting senrices and takes care of all costs and offet classes for all the students and teachers for nominal fees. The ptivate companies are allowed to use these laboratories to offer classes to general population when they are not being used by the schools. NGO & Donor Initiatives The following is a brief summary of the nature of the ICT development work that has been commissioned by the various NGO and donor organizations in the country. ADB: Provided technical assistance for the Science and Technology Master Plan in 2000. As part of that technical assistance, a master plan for telecom and leT sector development in the Maldives was prepared. In 2001, proposed a loan to the government to establish network government agencies and offices to increase access to government services and information in outlying areas; increase public internet access in Male and outlying areas through kiosk; and reform the telecommunications sector, particularly \vith the view to lowering access costs to the end users. UNDP: In 1999, sponsored the Government Network Maldives Study. Currently, \vith the Assistance of UNDP, Ministry of Communication, Science and Technology plans to run a project to develop the national IT policies and strategies. This will be very much a consultative process \vith the government agencies, private sector and the island communities. This would help to improve the policy framework, establish pilot ICT centers in the islands and liberalize the ISP market. International Telecommunications Union: Assisted 'with prepararion of the telecommunications sector policy, which provided a basis for the :Maldives Telecommunication Policy approved by the Government on 1 August 2001. Potential Areas for Future Involvement Health & Education Telemedicine and distance learning are particularly relevant given the small population and widely dispersed communities .. Given numerous atolls that make up Maldives and their small populations, it is not always cost effective to set up large hospitals or schools in each and 87 Maldh-es - lCT Country Assessments every atoll. However, use of leT would allow these small communities access to centralized resources in real time in an effective manner. Private Sector - Development of leT use in private sector, particularly niche areas like e-tourism: It would be highly impractical for Maldives to try to compete head on in the highly competitive software development market. However, it can make use of its natural competitive ad,'antage to carve out a niche using leT. Given that Maldives is one of the world's top tourist destinations, leT can be used to more effectively market Maldives and also provide better information and service to prospective tourists. leT Training - Provide support for university b-el leT training to alleviate the shortage of IT professionals: In order for Maldives to fully reap the benefit of it will require skilled IT professionals to implement yarious programs. However, there is an acute shortage of such skilled personnel. So, there is an urgent need to expand and deepen the scope of IT training at the university level to ensure leT development and implementation is no derailed by lack of skilled professionals. Regulatory Assistance - Provide technical assistance in the area of leT regulation. leT development can not take place without private sector participation. And also in many instances investment from abroad may be necessary. However, in order for parties to invest, there must first be a regulatory and legal framework for them to operate in. Maldives is currently lack in this area. It is imperative that this is remedied urgently. Key Contacts and Organizations Ministry of Communication, Science and Technology UNDP, Maldives URL: http://wNw.mcst.oov.mv URL http://ww·w.mv.undp.OIgI e-mail: secretariat@mcst.oov.mv e-mail: regmdv@dhivehinet.net.mv Table ofKey Documents Telecommunications Maldives Telecommunications Policy 2001-2005, Ministry of Communications, Science and Technology, 2001 Maldives Telecom Brief, Network Dynamics Associates, 2004 ICT Strategy Science and Technology Master Plan, Ministry of Communications, Science and Technology. 2001 National Development Plans The 6th National Development Plan, Ministry of Planning and National Development. 2000 E-ReadinessReports Internet Country Case Studies Maldives, ITU, 2003 Other Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Republic of Maldives for the Information Technology Development Project, ADB, 2001 88 Maldives reT Country l,sscssmcnts Overall Country Assessment for Maldives Education & Skilled Labor Infrastructure & Connectivity Legal & Regulatory Framework "... • Literacy Rate: 97% and equal between men & • Electrical connectivity very poor, particularly in • Responsibility for telecom sector planning and women rural areas. regulation lies with the Ministry of ... c: • In 1999 enrollment in lower secondary education • Teledensityat 11.63, highest in South Asia . Communication, Science and Technology GI stood at 14,531 (Pakistan at 35 per 1,000) • Weak legal and regulatory environment E • Government recently established a goal of • Teledensity much higher in Male, compared to • Maldives has no statutory legislation for telecom. til 11/ making all the O-Ievel graduates "computer outlying areas and also telecommunications A draft Telecommunication Law has been GI 11/ 11/ literate" by the year 2002. charges are lower in Male. proposed but no action has been taken « ... • Five private companies provide IT training • By the end of 2003, "DhiMobile" GSM service • The key guiding documents for the sector are c: .tl! :::l 0 • 44 graduates of IT from the Institute of Management and Administration • Limited scope for higher education. reached 19 of the 20 Atolls in the country covering 73% of the population • The backbone network based on microwave the Telecommunications chapter of the Science and Technology Master Plan, and the Maldives Telecommunications Policy, both prepared by • Serious shortage of skilled Maldivians, heavy links now connects 20 atolls. MCST. reliance on expatriates. • Computer, internet and television penetration • Development of a regulatory authority required. rates are highest in South Asia. " /' • One of the government top priority is Increasing • Reducing telecommunication charges, especially o A Regulatory Authority is in the process of its the human resource capacity and productivity by in the outlying atolls. formation. providing relevant training and employment • Expand telecommunication services and to • Government is preparing to introduce 11/ opportunities. reduce the disparity in service provision between competition in GSM mobile services, possibly as ;: • Efforts are underway to achieve computer Male and the other islands early as 2004. III literacy at lower secondary level. • Work is underway to develop simple !e communications facilities in all 355 key districts ... .5 • HUman Resource Development Master Plan has .. c: GI :::l been developed . o Stress on vocational and technical education • Plans to increase skill levels through training across the country. • Wireless connectivity is expected to continue to grow. 0 programs both at home and abroad '- "... • Ongoing WB assistance through one Education • Opportunity to develop public access centers in • Provide technical assistance in the area of ICT project and one Human Development project outlying areas. regulation E :::l o Support for use of ICT for distance learning. "S .... LI..; o Provide support for univerSity levellCT training ... E ,gGl -> 1Il- ._ 0 ... > c: c: ClI- '0 Q. " 89 4.6 Nepal Introduction Despite four decades of development efforts, Nepal remains among the least developed countries in the world with 42% of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for over 80% of the population and accounting for 40% of GDP. }Jthough notable progress has been made in financial sector reform, public expenditures management, changes in public service modalities, increased transparency & the fight against corruption and the infrastructure regulatory environment, nonetheless, the impact of the reforms have not been felt widely enough to date and Nepal remains one of the world's poorest countries, with an annual per capita income of about US$240 and bleak social indicators. Although strides have been made in bringing ICT into the forefront of Nepal's development agenda, many challenges exist in the implementation of ICT initiatives such as e-commerce, e-government, and ICT sector interventions. Apart from human resource issues, there are issues related to infrastructure access including uneven telephone and internet distribution, bandwidth and quality of connections. Further constraints to the use of ICT for Nepal's economic development, growth and poverty reduction include access and affordability issues, such as low computer penetration, nascent IT industry, low levels of IT diffusion, high up front costs, low levels of computer education, absence of local content, and little public awareness about the Internet. Despite the establishment of the Nepal Telecommunications Authority (NTA) to regulate the sector, situation is exacerbated by limited points of presence of ISPs, and slow adoption by most government departments of computer applications, political uncertainty and security issues. . Despite evolving complexities that come concomitant with the application of IT, the government has developed an ICT strategy which is aimed at creating a facilitative mechanism. The fact that Nepal is divided into 14 zones and 75 districts and 4000 Village Development Committee (VDC) spread over three disparate geographic regions introduces issues that need to be accounted for and addressed at a national strategy level. The expansion of Information Technology skills, increased transparency and solid infrastructure development are crucial for gaining government and business efficiency, which may lead to the enhancement of social development and welfare not only in the main urban areas, but throughout the country. A Consultation on National ICT Policy held in August 2000, was led by the National Planning Commission (NPC) and addressed the use of ICTs specific to the Nepalese context, with attendance from government and private sector organizations, ICT policy experts and international NGOs. The topics reflected in the papers presented (E-Commerce/E-services; E-Governance; Software Production; Human Resource Development; Universal Access to Information; and, Information and Communication Infrastructure) reflected the intended direction the Nepalese Government is willing to take. Additionally the government is in the process of revising the IT policy of 2000 and is prioritizing, through an Integrated Action Plan (lAP), key ICT related actions for implementation in the near to medium term which may lead to improved and more effective lCT sector policy coordination, implementation, monitoring and evaluation. The composition of the industry and the import/export trends leaves a lot of room for the introduction and mainstreaming of systematic lCT inclusion in 90 various social sectors, e-business and the public sector. A key issue for a country the size of Nepal, with limited ICT policy capabilities in the Government, is the need to undertake institutional reform and consolidate policy making functions for the sector under one parent agency. Overall Country Assessment A basic overvie,v of any country's "e-readiness" would require a basic understanding of some of the key factors that are required to develop and use ICTs in al1 sectors of the economy. These factors include adequately trained skilled labor, adequately connected information infrastructure, and a legal and regulatory environment that promotes ICT development. Using this criteria, a basic review of Nepal's "e-readiness" was put together to focus on the main foundational priorities that are required to sustain ICT development. Education & Skilled Labor The modem education system in Nepal is one of the youngest in the world and operates within a political democracy that was established only in 1991. Not surprisingly, while parts of the system have been well designed and are implemented effectively, others remain in an embryonic stage and are only partly effective. Over the past five decades, there have been considerable quantitative achievements. From the situation in 1951 when there were only 321 primary schools, 11 secondary schools and 250 university graduates currently there are over 3.4 million children enrol1ed in 23,000 primary schools, 360,000 students in about 3,300 secondary schools and over 80,000 students enrolled at the tertiary level. The literacy rate has increased from less than five percent Oess than one percent for females) to over 40 percent. From a period of extremely limited access enjoyed exclusively by the most privileged social groups, the education system has opened up to a larger population particularly at the primary level. In addition, increased attention has been given by Governmenr to developing new curriculum, distributing free textbooks and providing teacher training as well as attempting to reach out to communities which are particularly educationally disadvantaged. In spite of these successes, however, there is a general acceptance that access to primary education is stil1 far from universal, that post primary education requires structural reforms and that the quality of education received by the majority of students at all levels is unacceptably low. Both the low rates of primary school completion and the dramatic increase in enrolments in the private educational institutions over the past decade indicate that the outcomes of the public education system need to improve significantly. The wage labor force is stil1 undereducated with an average of only 3.9 years of schooling, and 62 percenr have no schooling at all. Estimates of social returns (based only on monetary benefits) are ° below 1 percent for secondary and higher education graduates in employment, and are lower for the self employed. For primary school graduates, they are around 15 per though this is likely to be a significant overestimate for recent graduates. Compared to the social rates of return of several other low income countries, those for Nepal are probably low. There is also lack of adequate, qualified personnel within the civil service which in the long run would lead to wider diffusion of IT, and efficiency gains in the civil service. Currently there are about 1200 high level professionals. Computer courses are offered in 200 schools, 4 IT related universities and 1000 training institutes with overall enrollment capacity of 5000. 91 -. rC1."" Infrastnlcture & Connectivity The introduction of telecommunication services in Nepal is relatively recent. The first telephone exchange was established in Kathmandu in 1960. Since then, the state-owned Nepal Telecommunications Corporation (NTC) has been the monopoly supplier. Throughout its history until 1997, Nepal was dependent on investment assistance from the World Bank and other donors. Up to 60 percent of its capital for network expansion was derived from extemal donor sources. \Vith the sudden adoption of the "Washington Consensus" - when the international community collectively chose to embrace market reform over financial subsidy in the telecom sector J\JTC growth came to a virtual halt. The company ceased deployment in rural areas altogether in 2000 as it could no longer commercially justify the investments. At the moment, the existing information infrastructure in J\Jepal consists of the Public Switched Telephone J\Jetwork (NTC), 2 mobile operators and 1 WLL service provider, data service infrastructure; Radio Paging; Radio Broadcasting, TV Broad Casting and Cable TV J\Jetwork. On the connectivity and technology infrastructure front, J\Jepal ranks very low, specifically in terms of access to telecommunications service in rural areas: only about 45% of VDCs (Village Development Committees) have access to telecommunication services. It is important to note that only 15% of the Nepalese population has access to electricity, and these people are mainly in the urban areas. The PC penetration in Nepal is at a very poor low of 3.66 PCs to every 1000 citizens. Internet penetration similarly is at a very low level of 3.45 users to every 1000 citizens. The concentration of teledensity in Katmandu is much higher as compared to the rest of the country with 18.2 lines per 100 inhabitants in Katmantdu vs. overall J\Jepal a mere 1.13 lines per 100 inhabitants and in rural areas 0.06 per 100 inhabitants. The inaccessibility is more severe in the Mid-West and Far-West Regions, where previous imbalances in resource allocation, security issues, and the difficult terrain have left these regions with underdeveloped infrastructure. Today Nepal has an estimated 377,000 basic phone lines in service yielding a teledensity of approximately 1.54. Most of the lines are in Kathmandu and teledensity in the capital is approximately 21. NTC provides 365,000 lines and UTL, the new fixed wireless operator that began service in December 2003, has 12,000 subscribers in Kathmandu Valley. Between 1995 and 1999, the annual growth rate of telephone service was 28.8%, the third highest in Asia-Pacific region after Sri Lanka (33.8%) and Cambodia (32.1%) but admittedly from an extremely low base. Tariffs on local service have been unchanged for nearly 10 years. Average revenue per user per line is about $14 per month (NPR 1000), fully blended (with international call revenues from urban users). The waiting list for a line is thought to be about 290,000. Most Nepalese place calls from small storefront public call offices. Attacks by Maoist insurgents on civilian infrastructure have increased the level of frustration with the lack of service. Since the outbreak of insurgency in 1996, the Maoists have damaged 133 telephone facilities including repeater stations, satellite terminals and network exchanges. An estimated 8,720 telephone lines have been affected causing damages exceeding $6.2 million. NTC's GSM service has an estimated 110,000 GSM subscribers but capacity is saturated. The network currently has a total of 150 base station controllers, of which 40 are in Kathmandu. HuaWei is the principle supplier. An estimated 80 percent of customers are pre-paid. Mobile ARPU is $18-$20 (NPR 1300-1500). NTC is in the second year of a $325 million capital expansion program (2002 - 2007). Spending in 2004 is expected to reach approximately $83 million (NPR 6 billion). The budget ",ill be funded entirely from NTC operations rather than through government subsidies, grants or loans. The company is planning a dramatic expansion of both its GSM network with the addition of about 300,000 new lines, valued at $30 million. It will also launch a 400,000 line full-mobility, wireless local loop network based on CnMA 800 technology, valued at $40 million. NTC anticipates that 92 competition will finally be approved and introduced this year and seeks to position itself ,vith robust facilities. NTC is currently constructing an East-West fiber route which will establish the first terrestrial international connectivity via China. The first competitor to NTC is United Telecom Limited (UTL) , a collaboration of three Indian government owned firms: Mahanagar Telephone Nigam Ltd (MTNL), which holds the highest stake (26.68 per cent), Telecommunications Consultants India Ltd (26.66 per cent), Videsh Sanchar Nigam Ltd (26.66 per cent) and a Nepalese company Nepal Ventures Pvt Ltd (20 per cent). The firm is actually administered by India's Department of Telecommunications, a state agency - a role that belies India's strategic position in the sector. UTL has a lO-year extendable license to provide basic telephone service using wireless technology. It is deploying a fullmobility CDMl\ 1800 system in Kathmandu Valley and the neighboring districts of Lalitpur and Bhaktapur. The platform is provided by LG with a capacity for 500,000 lines. The company has 12,500 subscribers as of January 2004 and hopes to reach 57,000 subscribers by year-end. UTL has a license for international traffic and acquired a 9 meter earth station from the U.S. firm Globecomm Systems International (GSI). Rural communications presents Nepal's greatest challenge. Current phone density in rural areas is among the lowest on earth - about one line per 1,000 population. There are over 4,000 village development committee areas of which only 1,500 are linked by telecom. Huge areas of the country have no service at alL The Maoist insurgency has it roots in rural areas and the absence of effective communications is believed to fuel popular discontent with the government. The Maoists have taken a hard line politically and their opposition to development makes deploying facilities in the remote regions both difficult and dangerous. In the mid-90s the Government called for introducing at least one phone in each village. NTC was also directed to commit 15 percent of its spending to rural areas. Neither target is close to having been met. In September 2003 an award was issued to the U.S. firm STM networks to construct a WOO-node rural satellite network. The World Bank is providing $12 million in financing, out of a total project cost of $16 million. The scope includes installation and operation of public call offices systems in at least 2 separate locations v.dthin each of 534 Village Development Committees (VDC) in Eastern Nepal. STM's consortium includes Samart Communications Services and a local partner, Vishal Group, through tender conducted by NTA. Rural expansion could be spurred further by the introduction of a universal service obligation totaling 2 percent of revenues on licensed services providers. Legal and Regulatory Policy Nepal has developed a progressive policy and legal framework for telecommunications. The first National Communications Policy was adopted in 1992 and updated in 1999 to encourage private sector participation. A sound Telecommunications Act was passed by Parliament in 1997, establishing the Nepal Telecommunications Authority (NTA) and a Radio Frequency Policy Determination Committee. Today the Policy is being revised once again. The new draft, adopted in March 2004, aims to remove restrictions on investment and accelerate broad market opening. The Government's guiding documents for the sector are uniformly articulated, purposeful and well reasoned. On paper, Nepal has consistently adopted a "global best practices" approach to sector reform. In actuality, progress has substantially lagged behind the lofty language of the strategy papers and market growth has overwhelmingly failed to meet expectations. Nepal's telecoms have suffered from recent years of political instability. In the time since the reforms began, and despite a proper regulatory platform, only one alternative provider has emerged to the 93 incumbent operator, Nepal Telecommunications Corporation (NTq. \\/ith the absence of meaningful competition, expansion of basic (and mobile) services has been predictably disappointing. Rural regions average one line per 1,000 while more than 60% of rural districts have no telecommunication services of any kind. Virtually no investment has been in rotal areas since 2000. Kathmandu, by contrast, has a telephone density of about 21 %. With a waiting list estimated to top 290,000 lines, market demand clearly outstrips supply, even with the economy's low purchasing power. Given the Government's recognition of telecommunication as a prerequisite for development, the clear sector roadmap defined in policy and obvious consumer demand, international investors invariably ask: why has Nepal's telecoms market not taken off? The flrst and most obvious answer is that the Government has not had the political constancY required to implement its own meticulously crafted reform program. Over the past 13 years, Nepal has had 13 governments. Since the dissolution of Parliament in May 2002 and the sacking of the Prime Minister in October of that year, the Government has been unable to steer a steady course for the sector. In the absence of apparent executive direction, efforts to liberalize the economy and introduce competition have largely failed to materialize. The enthusiastic support on paper for reform has been no match for the traditional inertia of the established state institution. W'ithin Nepali telecom circles, the sentiment to protect NTC runs deep. It has been treated like a national treasure. The chairman of NTC is the Permanent Secretary for fl..finistrv of . . Communications. The chief of NTC routinely assumes the position of the nominally independent NTA. To date the checks and balances have been weak between the Government, the incumbent and new market entrants. As a result, competitors have had a rough run. In 2000 a tender stipulated by the 1999 Policy was held for a flrst GSM service operator to compete "rith NTC. An award was issued to Modi Group, the Indian mobile serv:ice provider, and a local investor, Khetan Group. Despite auspicious beginnings, the venture quickly became encumbered by a series of barriers. First, a formal protest to the contract was issued by the NTC trade union. \X'hile NTC was not directly complicit, a petition from the labor union had special resonance in a society combating a strong Maoist opposition. The consortium overcame this impasse on1y to be instructed to apply for a radio spectrutn license, a process that introduced a nine-month delay. Once the license and spectrutn issues were agreed, the Government demanded a bank guarantee for bid insurance a condition that was not a part of the initial tender. The issue was resolved after months of negotiation when a local bank stepped in. Finally, after all the legal, labor, regulatory, spectrutn and financial impediments failed to deter the entrepreneurs, the Government threatened criminal inquiry and invoked an investigation by the Commission for Investigating Abuse of Authority. The group was cleared of charges. In the end, after four years of wrangling, no investment has been made and the company has failed to initiate operations. In the mean time, NTC's operations have prospered. Overall Economic Development Objectives for Nepal The main objective of the Tenth Plan (2002) is to alleviate poverty by mobilizing optimally the means and resources on the mutual participation of government, local agencies, non-governmental sectors, private sector and civ1l society to extend economic opportunities and open new ones enlarging employment opportunities and \viden the access to means and economic achievements for women, Dalits, peoples of remote areas and poor and backward groups through programs like empowerment, human development, security and targeted projects thereby improve the status of overall economic, human and social indicator. The strategies of the Tenth Plan can mainly be grouped into following four categories: 94 1. High, sustainable and broader economic grO\vth. 2. Social sectors and rural infrasrrucrures development. 3. Targeted programs 4. Good governance The 10mPlan identifies follo\\1ng thrust areas for achieving the above objectives: a) Agriculture development, sustainable management of narural resources and biodiversity: The income and employment of the majority of Nepalese people living in rural areas depend on agriculture. The Agriculture Prospective Plan for twenty years has the vision that poverty alleviation depends on the development of agriculture. The experience of other developing countries shows that the positive impact on agricultural development squarely falls on poverty alleviation. Thus the first priority in the Tenth Plan has been accorded to agriculture in view of the main objective of plan being poverty alleviation. The period of the Tenth and the Eleventh Plans "rill be celebrated as agricultural-decade to successfully implement the long term agriculture perspective plan. As there are close and complementary relationships between agriculture and natural resource management, the sustainable management of natural endorsements and biodiversity aspects are broadly included in agriculture development prospective. b) Rural infrastmcture development and rural energy: The government's experience has visualized the necessity to develop rural infrastructures for the economic uplift of rural sectors through continuous modernization of increased production by utilizing rural productive capacity. In the same way, rural energy development helps to mobilize rural economy and to solidify social transformations as these program help add to alleviate poverty for which the development of rural infrastructures and rural energy are especially emphasized in the Tenth Plan. c) Population management, social service and basic social securities: In view of low level of social indicators in Nepal as compared to other nations, weaker existence of social security measures and mounting additional pressures on available social services, it has been dire necessity to increase investment in these sectors as well as to stress on population management in order to raise the living standard of rural masses, facilitating their capacity enhancement so as to make them capable to utilize the unfolding opportunities of employment and improve their production and productivity. In compliance \\~th this basic policy that there shall be an increase in the investment in social sectors. d) Under the role of private sector, development of tourism, water resources, information technology, industrial and commercial sector: It has been visualized that as the development of areas like tourism, water resources, information technology, industry and commerce and their extension pushes up the country's economic development and contributes significantly to increase employment opportunities, the role of government in the development of such sectors is defined to be a catalyst, regulator and facilitator and encourage the private sector for active participation. e) Human resource development and women empowerment: It has been a felt-need to accord proper priority on human resource development in order to achieve macro economic growth through sustained increase in national production and productivity and to develop capacity to internalize the benefits arising out of such endeavors. Besides, it is necessary to step up special program for capacity enhancement of women as a remedy to redress existing exploitation and related problems due to gender inequalities. For this propose, it has been conceptualized to involve them in decision making process via empowerment activities and to widen their access to means and resources, raise their social economic status and thereby accelerate additional pace 95 towards poverty alleviation direction. It has been stressed to imply women related programs to full extent in related fields and agencies. f) The targeted programs for uplift, employment and basic security of DaJits, indigenous people and disabled class: Past experience dearly shows that weaker section of society fall behind because each one sector or class has no easy access to the fruits of economic development. In this connection, to identify disabled, DaJits, indigenous people and other deprived sections into main stream of development, it is necessary to enable them to competently fight for employment. Besides, the government should pilot strong and separate package of program of basic security for blinds, disabled and vulnerable section of society .It has been taken into consideration to move specially through targeted projects. g) Strengthening of 10caJ bodies, Non-government and community based organization (NGOs, CBOs): In compliance with decentralization policy, the program for strengthening of alllocaJ bodies will be implemented, as their involvement is impOrtant to formulate and implement effectively micro-plan to operate at 10caJ level. Similarly, as NGOs, cooperatives, CBOs and civil society can contribute largely in poverty alleviation programs by helping locally launched people's consciousness campaign and transporting and delivering necessary goods and services timely and safely at low cost, their mobilization program is aJso emphasized. h) Thrust on Area vlise development and remote areas: Government shall launch specific programs for development of remote and backward areas. The guiding policy to develop such areas would be to explore and exploit the locally available resources and possibility to their full extent to produce desired results. The plan shall take up development of Kamali water shed as the specific remote area V,rlth high priority. Similarly, the development district left behind in development MWDR and F\X''DR shall aJso be accorded high priorities. i) Use of better high-tech technology in ruraJ area: It is through better use of new technology that the product and producti'vity v,ril\ be increased to bring positive change in ruraJ economy. Reform and re'vitalization of ruraJ technology is a long felt need in NepaJ. The proper use of sophisticated technologies at increased scale like information and biotechnology and capacity development in health will help to bring remote areas in the main stream of national development. It has been stressed to develop rural capability to utilize the opportunities of trade and employment emerging at national and international level and to integrate the markets with it for the rural products and thereby transfer technology, skills and knowledge to rural areas. It is assumed that this process would playa significant role in alleviating ruraJ poverty. j) Reform and assurance of good governance: It is relevant to strengthen and reform the existing legal and administrative frameworks to facilitate transparency process as it would not only be effective to control possible irregularities and corruption but also control the quality of development programs both on the formulation and implementation levels. In this respect, it is necessary to move through the medium of decentralization process into related sectors to provide guarantee and reforms and capacity enhancement of agencies directly involved in corruption control so that the dean, accessible and efficient administration may prevail. k) Protection and conservation of em'ironment: In compliance with the priority of sustainable development as proposed by Earth Summit-Rio 1992, the integrated development of social, economic and environmental aspects is stressed keeping in line V,rlth the inter-relationship between poverty and environmental depletion. In this connection, special attention will be paid for the protection of environment and control of pollution while utilizing natural resources, biodiversity and infrastructure development to accelerate economic growth rate. Similarly, for augmenting of environmental consciousness, programs v,ril\ be implemented focusing on 96 -leT security, protection, rehabilitation and prudent application of environmental technology along \Xrith environmental health, education and other concerns. In addition, the urban environment shall be made healthier. I) Development of national and regional infrasrructures: It is necessary to develop coordinated essential infrasrructures to optimally utilize available of national and regional resources such as road transport, air transport, telecommunications and information services, production of hydro-electricity power, distribution grids, extension of development epicentre, etc. to achieve high, sustainable and broader growth rate. Among them, the role of govemment shall be crucial one to develop highways, hydropower distribution grid, airports and extension of epicentres. In other areas, private sector is eA-pected to be attracted go with suitable policy formulations. The whole strategy of developing national and regional infrastructures is guided centrally by this principle. Government Related leT Initiatives The govemment views ICf as an important tool for development. ICf, particularly telecommunications can playa ,ita! role in improvmg the socio-economic welfare of the country. With this in mind there are ICf specific policies in the 10th Plan. Furthermore, the Nepal Telecommunications Policy 2004 has also been drawn up with dear set of objectives in mind. leT policies from the 10th Plan are as following: • Developing, expanding and operating telecommunication senices in maSSIve participation of private sector so as to contribute in poverty alleviation. • Clearing liabilities and responsibilities of private and govemment broadcasting senices to develop, expand and operate their broadcasting sen;ces in a competitive and co-coordinated manner. • Improving the capabilities and effectiveness of posta! senrice by arranging its operation as autonomous body. • Developing a security printing press by creating a favorable environment wi.thin the country for all kinds of printing activities related ",rith security printing, except printing paper notes. • With an aim to develop healthy competition in the journalism sector and to bring effectiveness in flow of information, Department of Information would be developed as a centre for releasing information for general public in the country and abroad. • Encourage private sector in production of Nepalese filins and develop Nepal as a centre for international film related activities. The country's ICf Policy was drawn up in 2000. The salient features are outlined below: 1. To declare infonnation technology sector a prioritized sector. 2. To follow a single-door system for the development of infonnation technology. 3. To prioritize research and development of infonnation technology. 4. To create a conducive environment that will attract investment in private sector, keeping in view the private sector's role in the development of information technology. 5. To provide internet facilities to all Village Development committees of the country in phases. 97 -IeI' 6. To render assistance to educational institutions and encourage nati,'e and foreign training as a necessity of fulfilling the requirement of gualified manpower in various fields pertaining to information technology. 7 To computerize the records of each governmental office and build websites for them for the flow of information. 8. To increase the use of computers in the pri"ate sector. 9. To develop a physical and virtual information technology park in various places 'wjth the pri"ate sector's participation for the development of information technology, 10. To use information technology to promote e-commerce, e-education, e-health, among others, and to transfer technology in rural areas. 11, To establish a National Information Technology Centre. 12. To establish a national level fund by mobilizing the resources obtained from HIS i\fajesty's Government, donor agencies, and private sectors so as to contribute to research and development of information technology and other acti"ities pertaining to it. 13. To establish venture capital funds with the join participation of public and prkate sectors. 14. To include computer education in the curriculum from the school level and broaden its scope. 15. To establish Nepal in the global market through the use of information technology. 16. To draft necessary laws that provide legal sanctions to use of information technology. 17. To gradually use information technology in all types of governmental activities and provide legal sanctions to its use in such activities. The new Telecommunications Policy, crafted \-vith international assistance, defines a liberal rebrulatory environment based on open licensing; widespread competition; specific service obligations for licensed operators; a proposed regime for non-compliance; an explicit reference to \X?TO interconnection obligations; and a schedule to corporatize and privatize NTC. It is a how-to manual for aggressively liberalizing the sector. \'{'hat remains to be seen is how assertively the Govemment \vill be implementing the plan, or whether continued political instability thwarts effective execution. Selected recommendations specified in the new Policy include the follo\.\~ • liberalize the telecommunications sector fully so that the telecommunications sector is open to new operators without restrictions, except where radio spectrum limits the number of operators (Section 4.4). • Introduce a multi-service and multi-operator environment so that any operator can offer any service and each serv"ice can be obtained from a number of operators. The only restrictions shall pertain to serv"ices that reguire access to radio spectrum. Operators are allowed to resell services (Section 5.4.1). • Introduce an Open licensing regime, in which new licensing methods are applied to open the sector to new operators in a transparent manner that creates a level playing field (Section 4.5). • Commercialize and privatize the incumbent, NTC and reduce the Government's ownership. NTC v.1ll be converted to a company, restructured to meet increasing competition, and the Govemment is expected to eventually sell down its position (Section 4.10 and 5.10.3). • Promote private sector participation in operation of telecommunications. The Govemment Ministry of Infonnation and Communications and NTA are directed to keep the private sector informed of sector reform development and licensing opportunities in a transparent manner (Section 4.6). • Introduce new mobile operators through tenders on the basis of maximum rural coverage which will define commercial coverage without subsidies (Section 5.1.1). Two new mobile licenses are expected to be awarded by late 2004 or early 2005. The World Bank has agreed to provide a 98 technical assistance grant to draft the tender documents. Solicitation and selection of consultants is expected in the spring/early summer 2004. • The Government will purchase services from several operators based on price and quality assessments to demonstrate its commitment to market liberalization, rather than obtain services from the incumbent (Section 5.4.6). Other key strategic provisions not explicitly stated in the Policy include: • Radio spectrum will be awarded through allocation, not auction. The Government is mindful of avoiding the pitfalls other countries have pursued with crippling frequency charges. It prefers to ensure that scarce investment capital is reinvested directly into the sector. • Spectrum fees, in the form of a revenue share, are slated to be modest and intended only to cover the operating costs of the regulator, NTA. • Nepal is pursuing a technology neutral regulatory regime. No restrictions will be placed on mobility services in the 800/1800 "MHz bands, that is, there will be no requirement to resttict the potential of CDMA technology based on artificial constraints. WB Related leT Initiatives The latest Country Assessment Strategy (CAS) for Nepal was discussed on December 13, 1998 and a Country Assistance Strategy Progress Report was discussed on December 19, 2002. With the aim of reducing poverty and improving critical public services, the recently adopted Poverty Reduction Strategy (FRS) is built around four pillars, including broad -based economic growth, social sector development, social inclusion and good governance. In implementing it, the PRS stresses decentralization, rationalization of central government functions and transparency. The overall objective of CAS is to accelerate the reform actions embodied in the PRS, in particular those dealing with greater decentralization. Given the risks of politics getting in the way of reforms, the Bank will continue to maintain sharply differentiated lending levels linked to progress on reform implementation. This would be essential not only for rebuilding the people's confidence in the state, but also for making meaningful progress toward poverty reduction and achieving the Millennium Development Goals (L\IDGs). Although the Country Assessment Strategy highlights lCT as a useful tool for overcoming some of the major constraints to development, including poor governance, economic weaknesses, poor public expenditure management, ineffective public service delivery and a weak financial sector, it is not central to the Bank's program except through the Telecom Sector Reform Project. Similarly PRSC makes references to the important role and impact of ICT, however not enough to include it as one of the main pillars of the overall strategy. There are very few references to sector applications. The World Bank Group's operations in Nepal began in 1969 with a credit for a telecommunications project from the International Development Association (IDA), the World Bank's concessionary lending affiliate. Since then, the World Bank has approved 79 projects \vith a cumulative total of around $1.6 billion. Active credits total $341 million as of April 2004, of which the IT sector includes $22.6M contributed to the telecom sector reform project which is intending to support the ongoing reform process by managing the radio spectrum, assisting the Nepal Telecommunications Authority to establish itself as an independent and effective regulator, and enabling private provision of 99 telecommunication infrastructure and services in rural areas, and access to ICT services and applications through the establishment of telecenters.>4 Both CAS/PRS note the importance of increasing the percentage of population with access to telecom services to all VDCs. The importance of enhancing the farmer's group based technology dissemination, improved reporting, and review system is also noted. PRS recommends the development of a national GIS and land management information system to help develop effecti\"e land management. There are plans to deploy MIS in 25 districts as part of the fiscal and administrative decentralization agendas. A number of projects in various sectors encompass some form of ICT intervention including MIS- based systems in financial and health sectors, modernization and improved service delivery in Dept. of Roads; GIS-based system for rural access planning, and capacity building in agriculture. Other leT initiatives Private Sector Initiatives IT industry turnover in 2002 was estimated to be $35 million, with hardware accounting for 70% of that, followed by education/training at 17%. There are 1000 IT training institutes, 16 ISPs, 200 software and hardware vendors, over 200 IT services firms and 74 software developers. NGO & Donor Initiatives The following is a brief summary of the nature of the ICT development work that has been commissioned by the various NGO and donor organizations in the country. • UNDP and the government have identified the concept of telecenters, or Rural Information Centres (RIC), as the mode for widespread ICT access. A national pilot scheme for around 15 rural tde-centers is being executed by the government and supported by UNDP. Another rural telecentre project that is an extension of the Nepal component of UNDP's South Asia Poverty Alleviation Program (SAPAP), which has been conducting social mobilization for poverty alleviation among the rural population in one district in Nepal. An additional US$3 million is allocated under the Telecommunications Sector Reform Project to provide community access to ICT services and applications Through a telecenter approach. • In addition to the W orId Bank several other International organizations and donor agencies have taken part in the financing of about 46 ongoing or completed communications sector related activities in the past few years. These organizations include Australian Development Agency, DANIDA, ITU, DFID, JAMP, IDRC, United Nations Population Fund Potential Areas for Future Involvement Telecom Infrastructure - A major challenge for the Government of Nepal is to promote development through the provision of an appropriate level of infrastructure especially to the country's rural areas. This is vital if Nepal is to move into information society and provide appropriate ICTs for users in the rural areas. Improved telecom infrastructure will enable JCT for development activities with increased and reliable connectivity, content, and access for government 34 Project Appraisal Document - Telecommunications Sector Reform Project 100 agencies and public service providers specifically in agriculture, health, education. There is scope for bank intervention in this area. Cross Sector ICT applications - In Nepal, IDA can make substantial contributions by way of ICT interventions in specific sectors and cross sector initiatives. Projects such as Private Sector Support Project, Agricultural Commercialization and Trade, Higher Education Project, Rural Access Improvement, Nepal Second Poverty Reduction SuPPOtt, Nepal Health Sector Program, Higher Secondary Education can benefit from the inclusion of lCT-based components and interventions for both the administration and management of the respective ministry and! or the delivery of services within the given sector to the targeted population. E-Govemance Develop a roadmap with lCT projects prioritized and planned properly. Specifically, information systems including financial management systems (i.e., budgeting, accounting), human resource management, land management, planning and project management, records and case load management, and land management should be incorporated. The road map should factor in resource implications and realistic timetables; Key Contacts and Organizations Ministry of Information and Communications Nepal Telecommunications Corporation URL: http://www.moic.gov.npJ URL: http://www.ntc.netnp/ e-mail: moichmg@ntc.net.np Nepal Telecommunications Authority Computer Association of Nepal URL: http://www.nta.QOv.np/ URL: http://www.can.org.np/ e-mail: info@nta.gov.np e-mail: info@Can.org.np Table ofKey Documents Telecommunications Nepal Telecommunications Policy, 2004 Nepal Telecom Brief. Network Dynamics Associates, 2004 leT Strategy Information Technology Policy. 2002 National Development Plans The 10th National Plan, 2002 101 Overall Country Assessment for Nepal Education & Skilled Labor Infrastructure & Connectivity Legal & Regulatory Framework • Literacy Rate: 44% • Illiteracy rate in rural areas higher • Only around 15% of the population has access to electricity • The first National Communications Policy was adopted in 1992 and updated in 1999 1"\ • Over 3.4 million children enrolled in 23,000 • There were 13 telephones per 1,000 (2001) • New Telecommunications Policy adopted in l: 2004 III primary schools • There were 3.5 computers per 1,000 (2001) E ", • 360,000 students in about 3,300 secondary • Number of internet users stood at 60,000 (2001) • Telecommunications Act was passed by ", III schools • Number of radios and televisions per 1,000 Parliament in 1997, establishing the Nepal III • Over 80,000 students enrolled at the tertiary stood at 39 & 8 respectively (2001) Telecommunications Authority (NTA) and a ~ level Radio Frequency Policy Determination • 161SPs l: • Access and quality of education remains poor. Committee ~ :::l • Computer courses are offered in 200 schools, 4 • Political instability and insurgency has derailed f.) IT related universities and 1000 training many of the initiative institutes with overall enrollment capacity of • Entrenched institutional resistance to reform has 5000. also slowed down many of the reforms. • 1200 hiah level IT professionals th • The 10 Plan strongly emphasizes education as • Electrification of rural areas is one of the top • Liberalize the telecommunications sector fully the primary means for all-round development. priorities in the infrastructure development goals • Introduce a multi-service and mUlti-operator • Steps to Increase enrolment rates in both of the govemment. environment as to extend services in a ", primary and secondary education and keeping • Fixed line and GSM connections are being competitive manner the drop out rates low. added rapidly • Introduce an Open Licensing regime ~ i • Introduction of technical and vocational training • NTC is in the second year of a $325 million • Commercialize and privatize the incumbent, NTC ;: in high schools. capital expansion program (2002 - 2007). and reduce the Government's ownership :5 ... • Expansion of the scope and reach of technical • NTC is currently constructing an East-West fiber • Promote private sector participation in operation c and vocational training. route which will establish the first terrestrial of telecommunications ~ :::l • Expansion of the Tribhuvan University. intemational connectivity via China • Introduce new mobile operators through tenders f.) • Development of Open University and regional on the basis of maximum rural coverage which universities. will define commercial coverage without subsidies • Ongoing WB assistance through a number of • WB is already involved in rural electrification • Telecommunications Sector Reform Project ongoing projects with particular emphasis on projects. supported by the WB. primary and secondary education with the view • Support for rural access initiatives, particularly to expand enrolment of girls and other for electricity and telephony. ~ disadvantaged groups and keeping the retention • Opportunity to develop public access centers in :::l :;1: 1.1..111 rates high. rural communities. .. E • Continued support for incorporating IT into o > ... III school administration and teaching - particularly !g c C in the secondary education and in rural areas. • Support in the area of IT training as part of QI- a Q. vocational and technical education. 102 4.7 Pakistan Introduction Although current socio-economic indicators for Pakistan are among the worst in the world, the country's performance in meeting its development and poverty reduction objectives has been improving since the beginning of the new millennium. Real GDP gro'W1:h consistently increased from 2.2% to 5.1% between 2000 and 2003 respectively. A lot of this is attributed to its ongoing reform program targeted at improving the quality of governance, human development, and the business climate to facilitate broad-based economic growth. Yet, to reduce poverty significantly in a manner that will yield positive benefits for economic and social transformation, research shows that Pakistan needs to maintain an annual GDP growth rate of about 5-6% or higher. Achieving this pace of growth will require significant increases in current productivity levels in both the public and private sectors of the economy. Increasing productivity requires that Pakistan overcome a number of practical development challenges. Among others, the public sector needs to facilitate improvements in the funding, delivery, and quality of public and social services (like education, health, rural water supply, sanitation), infrastructure and related senrices (like transport, communication, irrigation and drainage, power, etc), without crowding out private sector involvement. Government needs to facilitate improvements in the financial sector through mechanisms that increase transparency, independence and performance of banks. In addition, the establishment of appropriate tools and governance systems that will facilitate better regulatory and macroeconomic oversight is also necessary. And, the need to implement support programs that will assist the transformation of local firms and farmers into globally competitive entities that can create more and better jobs for the people of Pakistan cannot be overemphasized. The government's strategies for implementing various activities that will help address some of these challenges are outlined in Pakistan Interim Poverty Reduction Strategy Paper (l-PRSP, November 2001). The I-PRSP (2001) underscores the usefulness and imporrance of information and communication technologies (leTs) in improving national productivity to address development priorities. The government believes leTs can contribute to growth by helping to build competitive markets, facilitate private sector development, create employment, and improve export earnings. To this end, a national IT policy and Action Plan was developed in 2000. The IT Policy outlines Pakistan's vision and approaches for harnessing the potential of information technology to achieve its development objectives. Not only does Plan focus on investments in adequate infrastructure, human resources, and appropriate legal and regulatory environment as pre-requisites for broad-based leT development, it also advocates the development of the local IT industry as a grO\vth sector, exporting IT equipment and services (e.g. outsourcing) abroad. Perhaps most importantly, while the development of the leT sector itself may be useful in creating jobs and export earnings, the Plan also advocates the integration and use of IT applications to facilitate trade (e.g. the efficiency of customs, transportation, and ports management), improve the environment, enhance quality of national education and health services delivery, as well as a whole range of government and social services in all sectors of the economy (e.g. in rural communities). This is likely to be one area where action will have a high rate of return. 103 Overall Country Assessment Exploiting the benefits of leTs for development also comes viith some challenges. leT programs require lots of planning and investment. Making the right choices of technology, pricing and deployment strategies for leT applications that will benefit the poor can be difficult, and failure rates can be high, especially for large-scale projects. Thus in pursuing leT development initiatives, one must first consider whether enough critical mass of resources, people and infrastructure exist that can make such an initiative feasible. There are at least 5 e-readiness assessments that have examined Pakistan's ability to make use of ICTs in all sectors of the economy. One of them is the Knowledge Assessment Methodolog)~ (KA:"f) database created by World Bank Institute. A summary of the some basic 2003 K.A.M indicators for Pakistan is provided in the Table 1 below. Table 1: Comparative Analysis of High Level Development Indicators Paki~an ijSA Average AnnualGDP 3.50 5.10 3.30 5.40 4.16 3.28 2.16 3.00 growth(%) Human Development 0.50 0.50 0.73 0.59 0.56 0.77 0.93 0.94 Index Adult literacy rate (% age 15 47.10 42,00 91.90 58.00 56.34 93.10 99.79 100.00 and.above) Secondary 24.13 45,73 72.12 48.70 48.26 74.28 108.48 95.16 enrollment Ternary 3.55 6.61 5.32 10.49 6.12 30.85 55.66 72.62 enrollment Telephones per 1,000 30.40 13.20 95.80 52.00 41.28 667.02 1256.37 1147.00 (mainlines + mobiles) Computers 4.10 3.40 13.20 5.80 6.00 188.76 405.36 625.00 per 1,000 Internet.users 34.49 15.32 105.56 159.14 68.18 2165.00 4164.92 5375.06 per 10,000 The assessment shows all of Pakistan's e-readiness indicators to be below the regional average, as well as those in Latin America and East Asia. In particular, access to leT infrastructure and services (telephones and internet) is about 2 times as worse in Pakistan that it is in the Middle East and North Africa, about 3 times as worse when compared to Latin America, and 4 times worse than in East Asia. These results are comparable to the new EIU e-readiness rankings (2004) that place Pakistan, behind India and Sri Lanka 3 5, in the bottom percentile of e-ready countries in the world, and the least e-ready within the Asia-Pacific region. Only 4 computers and 30 phone (main + mobile) lines are available per 1000 persons, compared to Sri Lanka with 95 phone lines and 13 computers. Use of the Internet is estimated at 34 users per 10,000 compared to 150 in Sri Lanka, 159 in India, 570 in Latin America, and 2165 in East Asia, and 4,165 among G7 countries. Detailed comparative indicators are provided in Annex 1. 35 India and Sri Lanka have income levels similar to that of Pakistan 104 It is clear that Pakistan faces significant challenges in using ICT for development, especially in the following 3 broad areas (1) Access to adequate ICT infrastructure, including the affordability and quality of hardware, software, and support services (2) Literate population and IT savvy labor force, (3) Public policy, including the legal and regulatory framework governing the telecommunication, IT and other industries. However, the comparative nature of these assessments appears to have obscured the fact that adult literacy rate has increased by over 46 percent since the last 15 years, and enrolment ratios for primary education have increased by 19 percent and for secondary education by 62 percent in the last 2 decades. Perhaps more importantly, real improvements have been made in strengthening the country's ICT architecture in the last 3-5 years. A summary of these improvements and challenges in the last few years are provided below. Education & Skilled Ltlbor A literate population and an IT savvy workforce are very important factors, both for ICT development, and in the use of ICT for de,-elopment. Illiteracy hinders the ability for people to transform information into knowledge that will help them profit from the access and use of such information. The usefulness of the Internet, much more than the telephone, depends on the ability of users to, at least, be able to read. Particularly for Pakistan, with a population of about 150 million people, 53% percent of which are illiterate and about 70% are living in rural areas, achieving higher productivity growth through the use of ICTs is a big challenge. Less than 25{Yo of the youth enroll in secondary schools, less than 4% sign up for a tertiary level degree, and the human development index is generally lower than the average in the South j\sia region. The quality of education has also depreciated over time, and there is a misalignment between the skills of graduates and labor demand. To address the situation, the government has developed an Education Sector Reforms Action Plan 2001-2004 (ESRP 2001-4). One of the main thrusts of this plan is to implement a National Literacy Campaign targeted at improving literacy rate and access to primary education. The government also plans to provide education to 13.5 million males & females (10+ age group), hereby increasing the literacy rate from 47% to 62% during 2001-2004, and to 86% within 15 years. i\mong others, the ESRP 2001-4 promotes the incorporation ofICTs into the learning process, and the establishment of smart public-private partnerships that will help improve the quality, management and sustainability of educational programs. For example, the establishment and use of videotext books and libraries that will ease accessibility of educational materials to rural areas is ongoing. There are also plans to improve the standards of secondary education especially in science and math subjects; and the use of ICTs for extending basic education to remote and unconnected populations (see page 43-44, I-PRSP 2002). Private provision of computer studies has also been introduced in government colleges 36 • For example, the NWFP engaged private firms to provide computer education in 39 schools. About 51 % (of universities and professional institutions have computers, and about 10% of the over 9000 secondary schools have computer labs (pGPR 2001, ESRP 2001-4). However, these computers are used mainly to teach basic skills. Moreover, a vast majority of schools do not have computers, especially in rural areas. The rapid grmvth in access to ICT infrastructure and services has increased demand for IT-related skills in the job market. Yet, the IT industry suffers from a severe shortage in IT faculty and emigration of experienced IT professionals. This has undermined the quality and availability of the IT workforce that can sustain the use of ICT for socio-economic development. In response, government is: • Stepping-up programs designed to empower various segments of the labor force with relevant IT skills through various computer literacy and vocational programs, 36Punjab, Sindh and NWFP have made progress at incorporating computer courses at secondary and higher secondary level through private sector initiatives 105 • Facilitating the establishment of a National Accreditation Council and Testing Service to develop curricula and testing guidelines for IT education and training, • Recruiting faculty from abroad and training local faculty, to enhance quality of teaching and education • Creating a wide-band Intranet system with centralized data warehouse containing teaching and research material to foster resource sharing through video-conferencing and distance learning; • Strengthening IT institutes and promoting the establishment of IT labs; and the establishment of a virtual university. The use and impact of ICTs to the everyday life of the average person is still minimal in Pakistan. The perceived value of the use of ICTs to the average individual is still small. The use of ICTs to help address core problems facing rural areas is still very limited. This may be due perhaps to the low level of local content, literacy levels, or limitations in technological capabilities and penetration levels in these areas. However, software packages geared towards local needs are gradually being developed (e.g. Urdu word processors, accounting programs, and different databases and web-authoring programs developed by of Pak Data). The development of E-commerce is still embryonic mainly due to lack of legal and financial infrastructure. As a result, businesses have not fully realized the value of ICTs in improving the business or productivity levels. However, the financial sector has realized gains from costs savings linked to a shift to electronic banking and the use of ATMs. E-government perhaps is another arena where the perceived value of ICT is likely to increase rapidly. Many government ministries already have websites, and are at yarious leyels of automation of their internal processes and information procedures to promote greater public sector transparency and accountability. Intrastruewre & Co/meedvit:v Availability of information infrastructure is a minimum requirement for ICT development. Likewise, the development of physical infrastructure and dependable systems, such as postal, energy (including electricity, water), and transportation facilities, is a necessary compliment to the use of ICT for development. Put together, these systems are the building blocks \vith which any country achieves efficient national and global connectivity between resources, people, and markets. Pakistan's Interim Poverty Reduction Strategy (I-PRSP 2001) stresses the need to redress the shortage and inefficiencies of communication infrastructure in the country, including roads, railways, and aviation. To this end, a National Transport Policy has been developed, and if properly implemented, associated financial benefits could be high. Reforms in the railway sector alone, for example, are expected to be about Rs 1 billion. Likewise, power generation capacity has also increased in recent years, due to increased foreign investment in this sector. This has led to a reduction in power shortages. However, due to poor quality of infrastructure and theft of power equipment and lines, still results in transmission losses of up to 30%. Much of Pakistan's rural areas still do not have access to stable electric power, and less than half of the population is connected to the national grid. In response to this, the government has encouraged private sector involvement in generation and transmission of power, and the Karachi Electricity Supply Corporation has been restructured to improve service delivery and minimize losses. Improving access to IT infrastructure and services and harnessing its potential, has become one of the government's highest priorities. The penetration of telephones, and Internet access, has been the overarching goal. Since 1998, a number of Government initiatives have been implemented to improve access. An Internet Infrastructure Project was implemented between 1998 and 2000, to expand Internet access to about 500,000 users in over 90 districts in the country. A Public Sector 106 Development Program was also implemented between 1999-2000, which included a component targeted at providing about 300,000 new Internet connections to the main districts in the country. These programs were designed to help increase national penetration rates of the telephone and Internet. According to the Pakistan Gateway Project Report (pGPR 2001), wireless subscribers have grown at the annual rate of approximately 50~/o since the last 3 years. Double-digit growth rates have also been obselyed for wireless; Internet connections and cafes, and bandwidth in the last 2 years. Pakistan has also initiated progress in access to cable television due to the increased award of licenses to ISPs, cable TV operators and other telecommunications service providers. However, these services are still heavily concentrated in major urban centers, such as Karachi, Lahore, and Islamabad. For example, nearly all of the 150 different ISPs operating in 2001 were limited to major cities, especially around the Indus Rover Valley. And, most of the estimated 825 Internet cafes at the time were located in five major cities. Currently, according to the government's Telecom Status Report (2002-3), over 1700 cities and town how have access to ISPs, and subscriptions have increased to almost 1 million. Almost all the 200 cities in the country, including some rural areas, now have Internet cafes. The Telecom Status Report also suggests that over 1 million telephone lines were added between 2002 and March 20003 alone. In 1996, there were only 2.366 million access lines in service. But, by the end of June 2003 these had increased to 3.912 million. As a result, teledensity is believed to have improved by 54 percent within the last 10 years. With the introduction of a better competitive regime in 2001, subscribers to mobile phones increased from 0.2 million in 1999 to about 1.2 million in 2002, and to 3.4 million by December 2003. However, service is still not available to most of the population, especially in rural areas. The report shows that only 0.76% of the rural population's basic telephony needs have been met (16,549 villages). Internet affordability is also believed to have improved. Subscription costs have dropped significantly in the last 3-5 years. This is closely associated with the drop in Internet bandwidth rates that have been facilitated by more liberal government policies. Prices of computer hardware and software have also dropped significantly, and off shelf availability has increased. One estimate puts this at 300% between 1999 and 2001. The quality of telephone services has also improved. The 2001 PGPR points out that between 70-90<;/0 of telephone calls were successful, and one estimate suggests that fewer than 50 faults are reported per year for each 100 mainlines. However, in general, afford ability is still limited to a few segments of the population - predominantly the middle and upper class, and a lot still needs to be done to improve IT infrastructure and affordability for rural populations. Lastly, the PTA Telecom Report also highlights that the Quality of Service (QoS) is not as good as expected. PTA tracks QoS using data on new telephone connections, shifting of telephones, billing errors, complaints, faults and interruptions. This is perhaps an area where increased competition will yield additional benefits, and safeguard the interests of consumers. Legal and Regulatory Policy Promoting a competitive environment in the provision of telecommunications infrastructure and services is the vehicle with which Pakistan can rapidly and efficiently improve access to, and use of ICTs. Since the establishment of the Pakistan Telecommunication Authority (PTA) in 1996, the setting up of the Information Technology Commission in 1997, the ICT regulatory environment in Pakistan has changed considerably. There is now a Ministry of Information Technology and Telecommunications (MITT), which addresses policy issues in the ICT sector, hereby giving the PTA more autonomy to address issues within the telecommunications sector itself. 107 In 2003, a deregulation policy was approved for full liberalization of the local loop (LL) and long distance and international (LDI) markets. This policy was tatgeted at improving IT infrastructure, competition in service provision, and increased access to rural communities. This was followed by a new mobile policy in 2004 to ptomote competition on this market. Now, The telecommunications sector is already fully liberalized and de-regulated, except for the defacto monopoly of Pakistan Telecommunication From this perspective, government's priorities are to (1) improve performance of the sector by facilitating the entry of new private operators, to the competitive environment; (2) facilitate higher cellular penetration levels (rural access); and (3) improve institutional capacity of the MITT, PTA, and the Frequency Allocation Board (FAB) for policy making and enforcement (especially in implementing a better interconnection regime, competition policy, and promoting universal access). Specific activities that may be hnked to this include the design and establishment of a Universal Service Fund, restructuring and privatization of PTCL, and development of a general competition policy and legislation to prevent anti-competitive practices in the area of interconnection, licensing, and tariffs. (Telecom Sector Strategy Brief, GICT, World Bank Group). Regarding ICTs, the government announced a National ICT Policy and Action Plan in 2000, laying the grounds for the deregulation of ICT sector, and private sector participation. The Action Plan documents government's focus on the integration of ICTs into all sectors of the economy, to help meet the country's development objectives. The Plan calls for the training of an IT workforce, Internet for education program, universal internet access, development of IT parks, and activities in e-commerce development and trade facilitation. And the development of smart public-private partnerships to promote extensive use of IT applications in "trade, industry, homes, agriculture, education, health, and other sectors" is one of the main goals of Pakistan's IT Policy. Associated policy areas under consideration also include the reduction of barriers to trade (e.g. tariffs) on ICT equipment, software and electronically ordered goods and services. This can help make software and hardware more affordable. Overall Economic Development Objectives for Pakistan For many countries, the importance attached to ICT development lies in the promise it offers as an effective tool that can help to "leapfrog", and to accomplish their economic development objectives in a cost-effective manner. In Pakistan, where the absorption of ICTs into everyday life is still embryonic, it would be useful to consider uses of ICT in a broader sense, and think through ways in which they can be applied beneficially to reahze positive outcomes of programs designed to help meet a country's development objectives. Pakistan's socio-economic developments priorities involve 5 main priorities (I-PRSP 2001): (1) Engendering growth - restore and maintain rapid and broad-based economic grO\vth by • Stabilization - achieve GDP gro'Ww targets at 5%, reduce fiscal and current account deficit, maintain inflation target at 5%, increase investments to 16.5% of GDP, and attain real grO\vth to 52% in the medium term • Tax Reforms to increase ta.'5( balances upwards of 13% of GDP, and implement improvements in public expenditure management and oversight • Maintain prudent monetary policy, exchange rate stability, and disciplined debt management • Widen export base through revival of industrial activity through export promotion and import liberahzation measures 108 (2) Enabling investment climate to sustain private sector activity and investment across sectors • Agriculture: move to\vards market-based prices consistent witb the interest of fatmers, improve water management and pricing to maximize water sa\;'ngs, raise per unit yields and increase production of high value crops, and increase flow of credit to tbe sector • Manufacturing - improve managerial, technical, and infotmational support for Sl\ills • Complete tbe refonn of financial/ capital markets, including tbe privatization programs • Infrastructure Address shortages in communications infrastructure, including the transport sector (aviation, railways, and roads) • Energy, Oil and Gas - Create more competitive markets in tbe power sector, and encourage tbe use of alternative fuels for power generation. • Telecommunications and IT - Develop and expand tbe telecommunication and ICT sector and infrastructure, achieve greater penetration of voice and internet communication, develop stronger base of IT professionals and an IT saYV"1' workforce, encourage software el\.70rts (3) Improving the effectiveness of governance and accountability of state institutions. • Devolution of power to increase transparency and accountability of public sector administrative operations. • Civil service refonns to enhance professionalism, reduce corruption, and improve service otientation • Judicial refonn to improve governance and administration, improve case management procedures, court fotmation systems and human resources (4) Creating income generating opportunities and protecting the vulnerable • Improve access to credit and creating assets for tbe poor (housing and land) • Eliminate discrimination of women and disabled, and address child labor issues (5) Accelerating human development • Education implement tbe Education Sector Refotms Action Plan 2001-2004 to attain 100% literacy tbrough universal primary education for fotmal and non-fonnal systems, redressing under-investment in education quality tbrough tbe implementation of tbe National Education System Assessment (NEAS) • Healtb shift from curative approaches into more preventive and control programs targeted at communicable and infectious diseases, strengthening primary healtb care tbrough smart public-private relationships, improving healtb staff training, improve water supply and sanitation services in rural areas • Nutrition - Take steps to correct tbe situation of estimate 8 million Pakistani children suffering from malnutrition Government Related leT Initiatives Several ICT initiatives already penneate different programmatic initiarives of tbe government. For example, the I-PRSP (2001) points out that 18 projects have been launched to produce large number of IT professionals ranging from blue collar IT workers to skilled academic degree holders. Other initiatives include tbe establishment of COMSATS Institute of IT, launch of Islamabad Software Technology Park, reduction of PTCL bandwidtb charges by 98%, promoting tbe growtb of new products in the venture capital markets especially to support IT start-ups. As part of promotion of a 109 -leT public-private partnership strategy, the government has established joint ventures and other smart relationships with private parties, including NGOs, to set up cyber cafes at airports, post offices, and selected gas stations in the country. E-government is another area of emerging activity. An e-government program is has been launched with the establishment of the Electronic Government Directorate (EGD) in October 2002, to improve the efficiency of government services, generate market for local software development, and provide standards for software and infrastructure in related fields. A total of 5 projects have been implemented, including a "Citizens On-line Project", automation of salary disbursements through Automated Teller Machines, a survey of Federal Departments hardware and network connection requirements. Four other projects namely: E-Communication and U\N at PJ\f secretariat, Lexicon, Machine translation and Text-to-Speech in Urdu, and the Service Web Portal upgrades are ongoing (Telecommunication Annual Report 2002-3). The EGD also launched a special FOR.\IS.GOV project designed to provide an integrated one-stop shop for all 450 government official forms. As part of this, a plan to develop web pages for each 'Ministry/Division is also in the works, and considerations are underway for the computerization of Human Resource Management processes in the civil service to improve its professionalism and service delivery capabilities. The use of ICT in tax assessment is also being explored, together with online dissemination of government expenditures. The modernization and computerizations of accounting systems of government agencies are also underway, including automation of court information systems. ICT are also being used in the delivery of education services for reaching ESR targets; and private firms are now engaged in the delivery of computer education and literacy programs (e.g. the NW'FP government's current program). And regarding rural development, Rs 1 Billion has been allocated under the IT component of the l(busal Pakistan Program, to deliver rural-based vocational training in computers, including through the use of distance learning models. WB Related leT Initiatives The thrusts of the World Bank's Country Assistance Strategy (CAS) for Pakistan (FY03-05) coincide v.rith the main program areas outlined by the government in the I-PRSP. The CAS proposes a programmatic support in 3 main priority areas: (1) Strengthening macroeconomic stability and effectiveness of government, (2) Supporting improvements in the investment climate through initiatives that "\\;n create a conducive emrironment for private sector development (3) Supporting pro-poor and pro-gender equity policies through the promotion of basic education and health for all, better rural infrastructure, and gender policies. The CAS also highlights the importance of ICT related initiatives in achieving Pakistan's development goals, and advocates the promotion of private sector involvement in telecom, and power sectors through IFC support in the area of infrastructure financing and investment lending, technical assistance on privatization issues (e.g. Faisalabad Electric Supply Company), and better functioning of the power distribution industry. The WBG software development project in Karachi is one of such new initiatives outlined in the CAS. Through the Improvement to Financial Reporting and Auditing Project (PIFRA) , the Bank also supported the modernization of accounting and payment systems to improve transparency and accountability in key institutions and district governments involved in public fInance management. Other examples of projects with ICT components currently being implemented, or under development by the Bank include: 110 Hl11Ilan DL'l'dopnlL'nt A National Educatiol1 Assessment Prqject was approved in May 2003. The project will support the design and administration of new educational assessment mechanisms; establish administrative infrastructure, and increase stakeholder knowledge and acceptance of education assessment techniques. Short-term technical assistance and training will be provided to develop local capacity for curriculum design, and instruction, on-line/ on-demand technical support services etc. Training will include skills areas such as "the use and application of IT in assessment". The project will also support the acquisition of computers and optical scanners to be used for a pilot the first phase of assessment mechanisms developed. AJK Comtmmit), Infrastructure S ertJices Project was approved in May 2002. The project's objective is to improve well being of unserved and underserved low income communities through delivery of cost effective and sustainable community development schemes and basic infrastructure services, using participatory community-based approaches. Assistance under this project includes support for procurement of computer equipment and requisite software and multimedia equipment to enhance the capacity of state, district/tehsil staff and communities including other partners such as NGOs, implement their decentralized planning and implementation activities. The project also supports investments in infrastructure and serdces, within priorities that are established in consultation with community-based organizations. Demand from these organizations may (or may not) include ICT initiatives. Sindh onjarm W'ater Management Pro/ect was approved in March 2004. The project objective is to improve irrigation water efficiency and management in tertiary level irrigation systems and on member farm fields, to increase agricultural productivity and farm incomes. As part of Activities under this project, ICTs will be used to manage the water resources and disseminate information on the availability of water in various parts of the irrigation system. A spatial database will be established as one of the tools for monitoring and evaluation of irrigation systems. Strengthening .A/aero-economic Stabili~v and Public Sector Effectiveness Public Sector Capacity Building Pro/eet was approved April 2004. The project is expected to support improvements in the overall quality of policy formulation, reform implementation, service delivery, and human resource management of the public sector. Among others activities, the project will provide support to foster professional development in institutions through the use of better infrastructure and IT connectivity to improve in-country training capacity. For example, assistance will be provided to the Federal Public Service Commission (FSPC) to enhance the civil service recruitment process and to automate and computerize relevant organizational processes. To strengthen capacity for economic policymaking and management, the project will assist the Central Board of Revenue to develop a Sales Tax Automated Refund Repository - a central database that will allow online verification of the documents for refunding claims from the automated sales tax refund program. Infrastructure and IT support will also be provided to the Ministry of Trade and Commerce and the ~inistry of Finance, to improve their business and monitoring processes. A data celli digital library would be set up for Ministry of Commerce. This would provide the needed backup support essential research and analysis activity. A Human Resource Management Information System ",rill be developed for Establishment Division to facilitate better planning at all levels. The project will also support improvements in the Management Information Systems (MIS) for Economic Affairs Division, and facilitate the development of a comprehensive l\.1IS for monitoring 111 public procurement, and enhance the skills and knowledge of technical staff at Federal Bureau of Statistics through enhanced IT support. Ta:>..' Administration Refomls Prq;ect is also in the pipeline. The objective of this project IS to fundamentally improve the Central Board of Reyenue for a more efficient and effective revenue administration system. The project will support the use of IT to improve the effectiveness of several functions linked to management of direct taxes. Organizational units involved in administration of direct taxes will be provided with appropriate hardware, system software and network and development of taxpayer registration system; income tax information processing and accounting system; case tracking system for collection/ enforcement; and computerized audit selection system. Also, sales tax information and communications system would be developed to process and reconcile a filed sales tax return. Audit functions of the CBR will be strengthened and audit parameters will be embedded in MIS, allowing the system to identify returns/filings for further scrutiny. IT will also be used for human resource management. The Internet will be used to improve communication between CBR and taxpayers as well as within CBR. Call centers will be established to facilitate taxpayer contact through e-mail, letters, faxes and telephone calls. IT will be used for taxpayer identification and registration, and will also be the basis of quality assurance and monitoring. Priv,lte Sector Developrnel1t Banking Sector Technical Assistance Pro/ectwas approved in May 1999. The project was designed to assist State Bank of Pakistan (SBP) in its restructuring program of transforming itself into a highly professional, efficient, and modern institution. The project is supporting the implementation completion of the automation of SBP processes. Installation of the base IT infrastructure has already been completed. In addition, deployment of a Banking Solution (Globus), ERP package (Oracle Financials) and data warehouse are being implemented. Change management initiatives are also being implemented to help SBP become fully prepared to make effective use of these new systems. Enhancements in existing computer systems for monitoring and record keeping are being implemented to improve the capability of SBP and associated organizations in these areas. The project is also helping to strengthen the national payments system by facilitating the acquisition and implementation of a comprehensive and robust RTGS system, and training of SBP and commercial banks' operations, IT and treasury personnel. The project is financing procurement of services of a dedicated project manager and other advisory assistance during system implementation, educational visits of SBP personnel to other advanced central banks using the RTGS, and specialist legal advice in establishing an appropriate legal infrastructure for the new system. All these activities will help SBP to provide a model 1 delivery versus payment (DvP) capability for secondary market trading in government securities as well as robust vehicle to provide a repo based intra-day liquidity to RTGS participants. The Credit Information Bureau (CIB) is being strengthened through IT initiatives targeted at improving the technical platform to provide a basis for an on-line secure connectivity with which users of can make optimum use of the system. Highwt!)is Rehabilitation Project was approved in November 2003 to support sustainable delivery of a productive and efficient national highway network that will help reduce costs of transportation. This project consists of an institutional and policy development component that will implement a business process re- engineering and corporate strengthening program to reposition National Highway Agency (NHA) for progressive commercialization. Specific activities here are targeted at creating an effective IT-enabled business environment in NHA through software procurement, computer hardware and networking procurement, etc. The project will also support development of improved road asset management system, and accident recording systems, and provide computer hardware and software for accident recording and analysis, and GPS equipment to facilitate identification of accident locations. 112 Potential Areas for Future Involvement Private Sector IT Industry Study: Given the importance the government has placed on facilitating the growth of the leT sector, there may be an opportunity for the Bank provide technical assistance in identifying specific programs the government can adopt in order to achieve its goals with this regard. Secondary School IT Project The government's ambitious goal to achieve 100% literacy through universal primary education, may be furthered by an Primary and Secondary School IT project that would connect primary and secondary schools to the internet and provide them with much needed computer equipment that would allow them access to much greater information and learning opportunities. E-Govemment Support: The Electronic Government Directorate outlines specific programs and strategies the government is interested in pursuing and there may be an opportunity for the Bank to assist with this regard. Rural Development Initiatives Based on basic infrastructure assessments on Pakistan, it is clear that there is a great need for better infrastructure connectivity particularly in the rural areas. Pakistan ranks amongst the lowest in the region in this regard, and it is particularly significant issue given the size of the Pakistan population. The government has already made significant progress with this regard, however this is still room for significant improvements. Key Contacts and Organizations Ministry of Information Technology Pakistan Telecommunication Company Umited URL: http://v..rww.pakistan.gov.pkimoittlindex.jsp URL: httg:/fv..rww.ptd.com.pki e-mail: gmpr@ptd.com.pk Pakistan Telecommunication Authority Pakistan Software Export Board URL: httg:/lwww.nta.gov.ok/ URL: htto:IIVIIWW.pseb.om.pkiitindustryJ e-mail: ahmedkamal@pta.gov.pk e-mail: Info@pseb.org.pk TabJe ofKe:v Documents Telecommunications Pakistan Telecommunication Authority, Telecom Status Report (2002- 2003) Pakistan Telecommunication Authority, Annual Report (2002-2003) Pakistan Telecom Sector Strategy Brief, GICT. World Bank Group leT Strategy Pakistan NationallCT Policy and Action Plan, 2000 Peter Wolcott, Diffusing of the Internet in the Islamic Republic of Pakistan, University of Nebraska at Omaha, 1999 National Development Plans Pakistan Interim Poverty Reduction Strategy, 2001 Pakistan World Bank Country Assistance Strategy, 2002 .E-Readiness Reports Tahir Ram Shah Andrabi and Shahzad Hasan, Readiness of Pakistan to Participate in the Networked World, Report for the Pakistan Country Gateway Project, 2001 Other Business Plan, Pakistan Development Gateway Foundation. 2002 Pakistan Education Sector Reforms Action Plan 2001-2004 113 Annex 1: Comparative Analysis of ICT Indicators Pakistan Somh Asia East Asia G7 actual / actual! actual! actual! Variables normalized (Group: All) - ..........••3.28 / .. -.~ 4.70 Human Development Index 0.77 / 5.10 Unemployment rate, 0;', of total labor force 4.75/7.67 ......,. ... Tariff & non tariff barriers 2.80/0.83 6.73/5.17 8.00/6.25 Intellectual Property is well protected 3.17/2.86 3.94/4.71 5.61 /8.18 ..~ .... ~ ...... .. ... .......... ~ Soundness of banks 4.67/3.25 4.54/3.49 5.79/6.94 Regulatory Quality 0.40/5.38 1.41 / 8.42 Rule of Law 0.39/5.69 1.51 / 8.38 Government Effectiveness -0.33 / 3.50 ...--...... Voice and accountability . . 0.37/3.32 Political stability -1.26/1.16 ; -1.05/1.47 literacy rate (% age 15 and above) .................. _ . • ... - ··········,,· ..- "..... · · · - - , · "... --······~"~··········r- ... •... ~· " ........ -~ ...... --~ .•.. Average years of schooling Second~enrollment Tertiary enrollment Primary Pupil-teacher ratio, pupils per teacher .•...............•••• and tech. workers as % of the labor force Telephones per 1,000 (mainlines + mobiles) Main Telephone lines per 1,000 Mobile phone per 1,000 Computers per 1,000 telecommunications, cost of call • Source: 2004 Knowledge Management Methodology Database, World Bank Institute 114 Overall Country Assessment for Pakistan Education & Skilled Labor Infrastructure & Connectivity Legal & Regulatory Framework .- -.... • Literacy Rate: 47% • Electrical connectivity poor in rural areas. • Pakistan Telecommunication Authority (PTA) • Illiteracy rate for women higher • less than half of the population connected to the established in 1996 ... c: • Illiteracy rate in rural areas higher national grid cafes. • Information Technology Commission set up in GI • less than 25% of the youth enroll in secondary • Teledensity at 35 per 1,000. 1997 E schools • 4 Computers per 1,000. • Ministry of Information Technology and I/! I/! c: c: S- o Q. 115 4.8 Sri Lanka Introduction Wben it comes to socio-economic development and the uses of technology, Sri Lanka is a country of achievements and contrasts. 37Its CJuality-of-life indicators are comparable to those of countries having twice Sri Lanka's real Gross Domestic Product (GDP) per capita. It has a modest but thriving ICT industry, and boasts many state-of-the-art ICT capabilities. At the same time, it is primarily a rural, poor country where a large percentage of the citizens cannot avail themselves of any of these modern capabilities. Access to telephone and electricity is rare for a large part of the population. Some of the adyantages of ICT development in Sri Lanka include a favorable macro-economic regime and a business culture open to global partners and investors. Education has been a priority in Sri Lanka since ancient times resulting in one of the highest literacy rates in the region and labor rates too are comparatively very competitive. As one of the fastest growing sectors, the Sri Lankan lCT industry has the potential to be one of the most significant revenues earners for the country. 38The communications sector is estimated to have grown by about 19(Yo in 2002. The industry has specific niche capabilities in areas of software products and serdces and business process outsourcing. However, there is a limitation on the availability of manpower with technical expertise and managerial skills. Offshore sourcing of software and Tele-services is being driven by the experience, relationships and investments by nationals who have succeeded in ICT-related professions and ventures overseas. Sri Lanka has a large Diaspora, which has brought in its knowledge, contacts, and capital back to help launch companies into global markets for software and Tele-services. The country's IT industry with an estimated export earning of US$ 100.0 million has the potential for growth in both IT and IT-enabled services industry. Industry coordination will rest on the ICT industry committing itself to rallying government and public support for the goal of achieving US$ 1.0 billion exports by 2012 set by the software exporters association. Existing constraints, it is believed, can be removed through vigorous policy reforms, which utill help attract investments from local and international sources. It is a challenge, however, when considering the country's low computer density. A UNDP study39 that looked at ICT for human development in Sri Lanka, says there is less than one PC for every one hundred people in the country. More developed countries like the US have around 80 PC's for every one hundred people. The high cost of technology is one big limiting factor. Although the price of a personal computer has fallen over the years, the high cost of Internet and other services have prevented widespread use of PC's. Around 70,000 connections to the Internet give access to 150,000 people to the web, according to data published by the International Telecommunication Union. Internet and email subscriber numbers have been growing but only in urban areas. Rural areas are still off line. Rural connectivity is depending on network rollout-- a slow process in Sri Lanka. Proactive regulatory initiatives and a new Communications Act aimed at facilitating competition can, however, help improve rural connectivity. 37 http://www.sida.se/Sida/articles/94009499/9481/srilanka.pdf 38 http://topies.developmentgareway.org/iet/re/fiIedownload.do-itemId= 1006080 39 http://www.undp.lk/documents/ICf4HDes.pdf 116 Underlying many issues in Sri Lanka is the two decade chril war between the Government of Sri Lanka and the Liberation Tigers of Tamil Eelam (LTTE). But in the improved climate as a result of the cease-fire agreement in February 2002, the burgeoning lCT industry was expected to grow. The previous administration, recently replaced in April 2004, had a strong belief that information and communications technology is a foundation medium for the equitable distribution of opportunity and knowledge within Sri Lanka, and a key determinant of its future competitive adyantage. This belief had resulted in a vision for an 'e-Sri Lanka'- a vision which would take the dividends of lCT to every village, citizen, business and transform the way Government works. The Roadmap created for this purpose (www.esrilanka.lk) was an aggressive Action Plan designed to implement the e-Sri Lanka vision, supported by the World Bank. i\1though the new administration had very different views than its predecessor on most development topics, it agreed on one thing: the importance of ICT for development and decided to proceed with the path-breaking E-Sri Lanka project. The Bank has a fairly rich lCT portfolio in Sri Lanka. Apart from the E-Sri lanka project an all- encompassing initiative targeting areas of the lCT economy the Bank is also supporting ICT enabled sectoral interventions to improve efficiencies in Health, Finance and Rural Development. Overall Country Assessment According to the Networked Readiness Index (2003-2004), which measures the degree of preparation of a nation or community to participate in and benefit from lCT developments, Sri Lanka ranks 66 out of 102 countries assessed. 40 The Index is a composite of three components: the environment for lCT offered by a given country or community, the readiness of the community's key stakeholders (individuals, businesses, and governments) to use lCT, and finally the usage of lCT amongst these stakeholders. Sri Lanka, with a ranking of 52 (tied with China) on a scale of 62 countries measured by the Economist Intelligence Unit (2004)41 and an overall score of 4.1 (out of 10), would appear to be somewhere below the median in terms of overall e-readiness. By comparison, countries like Sweden and Singapore have high overall e-readiness ranking scores of over 9. The main barriers to the widespread adoption of ICT were identified as being: low teledensity, an outdated legal infrastructure, a poor national communications backbone, prohibitive cost of Internet access, a general low usage of computers and a lack of skilled human resources in the ICT industrv42 • A basic overview of any country's "e-readiness" would require a basic understanding of some of the key factors that are required to develop and use ICTs in all sectors of the economy. These factors include adequately trained skilled labor, adequately connected information infrastructure, and a legal and regulatory environment that promotes ICT development. Using this criteria, a basic review of Sri Lanka's He-readiness" was put together to focus on the main foundational priorities that are required to sustain lCT development. Education & Skilled Labor 43Education has long been a priority in Sri Lanka, resulting in one of the highest literacy rates in the region - over 90%. However, for lcr development and growth, general literacy is not sufficient. Moreover, its education and training infrastructure is not sufficiently robust to remedy this problem quickly or easily, as there is a specific shortage of qualified trainers at all levels- primary school through post-graduate tertiary http://v.·ww.weforum.org/ pdf! Gal GITR_2003_2004 /Framework_Chapter.pdf 4th rates in the world, with fixed lines growing at a compounded annual rate of 20.9% between 1997 and 2002 (the seventh fastest in the world). Over the same period, cellular subscribers expanded by a CAGR of 52%. This growth has been driven by a massive increase in investment. Since the 1991 reforms, over $1.3 billion has been invested in the telecommunications sector. Spurred by competition, SLT has invested over $434 million in its network since 1997, and it doubled its subscriber base in just the two years following its privatization. As part of the "Greater Colombo Telecommunications Network Improvement Project," the number of lines in the Greater Colombo region alone increased by 100,000 by the end of 1996. The private sector, too, has made major investments; non-incumbent investments overtook those of the incumbent for the first rime in 2002. The government's decision to lift foreign investment caps in the sector has also played a crucial role. One noticeable trend is the decline in recent years: from $303 million in 1999 to $103 million in 2001 to just $87 million in 2002.1 This trend can in part be explained by the global telecommunications bust, but it is also a reflection of worries about Sri Lanka's political situation and regulatory uncertainty. 118 Currently there is a wide regional imbalance in network development. The teledensity in Colombo and other populated areas is in the order of 10 times higher than in rural areas. 70°/.) of all telephones are in the Western Province. The majority of fixed-line subscribers are located in the Western province, a reflection of the fact that the 700km fiber backbone laid by the incumbent in the 1990s did not even touch five out of the nine provinces, and only marginally touched another two. The North and the East, in particular, have been hard-hit by the war. The Northern of Jaffna, for example, with a population of 400,000, had only 2448 lines in 2001. Rural telecommunications, roo, remains underdeveloped, with only 11 % of Sri Lankan villages having telephone service in 2001, and 258,000 citizens (80% of them in rural areas) on waiting lists for phones. These regional imbalances have, predictably, led to a certain amount of market saturation, and many private players are now looking to expand their networks into underserved areas. The peace process, the upcoming auctions for Regional Telecom Network (RTN) licenses, and plans to establish a universal service fund should all help spur regional growth. A further critical step would be the addition of non-incumbent fiber capacity; such a project would both increase overall capacity in the country, and overcome some of the interconnection difficulties that private players have faced in rolling out their networks. Overall, with the right investments, and with a little more regulatory enforcement, Sri Lanka's market has ample room to grow. Currently, three fixed-line and four mobile companies operate in Sri Lanka. In addition, six facilities- based data services operators are licensed, as are 23 non-facilities based operators (e.g., ISPs). Some companies in the latter category are barely (if at all) operational any longer due to the interconnection and other difficulties they confronted. There are also a variety of other licensees, including 32 External Gateway Operators (EGOs), and a number of payphone, paging and other companies. Virmally all ICT activity is centred in Colombo, with small pockets in the Galle and Kandy areas. A UNDP smdy that looked at lCT for human development in Sri Lanka, says there is less than one PC for every one hundred people in the country. More developed countries like the US have around 80 PC's for every one hundred people. The high cost of technology is one big limiting factor. Although the price of a personal computer has fallen over the years, the high cost of Internet and other services have prevented widespread use of PC's. Around 70,000 connections to the Internet give access to 150,000 people to the web, according to data published by the International Telecommunication Union. Internet and email subscriber numbers have been growing but only in urban areas. Internet penetration, for example, remains low, at just 105 users per 10,000. Broadband penetration is infinitesimal; just one operator (SLT) offers consumer ADSL services, and only in major urban centers. Rural areas are still off line. Dialup access is moderately priced and competitive, but the accompanying high per-minute cost of voice telephone usage is a significant inhibitor. Rural connectivity is depending on network rollout-- a slow process in Sri Lanka. Proactive regulatory initiatives and a new Communications Act aimed at facilitating competition can, however, help improve rural connectivity. Legal and Regulatory Policy Sri Lanka has made significant strides in telecommunications liberalization since the inception of sector reforms in 1991, resulting in a competitive market environment. Policy leaders identified and understood early the potential economic and social benefits of lCT and have crafted a progressive framework for industry modernization and reform. Generally, the results of liberalization have been impressive, with the telecommunications sector growing at one of the fastest paces in Asia. Politics, however, have caused regulatory uncertainty and other difficulties for operators. Recently Sri Lanka has taken the dramatic step of opening its international services sector to competition in a concerted policy program that is being watched by low- and middle income countries worldwide. If Sri Lanka 119 can achieve a measure of political stability and maintain the peace with the LITE, these programs could help spur impressive grmvth in the telecommunications sector. The enactment of the Sri Lanka Telecommunications Act in 1991 separated the policy and business wings of the l>1inistry of Post and Telecommunications, and carved out Sri Lanka Telecom (SLT) as a separate entity. Under the provisions of the law, SLT was granted a license to operate domestic and international voice traffic. The country also saw the creation of its first regulatory authority that year the Office Director General of Telecommunications; in 1997 it became the Telecommunications Regulatory Commission (TRC). In 1996, SunTel and Lanka Bell were issued local loop licenses utilizing \\:'LL technology and thus ushered in the era of competition. By the mid-1990s, Sri Lanka also had four cellular operators: CellTel, Mobitel (an SLT subsidiary), Lanka Cellular, and MTN. Each of these operates on a GSM network, except Mobitel, which operates on a dual DAMPS/GSM netvlOrk (and is in the process of migrating entirely towards GSM). In 1997 the government divested 35% of its stake in SLT to the Japanese company :t'\IT, which also assumed management controL Two attempts to divest its position further (in 1999 and 2000) were postponed due to poor market conditions and negative investor perception related to SLT's commercial disputes (many of which were interconnection related). In December 2002, the government finally floated 12% of its stake in SLT in an IPO, leaving it with 49.5%, NIT with 35%, and the balance (3.5%) owned by employees. In 2002, the last vestiges of SLT's monopoly appeared destined for oblivion when the government announced its intention to institute an open licensing regime for international traffic, hitherto the exclusive domain of SLT Sri Lanka's market-friendly policies, and low penetration rate, combined with the relatively large number of operators in such a small country, make for a competitive environment. The TRC's hands-off approach to technical standards, too, has helped foster this competition, as has the government's openness to foreign investment. Thus far competition has made the greatest impact on the cellular market. Indeed, Mobitel, SLT's fully owned cellular subsidiary, had only a market share of 11 % in 2003, making it the third largest network (out of four). In the fiXed-line market, by contrast, SLT continues to maintain an overwhelming 85% market share. Even this figure somewhat understates SLT's dominance as its network is far more dispersed the private WLL operators are largely confined to the cities and towns - and it continues to own the vast majority of fiber capacity. In addition, as noted above, SLT has until very recently had a monopoly over international traffic, with the result that Sri Lanka's international call rates had historically been kept artificially high. SLT's dominance has led to a considerable amount of legal skirmishing and accusations of anticompetitive practices. Early on, cellular companies faced particularly onerous terms of interconnection, and ~'LL operators have also had a number of interconnection disputes with the incumbent. Although the TRC has published - and, in some cases, implemented tough interconnection guidelines, non-facilities based operators (particularly ISPs) have often had great difficulty gaining access to SLT's backbone. Some data operators have for all practical purposes been driven out of business. More recently, SLT's acquisition of the cellular company, Mobitel, as well as its provision of cheap ADSL services in Colombo, have led to concerns about crosssubsidies. SLT's impending takeover of LankaBell, one of three fixed-line providers, only heightens such concerns. Underlying many of these disputes and concems is the contested role (and authority) of the TRC, the independent regulator. In 2001, SunTel publicly questioned the TRe's independence, pointing out 120 .leT that the same individuals served as both the Secretary of the 1Iinistry and the Chairman of the TRC. The Ministry also nominates three independent commissioners, and the 1Iinister has authority to approve or reject the TRC's licensing decisions; the TRC has more autonomy in the matter of tariffs, which are determined in consultation with the 1Iinister. Industry is concerned that the TRC is captive to political developments ~ a worry given concerns over current political uncertainty. Observers point out that, despite well-drafted laws and the TRC's often best intentions, actual implementation of policy in Sri Lanka often depends on political will. Despite these regulatory uncertainties, a number of forward-looking decisions have recently been taken in the telecommunications arena. In late 2003, for example, the country saw the implementation of a new ten-digit numbering system, which will eventually allow number portability (although no date has yet been set for this action). The TRC had also announced its decision to implement a calling party pays (CPP) regime for cell phones on March 1st, a move that analysts estimated would drive penetration from 5% to 15%, by simplifying pre-paid billing packages. Significant opposition on the part of the operators to the way the Government intended to implement the regime, however, has led to its delay. In addition, a long-dormant proposal to tax international traffic for a uniyersal service fund (the Vishwa Grama Fund, or VGF) appears to be finally getting off the ground. The government believes this is essential to righting some of the regional imbalances in Sri Lanka's network development. Perhaps the most striking policy was the decision, in early 2003, to open up the international traffic market to an unlimited number of external gateway operators (EGOs). This decision, taken consequent to the end of SLT's international monopoly, was an expression of Sri Lanka's intent to regulate with licenses only where scarce resources are involved (e.g., spectrum), and with simple authorization procedures in all other cases. On paper, at least, the EGO policy represents a bold experiment in transparent regulation. The immediate results of the policy were striking: over 30 EGO licenses were granted and outgoing call rates quickly dropped by an estimated 70%. It soon became apparent, however, that only established operators, who had existing networks or interconnection agreements with SLT, would be able to take advantage of the liberalized policy. Despite the TRC's many directives on interconnection, for more than a year not a single unaffiliated operator (i.e., operators who did not have existing networks) was able to secure interconnection rights. Observers maintain that the TRC was either unwilling or unable to exert its authority over SLT. This situation prevailed until early 2004, when VSNL, the former state-owned Indian operator, which had bought a gateway license for US$SO,OOO, was finally able to secure interconnection. At least two other important initiatives "rill define the Sri Lankan communications landscape in coming years. With the aid of the World Bank, the government drafted a new National Telecommunications Policy in 2001 whose main purpose was to update the Telecommunications Act of 1996. In it the government signaled its intention to move towards a converged regulatory regime and announced a Communications Convergence Act. The Convergence Act is expected to introduce a comprehensive regulatory overhaul with a view to improving the competitive environment ~ ending, for instance, the current licensing distinction berween the provision of voice and data servICes. Another important policy milestone was the passing of the Information and Communication Technology Act. Passed by Parliament in late 2003, the Act created a new implementing agency, the Information and Communication Technology Agency (lCTA) of Sri Lanka, which is tasked with overseeing a broad range of technology-related activity (the ICTA is described as an implementation agency, not a regulator). Among the ICTA's key responsibilities is the implementation of an extensive "e-SriLanka" program. The program has received $53 million of IDA support. The program encompasses a range of activities, most of which are development-related, and many of which 'will have an impact on the country's telecommunications network. For example, the ICTA will 121 - leT be facilitating auctions for two Regional Telecommunications Network (RTN) licenses to encourage network rollout in underserved regions; these networks will be partially subsidized, and licenses will be awarded on a least-cost auction basis. Up to a hundred rural telecenters (Vishva Gnana Kendras, or VGKs) will also be built by the end of 2004, which should help drive demand in rural areas. And finally, a number of e-goyernment initiatives are also likely to be undertaken, including efforts to connect the thousands of disparate government agencies and offices. Current ICT Related Initiatives Underway GOl'ernment Related ICT Initiatives The government views ICT as an important tool for development. ICY, particularly telecommunications can play a 'vital role in achieving rapid economic gruwth and post-confliction rehabilitation and development. With this in mind there are is mention of Telecom and IT as a priority sector under infrastructure development in Regaining Sri Lanka. The objective being to develop the telecom sector on a competitive basis to facilitate the grov;rth of ICT (Information and Communication Technology Sector) sen;ces. This is to follow the principles set out in the ITC road map report including the strengthening of the regulatory framework. Overall this would help stimulate investment, increase job creation and productivity throughout the economy. A rapid expansion in the IT sector will also help catalyze the accelerated grm.vth of other sectors. The highlights of Sri Lanka National Telecommunications Policy are as following: • Availability of affordable and effective choices of communications for the citizens. This is the core of the ,rision and goal of this communications policy. • SuppOrt the establishment and promotion of a modern and efficient Sri Lanka Information Infrastructure (SLII) , with focus on convergence of Information Technology, Media and Telecommunications as well as new Information and Communication Technologies (ICTs) such as the Internet, Electronic Commerce and Electronic Govemment. • Greater independence and authority for the TRCSL for its regulation, as well as complete transparency and public participation in its procedures. Restructuring of the organization and establishing a separate budget. Also strengthening of the Commission's spectrum management functions and capabilities; • Transformation of the telecommunications market structure and regulation toward a more liberalized, technology-neutral model; few restrictions on cross-ownership of multiple networks and services; opening of both the switched access and dedicated network segments. Immediate opening of the international services market, with no predetermined limitation on the number of licenses or the type of services to be offered. Iibetallicensing regime to permit maximum entry with minimum barriers. Provisions for promoting and enforcing fair competition. • Establishment of an explicit Universal Access policy, to promote access to lCTs in rural areas and for all citizens; obligations for licensed operators to contribute to Universal Access development; creation of a Telecommunications Development Fund (IDF), with operators to contribute financially; encouragement of the construction of Multipurpose Community Telecenters (MCYs); Commission responsibilities for regulating tariffs, quality of sen;ce, and consumer protection; deregulation of tariffs for competitive sen;ces, including mobile and Internet sen;ces; quality of sen>ice regulation \vith minimized barriers. 122 leT WB Related leT Initiatives The Sri Lanka Country Assistance Strategy (CAS) of 2003 outlines a program which includes US$800 million of new assistance, in the form of grants and interest-free loans from the \X;'odd Bank's International Development Association (IDA) over the next four years. This amount is significantly higher than IDA lending to Sri Lanka over the last five years-which averaged about US$60 million per year. The CAS is organized around three central themes: Peace, Growth, and Equity, and aims to help finance the implementation of "Regaining Sri Lanka", the GOSL's ambitious plan for economic growth and poverty reduction. Recognizing that equitable access to information is essential to sustaining development gains, the Poverty Reduction Strategy has specified its goals towards (i) improving access to telecommunications facilities; and (ii) bringing internet into the countryside. Another thrust of the PRS is to change the role of the state from being a "provider" of goods and services to being a "facilitator" of private sector activity. To this end, it specifies a need to: (i) reform public administration; (ii) improve transparency and accountability; and (iii) continue decentralization. The strong push towards e-government through the e-Sri Lanka program, under the leadership of the Information and Communications Technology Agency (lCTA) will, it is expected, serve to fulfill these objectives. The broad areas within the sphere of ICT for development that are currently being served by the Bank are: • ICT Industry Development: The ICT sector in general was an important focus of the previous Government's development policy and the Bank has started to provide support to this effort during FY04--through E-Lanka. IFC will also consider investments in ICT companies. • E-Government Service Delivery: E-Lanka targets improved government service delivery to citizens through online applications, in a phased manner. Access to such services through rural kiosks is an important component of the project, and efforts are underway to build the necessary infrastructure. • Creation of a Knowledge Society: Given the CAS focus on inclusiveness and peace-building, especially in war torn areas such as the North and East, emphasis has been given to capacity building and connectivity as means to bring these communities together. • leT use in Sectors: Education projects are being implemented that would both increase the supply of IT skills through teacher training and certification-while also equipping recent graduates 'With basic employment requirements, including English language skills. MIS based systems are being implemented to improve reach and efficiency in health initiatives, and bespoke software systems are being developed for the judicial sector, and the Central Bank. Through e- Lanka, a societal applications fund will support innovative use.<; ofICT in sectors. Other leT initiatives Private Sector Initiative Sri Lanka has made strides towards creating a vibrant and sustainable ICT sector. Local companies have started to break in to the global marketplace to secure software development contracts either by themselves, or together \'lith foreign partners. In terms of ICT as a tool for improving efficiencies and increasing the competitiveness of industries and commerce, the 123 S1 lack of proper information infrastructure is a huge impediment for further progress. Conduct of B2C commerce is very low in Sri Lanka. Even though there are some sites offering full transaction capability for B2C trade, its adoption, even among the Internet ready households has been limited. However, given these stumbling blocks, there are visible advances in B2C commerce with ne'\A' sites coming up regularly, some with very innovative approaches to bypass the infrastructure bottleneck in the rural areas. Companies are slowly moving towards offering complete services online including transactions via the payment gateways that are being setup by several financial institutions. Sri Lanka's software exports are estimated to be over 550 million per year. Some of these companies have established solid reputation in world market, The indust0' relies on an ICT workforce of about 3000. NGO & Donor InitiatiL'fs - The following is a brief summary of the nature of the lCT development work that has been commissioned by the various NGO and donor organizations in the country. The Sri Lankan government and JleA have been jointly conducting a training program at the Cniversity of Colombo, the country's most prestigious computing school, in attempts to rectify the shortage of ICT specialists. 44The Korean Government will also grant a US $ 15 million soft loan to revamp the Information Technology infrastructure and human resources development sector in Sri Lanka, and the ADB is financing several lCT educational initiatives, including a computerization of schools program establishing electronic libraries and developing multimedia computer courseware to overcome the problems of many unqualified teaching staff and lack of instructional materials. USAID45 is infusing USS 7 mn to be disbursed over a two-year period for projects ranging from human development, IT training to competitiveness. USAlD is also looking at around US$ 20 mn worth of project assistance over a further two-year period. Some of the ICT initiatives have borne fruit, with millions of dollars disbursed to empower women in IT related fields. Potential Areas for Future Involvement In the many sector-specific poverty alleviation efforts launched by governments, non-governmental organizations and donors in recent years, lCTs have been used only sparingly. But some developments, especially in the telecommunications sector that has recorded phenomenal growth in the past decade, have benefited individuals and communities by creating more opportunities and generating higher incomes. Mobile phones best illustrate this situation; in only a few years, this one- time status symbol of the elite has become an indispensable utility tool for people from all strata of Sri Lankan society. There is great potential for using lCT to disseminate market information in Sri Lanka's dominant agricultural communities, but models so far adopted have not addressed the needs in sufficient scale and outreach. The most pervasive problems that affect the widespread adoption of lCT in Sri Lanka relate to its digital divide and lack of skilled human resources. 46 Issues that need to be focused on include the low levels of computer literacy, which investments in the education sector could help remedy. An Education Ministry survey found that only around 228 out of nearly 9000 schools island-wide had a computer lab. But hundreds of computer labs in rural schools will mean little if crucial reforms needed in the telecom and linked infrastructure sectors are not put in place to leverage the benefits. leT, a great leveler for human development can also be a great divider unless access is universal. Potential for further lCT inclusion in the education sector may include: (1) technical assistance in scaling up distance learning to bring knowledge to remote areas of the country; (2) technical 44 http://www.deve!opmentgateway.org/node/171482/news/item?item_id=I046621 45 http://www.lankabusinessonline.com/newjulLstory.php?subcatcode=5&subcatname=&newscode=953694445 '" http://www.lankabusinessonline.com/newjull_story.php?subcatcode=5&catname=ICT&newscode=452692101 124 assistance and guidance in content deyelopment and knowledge management in the area of education; (3) technical assistance in establishing training for trainers programs; (4) assistance to gm"ernment authorities in introduction of ICT related programs in public I priYate universities; and other. Small individual projects have serious bottlenecks that hamper sustainability. Initial funding for infrastructure development has to be sustained by a parallel investment for the upgrading of capital equipment and for operating costs. Thus, initiatives enabling local partners to develop private-public partnerships and business models to ensure sustainability are essential. 470ne of the main issues in rural areas is the market oligopoly due to information asymmetry, and it is the middleman who benefits from this situation. This problem could be resolved if accurate, updated and reliable information is made available to the villagers through mechanisms such as multipurpose telecentres or Internet kiosks. The e-Sri Lanka program has a strong telecenter development aspect, and progress has already been made in their implementation. The involvement of the rural sector in lCT projects could solve problems of productivity, employment and income generation in rural areas where poverty is widespread vlith emphasis to the North and East. Key Contacts and Organization Ministry of Science & Technology Ministry of Information and Media URL: http://www.most.gov.lk URL: http://www.gov.lklpublidoffice42.asp?xi=116 e-mail: mstsased@sltnetlk Ministry of Post and Telecommunications and Telecommunications Regulatory Commission of Sri Lanka Udarata (Upcountry) Development URL: http://www.trc.gov.lkl URL: e-man: dgtsl@slt.lk http://www.gov.lk/publicioffice42.asp?xi=124 Information and Communication Technology ADB, Sri Lanka Agency of Sri Lanka URL : http://www,adb.orglSLRM/defau!t.asp URL: http://wwW.esrilanka.lkl e-mail: adbslrm@adb.org e-mail: IIlfo@jcta.lk JICA, Sri Lanka USAlD, Sri Lanka URL: http://wwWjica.go.jP/srilankalindex.htmJ URL: e-mail: jicasl@jica.go.jp ht!p:llwww.usaid,govllocations{8sia near eastlcountries{srilan!sa/sri!anka.htrnl The SOftware Exporters Association of Sri Lanka URL: http://www.isiandsoftwate.orgl Table ofKey Documents Telecommunications Sri Lanka Telecom Brief. Network Dynamics Associates, 2004 leT Strategy Information and Communication Technology Agency of Sri Lanka, ht1p:llwww.esrilanka.lkl National Development Plans REGAINING SRI LANKA: VJSion and Strategy for Accelerated Development, 2002 E-Readlness Reports Country leT Survey for Sri Lanka , Greenberg ICT ServioeslSlDA, 2002 47 http://www.developmentgateway.org/node/171482/ news/item?item_id=l 055281 125 Overall Country Assessment for Sri Lanka Education & Skilled Labor Infrastructure & Connectivity Legal & Regulatory Framework • Literacy Rate: 92.1 % • Around 50-55% of the population has access to • Telecommunications Act enacted, in 1991, • Access of school children to ICT is appallingly electricity separated the policy and business wings of the - c ~ low • A significant number of schools do not have access to grid power and fixed line telephones • There were 44 telephones per 1,000 (2001) • There were 9.3 computers per 1,000 (2001) • Number of intemet users stood at 150,000 Ministry of Post and Telecommunications. and carved out Sri Lanka Telecom (SL T) as a separate entity. UI UI • First regulatory authority in 1991 - the Office QI • Lack of ICT professionals (2001 ) UI • Sri Lanka produces only a small number of ICT- • Number of radios and televisions per 1,000 Director General of Telecommunications; in ~ - C ~ ::s trained university graduates - university only about 6% of successful secondary school leaves (12,000 out of 200,000) stood at 39 & 8 respectively (2001) • 15 large to medium ISPs plus a number of smaller ones 1997 it became the Telecommunications Regulatory Commission (TRC) • 1996 two private companies were given local o • Brain drain loop license, four cellular operators • Current ICT workforce about 3000 strong • In 1997 the government divested 35% of its stake in SL T to the Japanese company NTT • 2002 - open licensing regime for intern. traffic. • Establishing a multi-layered and multi-skilled • Electrification of rural areas top priority in the • Establishing a development-conducive pool of ICT trained staff, at workforce, infrastructure development goals of the gov!. telecommunication regulatory environment professional and managerial levels • Installing communication backbone providing • Create a business-friendly ICT policy with a legal ~ • Providing ICT education to students in schools greater connectivity to industry & society. Initial framework aligned internationally . i throughout the island • Increasing the number of undergraduates construction will consist of 2 broadband Regional Telecom. Networks with further expansion to • Setting up guidelines and policies for the implementation of common ICT standards and - :E c ~ ::s graduating from university courses in ICT and providing higher-level training to university staff • Enhancing the opportunities and incentives for improving English and ICT literacy cover the entire country • Establishing a network of Vishva Gnana Kendras (VGKs or Tele Centers) throughout country • Enhanced govt. interconnectivity of all major architectures and security framework o • Increasing the supply of ICT professionals to the gov!. agencies. rest of the world and to encourage foreign ICT • Govt. call centers for the provision of gov!. professionals to set up training institutes in Sri services. Lanka • Establishing Country Portal / I ' · Ongoing WB assistance through a number of • WB is already involved in rural electrification • The E-Lanka --Development Project supports .-..... Education projects including the E-Lanka projects. institutional development and further ICT-Ied Development Project • Support for rural access initiatives, particularly reforms. e ::s • Continued support for incorporating IT into fOf electricity and telephony. -; c school administration and teaching particularly • Opportunity to develop public access centers in u.. QI in schools and in rural areas. rural communities (E-Lanka Development ... E ~~ • Support in the area of IT training as part of Project). vocational and technical education to expand the ;:> ICT workforce. c c QI- ~ 126 Annex 1: Sector Specific leT Frameworks Introduction This chapter aims to provide a snapshot of specific sector applications of leTs. Although each framework may not provide a comprehensive and complete view of all the sector specific applications of leT, they do provide a basic illustration of the range and various applications of leT. These frameworks should be considered when developing sector specific strategies on the use of leTs in our regional workprogram. 127 PrivateSettJr-ICTDeveIopnent Frat'Il'AOk THE .ENVIRONMENT Information Infrastructure Legal & Regulatory Framework • Access to electricity • Access to telecommunications infrastructure • Liberalized telecom market to allow for cost effective access to telecom • Access to internet infrastructure services Communications Financial f • E-Business Policies that allow for Accounting greater online trading and business activity. • Access to government services Basic Telephone Accounting Software online Basic E-Mail Financial Software Basic Internet Budgeting Software • Simple and transparent procurement procedures. THE PRIVATE SECTOR ENTERPRISE Marketing f Advertising Operations & Manufacturing Capital, Equipment & Services Skilled Labor I Human Resource Development Web page development Basic office software Market research HR Systems • Access to finance to fund capital • Access to adequately trained Media Advertising ManufactUring Systems investments in IT hardware and bUSiness professionals with Supply Chain Systems software appropriate IT skills • Access to business related IT • IT training facilities to train IT hardware professionals • Access to business related IT • Basic business management skills software • Access to bUsiness related IT services 128 Heath Sedor-ICT DeveIopnentFI'CI1'1fllNOIk HIV/AIDS & Epidemics Nutrition Training/Education • Radio • Immunization Programs • Prevention Programs • Nutrition Information • Advertising for relevant ~ • Television • Prevention Programs • Immunization Programs Programs health training • Telephone • Ways to receive medical • Ways to receive medical • Hygiene Programs • Internet z care care • Health Kiosks • Basic health information • Incidence rates on • Basic surveys of nutrition • Basic information on the ~ • PDAs • Geographic Infonnation surveys epidemics habits & diet number of adequately Systems ..J trained personnel by ..J • National database on • Institutional Connectivity o (J health statistics by region. region. • Database software • Telephone t;:?3 • Diagnose basic illnesses • Chat room technology for • Provide interactive • Distance learning sharing information nutritional support ~'* • Internet/Email • Prescribe appropriate • Training of the Trainer • Video Conferencing wE medication • Provide interactive Programs 1-(1) support • Scanners • Access to specialists ~~ • Health Kiosks • Digital X-Rays • Prescribe appropriate medication 0:: • Internal I External W • Electronic Patient • Online Medical • Specialized nutrition • Use of computers in I- Databases m Records Information Portals programs training • Internet/Email Z • Medication Management • Up to date information on • Scanners i treatments • PDAs ~ 129 Eckr.aion Sector-ICTDeveIoprratFranevvork Technologies Primary Education Secondary Education Tertiary Education Adult Learning • Ministry of Education - National Portal • General Education Statistics across all levels of education • Radio ~ • Television 0::: • Telephone :I • Information on standardized curriculums • Labor market information • Second Chance info for • Scholarship information • Foreign Degree programs • Information on learning programs Adult • Internet ~ • Health Kiosks • Information to assist dropouts primary school administrations • Geographic Information Systems t; • Student Enrollment Surveys W • Institutional Connectivity ..J • Teacher Deployment Surveys ..J • Database software • Internet 8 • Quality Assurance Surveys • Email • telephone t;~ • • Internet/Email Video Conferencing ~~ • • Distance Learning Program for Students Distance Learning Programs for Teachers & Administrators wE • Scanners I-ji:! • Distance Testing Programs ~~ • Health Kiosks • National Examinations 0::: • Internal! Extemal W Databases t; • Budget I Financial Management Systems • Internet/Email Z • School Management Systems • Scanners !i Q • National Examination Systems i PDAs « • StUdent Progress Tracking Systems • • 130 Agiculture/Rurai Sedor-ICT DeveIoprnentFramevvork Agriculture Extension Services Ability to diagnose problems and identify E-Commerce , arket & Weather solutions electronically Media Information Procurement of (Pest Management, Animal Diseases) inputs and outputs I bility to know online or through IT • Radio • Mobile Phones ( urrent market prices kiosks. • Web Interface I Web Kiosks 1 r commodities & ( gricultural products. • Voice Interface -Recorded I ,cress to weather Benefits Weather Reports I nnrt~:L • Cable & Satellite Television • Access to relevant information, . THE FARMERI inputs, outputs, goods & services Land Records & • Direct relationship with buyers E-Edu cation RURAL Administration • Reduced transaction costs and Delivery Channels Distan ce learning for COMMUNITIES more efficient marikets i-- Access to land • Improved links with service comm nity based records, titling at , Cooperatives organi ations and providers multiple locations • Farmer Orgs. farmel based electronically • NGOs organi ations • Federation of Farmers • Community Based Orgs. .. Panchavats Web Based Credit Government Facilitation Services Availability of loan Provision of information and government services transaction features to rural communities, online. through IT kiosks. 131 PuliICSector-ICTDeveIopnentFraJ'IeIM:Ik Business Community (G2B) (1) Publish (2) Interact (3) Transact • Economic Data • Online corruption complaints • Online delivery of records • Business Registration Forms • Feedback on new laws • Tax Administration • Agriculture Information • Email for interaction • E-Procurement • Project Procurement Information • Business Licensing 8. Registration • Investment f Export Promotion Portal Central Government (G2G) .. Operational use of leTs • Public Sector Modernization • Computerization f Training • Accounting f HR Systems • Records 8. Data Archiving • System integration with the Regional 8. Local governments (1) Publish (2) Interact (3) Transact • National Legislative Portals • Online corruption complaints • Tax Administration • Judicial Information Portal • Feedback on new laws • Online delivery of records • Voter Registration Forms • Email for interaction • Email for interaction • Public Information Dissemination Gp.m~ral Public (G2C\ 132 Annex 2 CAS I PRSP Comparison The following annex compares the WB Country Assistance Strategies with the Poverty Reduction Strategy Papers (or equivalent) for each country. The highlighted sections are instances where the PRSP indicated some use of ICT in achieving a development goal and the CAS did not. AFGHANISTAN ICT DEVELOPMENT· TSS & Securing Afghanistan's Future Comparison Fundamental Developmental Challenges and Priorities TSS SAF leT as mentioned in the leT armlications as mentioned the Document CAS Governlnce and Public Administration Reform Budgeting and revenue management No Yes Authorities have computerized Treasury Part of the government's vision of economic management accounting system includes the deployment of modern, electronic financial management systems to ensure efficient cash management, timely payments and disbursements, and accurate financial accounting. With the assistance of a Financial Management Agent, a system for computerized check issuance went into operation in 2002. This enabled a "real time" reporting of all expenditures processed through Kabul. This has now been augmented to allow for control of budget execution against budget allotments for expenditures processed through Kabul. However timeliness of budget execution, and expenditure tracking needs to be improved especially at the provinces. Operationalize international payments system Improve capacity for public administration Recentralize fiscal system Build national administrative capacity Development of a national reconstruction strategy Strengthen aid coordination, monitoring and reporting Communicate vision and accomplishments to the No Yes With respect to communication, the SAF pg 34 outlines the Afghan public need to reform the state media in order to ensure that it promotes democratic values and is editorially independent of influences. This reform will include updating infrastructure and equipment for both print and broadcast media such that 100% population have access to public TV by 2010 with satellite broadcasting established by 2015 (see table 2.9 pg 35) 133 Strengthen human rights, security, and rule of law No Yes Provision of equipment to enhance police communications and mobility (pg. 84). Launch public information campaign to educate Afghans on the role and duties of the police. Launch public awareness activities on radio and TV to improve knowledge of the Judicial system. Establish sound procedures and a database to record caseloads and court decisions disaggregated by sex, age, class, and ethnicity. Introduction of an automated data system for prisoner registration and tracking (table 6.10, pg 91) Humanitarian Assistance and Human and Social Capital Strengthen communities to improve their livelihood through CDD programs Shift from humanitarian development to national reconstruction Address the refugee issues Health Provision of basic health services Education No Yes Table 2.5 pg 23. Targets for education sector include the introduction of ICT in primary and secondary education to encourage innovation Improve access to primary, secondary and tertiary education Physical Reconstruction, Natural Resource Management, and Private Sector Devt Develop physical infrastructure Provide employment opportunities Create foundations for private sector·led strategy Foster urban development Develop capacity for water resources management Develop micro finance industry Implement new Telecommunications Policy No Yes Governments vision is to achieve modernization and rapid expansion of telecommunciations networks and services, and to aim for universal access across Afghanistan. The government also see ICTs as a sector that can create oopportunities for disadvantaged groups (women and disabled) and would invest on an ongoing basis in developing these opportunities. Only minimum amount of public investment will be undertaken to lay foundations for major private investment in the telecoms sector. The sector already received private investments of up to US$100m. However, the telecom sector is not listed as an area of expected 134 growth potential (see table 1.4 pg 9). Public investment requirements of up to US$3b is planned for the energy, mining, and telecommunications sector, of which 10% will go to public investments in telecom. Priority here will be to provide back bone services, fixed mobile services in major urban areas, and services at the district levels, bulk of which will be championed by private investment. As such Afghan Tel will be corporatized, and the postal arm subsequently (see page 53). Low cost mobile communications are already flourishing in the country (see pg 73) Develop transport infrastructure and services No Yes In civil air transport, MeAT will focus on policy and strategy formulation, planning and budgeting, database creation and maintenance 135 BANGLADESH ICT DEVELOPMENT· CAS & PRSP Comparison ICT Applications as mentioned in the Fundamental Developfl1ental Challeflges and Pri()rities CAS ~I3SP CAS leT applications as mentioned in the PRSP Empowering Communities and Vulnerable GroUps Strengthen local government institutions Improve inclusion of women, safeguard tribal livelihoods and culture Develop more effective social safety nets and disaster No Yes Strengthen early warning systems through better mitigation mechanisms topographical mapping and effective information sharing between the neighboring countries Educate vulnerable groups on disaster mitigation and Yes No Use of information and early warning environmental conservation techniques systems led to minimal loss of life in the 1998 floods Strengthening Human Development Education: Improve quality of teaching, classroom practices and No Yes The quality of primary education, imporvement of technical teacher training and vocational education, including ICT, constitute the central focus of the PRSP for this sector Improve monitoring and administration of education No Yes Providing opportunities to develop ICT literacy through the service providers education system, and ICT training facilities. Affordable access to computers and the internet. Emphasize electronic bookllibraries, cyber-cafes, cyber kiosks, call centers Re-orient school curriculum to meet labor market needs Improve access and enrollment rates in schools Health: Strengthen capacity for health care delivery, revenue No Yes Promote telemedicine, online education and medical collection, and accountability transcription Improve quality of health care services, especially at the district and Thana level Reducing malnutrition as a public health issue Intensify HIV/AIDS prevention Economic Growth, Improving Macroeconomic Framework, Public Sector Reform and Governance 136 Civil service reform to improve quality and effectiveness No Yes Use modem ICTs (e-governance) to address weaknesses in of civil service government. Use informatics to improve government coordination, institutionalize management systems, enhance productivity, and promote the voice of vulnerable groups Improve effectiveness and equity in civil justice system Accelerate SOE reform, and increase private sector No Yes Reform of telecommunications industry Includes telecoms sector participation Improve targeting and efficiency of public expenditures No Yes Reform in Budget Expenditure and Control Project geared towards providing an effective management information system for expenditure control and rationalization. Implement new procurement laws, public procurement website and electronic bid processing. Minimize opportunities for corruption Amplify the "voice of society" No Yes Use mass media and other information channels to mold public opinion. Take steps to promote unhindered flow of information and enhance the role of press and mass media Donor Coordination, and management of aid Generate employment No Yes Emphasis will be on promoting entreprenuerial skills, creating information channels on appropriate technology, among others. Accelerating pro-poor economic growth No Ves Promotion of ICTs and Biotechnology as a souce of growth, and emphasizing linkages to the poor and to women, through ICTs. The development of ICT is seen as a source of expanding grwoth within the economy Ensuring macroeconomic balances No Ves Establishing an early warning and effective economic information system to gusard against possible slippage and deterioration of macroeconomic envvironment SQctbtaJ Issuesahd Priorities Rural Development and Agriculture Improve land records and administration systems No Yes Computerization of land record system to reduce endemic burden of land disputes with adversely affect the poor Strengthen local institutions in natural resource and disaster management Training to improve capacity of community based organizations Improve management and decentralized delivery of water, transport, electricity, and sanitation services Improve non-farm growth and rural development No Ves Improve roads and communications network and access to credit, expanding ICTs to rural areas Improve efficiency of agriculture input markets Private Sector Development No Ves PRSP advocates the need to develop employment generating sectors such as agro-processing and IT-related industries for both domestic and export markets. Disseminate market and 137 technical information, and support services in skill development. Provide paid and self-employment and entrepreneurial activities offered by international and domestic leT industries. Promote deployment of leTs, and promote greater use of ICT as a tool for development. Develop SME sector Reduce cost of doing business Yes No Information and communications campaign to raise public awareness about benefits of privatization of infrastructure services Trade: Improve tax and customs administration Financial Sector: No Yes Promote use of ICTs in banking Power and Energy Reforms to address weak utilities, infrastructure bottlenecks, management, questionable quality Transport Improve planning, management, and maintenance Support connectivity and access at regional level for transport and logistic systems Address inefficiencies in Chittagong port Information and Communication Technology Improve service quality Yes Yes Remove hurdles through effective and coordinated policies in the sector, and developing infrastructure in ports, and telecommnications Develop comprehensive ICTlTelecommunications plan Yes Yes Third critical element in the infrastructural package for pro- poor growth Improve access to rural areas Yes No IFC considers further investments in cell phones if reforms are implemented Urban Development Improve capacity of local governments, and institutional coordination Improve access to urban services Improve efficiency of land and housing markets Weaknesses in Country Assistance Strategy 1. Core benchmarks for CAS do not include any ICT indicators 2. Only very little attention is given to telecommunications and leT applications/infrastructure under sector issues and priorities 3. No examples of ICT applications are mentioned in CAS 4. No advisory or knowledge transfer activities related to leTs are reflected in CAS 5. leT issues do not appear to be central to consultations with clients 6. Development outcomes and milestones do not all include ICT indicators 138 BHUTAN ICT DEVELOPMENT· CAS & 9th Plan Comparison Promote awareness of Bhutan's rich cultural heritage Strengthening Human· Development Education: Improve quality and relevance of education Achieve universal enrolment No Yes Annexed in the CAS Bhutan Plan suggests introduction of distance education program by 2007 (but CAS has this in the annex) Improve access to education Develop private schools Health: Provide access to primary health care services for No Yes Annexed in the CAS Bhutan Plan suggests introduction of operational all (especially remote areas) telemedicine by 2002 (but CAS has this in the annex) Improve quality of health care delivery and staffing No Yes Strengthening the health management information system and research Promote better quality in traditional medicine and mental health Extend HIVIAIDS prevention to vulnerable groups No Yes Develop better monitoring and information programs and border areas Consolidate and strengthen health infrastructure Introduce innovative methods of finanCing health care Achieving Balanced and I:qultable Otvelopment Maintain the momentum of development Promote diversification into knowledge content service industries Generate productive employment Create enabling environment for private sector Yes Yes Privatized postal services, investments in IT Transport and communications are ranked as one of the development and digital technology, Telecommunications highest priorities in certain Dzongkhags Master Plan, Postal Services Master Plan Stimulate private sector employment for educated labor force AddreSSing Dutch Disease Syndrome 13<) Promote Trade Diversification Poverty monitoring, assessment, and program No Yes Institutionalize Poverty Monitoring and Assessment System coordination (PMAS), and anchored to the Planning and Information System currently being developed Governance Improve tax base Reduce reliance on external assistance in the long term Explore new sources of revenue Further develop institutions, governance systems, Yes No Training of government staff through WBI human resources and participatory processes GDLN {marginal Addressing ethnic unrest and threats to social stability (especially from insurgents) Environmentally Sustainable Development Forest protection and regeneration Make full inventory of biodiversity resource base Maintain biodiversity Sectoral Issues and Priorities Transport Develop physical infrastructure Improve public transport system (surface transport) Improve international air services Yes No External air links with full instrument landing system capacity by 2017. Communications and Information Expand services to rural population Yes No Introduce national television by 2000, Villages and settlements have post office by 2002. (Annexed in CAS) Prepare an active IT Strategy Yes No IT strategy by 2002, Intranet services and e- mail systems by 2000. (Annexed in CAS) Urbanization Minimize negative effects of urbanization by responding quickly to changes Focus on rural development Further commercialize agriculture Establish regional growth centers Improve urban design and planning Agriculture and Rural Development Address seasonal hunger, food security, and 140 exclusion of groups in remote areas Develop an interconnected rural sector with good Yes Yes Promote rural telecommunications, automation of road social and physical infrastructure works Promote use of high-technology for production of high-value crops (e.g. greenhouses) Financial Sector Liberalizing and introducing competition Yes No Computerized stock exchange to encourage equity investments Weaknesses in Country Assistance Strategy 1. Core benchmarks for CAS do not include any ICT indicators 2. No attention is given to telecommunications and ICT infrastructure even under sector issues and priorities 3. No examples of ICT applications are mentioned in CAS 4. No advisory of knowledge transfer activities related to ICTs are reflected in CAS 5. ICT issues do not appear to be central to consultations with clients 6. Development outcomes and milestones do not all include ICT indicators 141 INDIA ICT DEVELOPMENT - CAS &10th Plan Comparison 10th ICT Applications as mentioned in the Fundamental Developmental Challenges and Priorities CAS Plan CAS leT applications as mentioned in the 10th Plan Improving Govemment Effectiveness Reduce primary deficit at the center and in states Increase tax collection for states Improve resource mobilization in urban local governments Improve financing of civil service reforms Modernize financial management and reduce opportunities for corruption Improving Governance and Service Delivery Yes Yes Possibility for substantial financing via Promotion of e-governance (e.g. support for Multi-functional E-government project Application Community Centers, a National Institute of SMART Governance, Creating Citizen Databases through ID/SMART cards, and Development of Language Tools and Content) (Vol 2, pg 811). So far, the emphasis has been on providing connectivity, networking, technology upgradation, selective delivery systems for information and services, and a package of software solutions. In the 10th plan, it is proposed to focus on the re-engineering of procedures and rules which are in fact the core of any effective e- governance program Improve accountability, efficiency, transparency of government operations in key sectors Strengthen effectiveness of decentralization especially in poor states Improve public sector capacity to deliver health, Yes No Citizen services via E-seva education and social services to poor/rural areas Investing In People and Empowering Communities Educational attainment for all Improve access to education for all, especially girls for No Yes Promote online education as an IT-enabled service (pg SC/ST populations, and disabled peoples Encourage the media to project positive images of women and the girl child; change the mindset of the people and thus promote the balanced portrayals of women and men (Vol 2, pg 245). Develop active participatory health education aimed at motivating the population on lifestyle changes and preventive and promotive health care programs. Expansion and diversification of open schooling and distance education system to secondary schools. (pg 43). Development pf audio visual aids for adult programs (pg 142 72). Strengthen youth development centers to become IT centers (pg 75) associated with the Department of Information Technology Increase literacy rates and quality of education No Yas Promote extensive use of the computrized MIS (CMIS) net for monitoring purposes. Implement the National Council of Teacher Education Project (NCTE) on imparting information technology literacy to the teachers. SCERTs should also be equipped to plan for computer education curricula, teacher training etc. Develop specialized correspondence course for teachers, in collarboration with open universities,. Expanding teacher access to digital resources, and networking institutions to facilitate the use of ICTs for online sahring of resources (pg 36). Rework centrally sponsored schemes (e.g. Computer education and literacy in schools, and education technology schemes). State governments will also prepare computer education plans for literacy and aeducation (pg 44). Networking of universities and information library networks, expand the coverage of distance and open learning systems to backward and remote regions. The 10th plan will take up several initiatives for strategic planning and management of technical education, including an electronic management information system scheme (EM IS) to plan coordinated development of the technical education system. The National Technical Manpower Information System will also be strengthened to assist central and state governments and the AICTE to monitor the mismatch between supply and demand for technical manpower. Distance and web-based learning is planned for various engineering and management institutions, and this will be supported by the establishment of education technology centers. (pg 56-64) Reduce shortages of teachers and absenteeism Health: Reduce infant mortality rate Reduce maternal mortality rate Re-orient health facilities to ensure better service Yes Yes Telemedicine services offered in public Complete development of a database that will help district-based to the poor health centers in Maharashtra health manpower planning to assess manpower availability, and obtain reliable and accurate district-wise data on the number of medical, dental, ISM&H professionals and institutes. Efforts are Improve access to basic health, accident, and No Yes Promote networking among and within institutions for manpower, trauma services materials, communication, training, and research, and specialized trauma care activities. Apart from communication networking, the apex center would be utilized for human resource development and creation of a comprehensive computerized information database on trauma cases (Vol 2, pg 128). Adopt an online computer inventory control program for the procurement and supply of drugs (VoI2, pg 131) Control infectious diseases by implementing adequate No Yes Build up fully functional, accurate health Management Information 143 control and surveillance programs System (HMIS) utilizing currently available IT tools. This real time communication link will send data on births, deaths, diseases, request for drugs, diagnostics and equipment and status of ongoing programs through service channels within existing infrastructure and manpower and funding. It will also facilitate decentralized district based planning, implementation and monitoring (VoI2, pg 84 and 118). It will also augment utilization of bio-informatics, bio-statistics, and all medical colleges will be brought into the network (Vol 2. pg 101). Address HIV/AIDS, increase knowledge of prevention measures Foster Empowerment and Rural Livelihoods Empower the poor to participate in shaping public No Yes Advances in information technology and communication would be programs harnessed to benefit self-help groups. Telephone connections to senior citizens aged 65 and above on a priority basis Improve access to basic services and infrastructure Sectoral Issues and Priorities Agriculture and rural development Improve access to power, electricity, and water in rural areas Improve access to information on technology and No Yes Encourage an innovative approach in the field of television/radio innovation for small scale farmers broadcast including specific channels in an interactive mode to help improve current practices in the provision of extension services (Vol 2, pg 535). Explore inherent benefits of communication Improve certification and property rights on land Yes No Agricultural property registration via Develop a comprehensive land rights database to facilitate CARD in AP, the Bhoomi Program to computerization of land records (Vol 2, pg 311& 313). This should computerize land records in Kamataka, be expedited (pg 555, 835). Improve research No Yes Modernize system of agriculture statistics. Improve the system of the traditional patwari agency and gidawari with the use of tools of information technology (vol 2, pg 554). Create National Animal Health and Production Information System with active involvement of research institutions, government departments, PRls, etc. This will be a national database (pg 574). Improve the fisheries database (pg 578), and promote the development of off shore fishing with modern communication equipment to ensure safety of fishermen Increase efficiency of irrigation, water delivery, and No Yes Promote and expand the use of remote sensing techniques in management systems other areas of water resources planning like land use, irrigated area assessment, water logging and salinity, crop condition, river morphology studies, flood protection, etc (vol 2, pg 590, 884) Improve connectivity to rural production and farming centers to markets Improve farm and non-farm employment opportunities 144 Improve access to finance in the rural sectors Urban Development Improve efficiency of land and factor markets to foster urban development Improve public urban transport system No Yes Application of IT to various activities of railways. The massive passenger reservation system managed by CRIS is the world's largest reservation system that connects about 2500 terminals. Similar use of IT in in the freight segment will be promoted. Indian railways have completed the first phase of a computerized Freight operation Information System to enable online cargo tracking. The second phase, covering Terminal Management System, will be completed under the 10th plan (Vol 2, pg 940). Efforts at automation in the ports will be concentrated on: Use of the Vessel Traffic Management System (VTMS) for navigation of ships within port limits; use of computers in cargo/container handling operations, use of e-commerce/EDI for trade-related document transactions (Vol 2, pg 969-970, 974). Regarding air transport, the Air Traffic Services (A TS) routes will be strengthened using satellite-based navigation system to reduce flying time and allocation of optimal flight levels through modern air-traffic management system (Vol 2, pg 983). Promote appropriate traffic engineering and management/enforcement measures as a complement to creating more physical capacity through major investments in urban transport infrastructure. (pg 658) Improve delivery of urban services No Yes Involve the public in user charge policies through the media, and the internet, as well as formal means of public information to be laid down in municipal rules (vol 2, pg 614). The most important tools for urban managers are maps and data (pg 619). Encourage the use of maps generated by satellite data to supplement ground- level work on property listings for taxation purposes, as well as monitor trends in urban growth especially in peri-urban areas. Infrastructure Development to foster industrial growth Improve operational performance of state energy systems Improve intersectoral allocation and management of national and state water resources Improve quality of interstate highway network, railway services, and port system management 145 Telecom: IFC continues to promote private sector Yes Yes Promote universal postal service, installation of additional investments linked to sector reforms automatic mail processing systems, computerization of all major post offices and over 136 registration centers are corner stones of the 10th plan. Introduction of new products like e-post, e-billing payment and presentment, e-commerce etc. Telecommunications is a cornerstone of the 10th plan. Provide high-speed data and multi-media capability using technologies including ISDN to all towns with a population greater than two lakhs. Major IT initiatives under the 10th plan include the development of software parks, community information centers, Indian languages interfaces to computers and IT for masses, e-commerce, e-governance, Media Lab Asia, IT security, IT human resource development, and promotion of IT-enabled services (see pg 809-813). Applications of interest in the 10th plan include business process outsourcing, insurance claims processing, medical transcription, legal databases, digital content development, online education, data digitization/GIS, payrolllHR services, web services, etc. Improve SME development and private sector No Yes In Art and culture, promote networking among central museums to development facilitate information sharing, in-service training, event planning etc. Undertake computerization work with the assistance of the National informatics Center. This would include setting up LAN and WAN, digitalization of museum collections, microfilming of manuscripts and the introduction of equipment for audio tours etc. Complete the documentation and creation of computerized catalogue of art objects. Develop a national bibliographic database in electronic format to encourage resource sharing, networking and to improve reader services. Retro conversion of existing records in electronic formats by the National Library and others (Vol 2, pg 284). All these will strengthen the modernization of galleries, digital documentation of antiquities, publication of catalogues, museum guides, post cards, and other informative materials. In the tourism industry, the 10th plan win also set up an internet portal in various languages to provide information to targeted market segments. Improve the efficiency of the financial sector No Yes Trading procedures could be improved by introducing a time stamping obligation and monitoring of prices by an eXChange official on a minute-by-minute basis. These prices should be disseminated widely on a real time basis with the help of IT. Weaknesses in Country Assistance Strategy 1) Core benchmarks for CAS do not include any ICT indicators 2) Attention to ICT issues has been de-emphasized in the CAS, despite the fact that this sector is currently the driver of India's growth. Focus is now strictly on reforms to promote FDI in telecom sector through IFC involvement 3) Limited examples of ICT applications across sectors are mentioned in CAS, even though CAS advocates the need to scale up IT applications 146 MALDIVES leT DEVELOPMENT· CAS &6th NDP Comparison leT Applications as mentioned in the Fundamental DeveloPll'Iental Challenges CAS 6th Plan CAS leT as mentioned in the 6th NDP ProMcting the FragUe Envlro~ment of the Islands Improve institutional environmental monitoring capacity Decentralize management of environmental resources Protect coral reefs and coasts (Coastal Zone Management. Sea level rise) Reform environmental infrastructure for public service delivery Improving Business Environment No Yes Study the possible uses of Information and Communication Technology in economic diversification and apply practical solution. Deepen and strengthen financial sector to become efficient and sound Delivery financial services to the poor (strengthen microfinance operations) Promote development of SMEs No Yes Increase the dynamism of the commercial and business sector of the country through ICT. 1) Promote the use of e- commerce to increase the efficiency of commercial activities. 2) Create an enabling environment for e-commerce to flourish. 3) Use ICT to monitor and assess the performance of economic policies and strategies. Strengthen commerciallegalf judicial system Reform state-owned enterprises Strengthlnlng Human DeVelopment Education: No Yes Administrative strengthening and reform is required to improve the effectiveness of the management systems and the use of ICT for administrative purposes in Education management. Develop an Education Management System Improve quality and access to education (especially in No Yes Ensure that every student who completes secondary school is atolls) information and communication technology literate. 2) Develop and implement a policy and plan to incorporate IT in teaching and learning. 3) Reduce internet charges for students irrespective of location. 4) Provide adequate computers and IT connectivity to all schools. 5) Ensure that those completing primary schools are computer literate. 147 Enhance teacher training Strengthen post secondary/technical institutes No Yes Develop a dynamic labor market information system to relate education and training to the needs of the employment sectors. Support foreign~based university training Health: Increase access to public health care in atolls No Yes Introduce a strategy for the use of tele-medicine. 2) Strengthen Health Information Systems 3) Strengthen the monitoring and supervision capacity at all levels of health services. Reduce transmission of diseases (especially No Yes Strengthen information system, including special disease HIVIAIDS) registries, for major non communicable diseases. Develop a National Health Management System. Address malnutrition in atolls Develop better trained and better paid government health workers Provide better water and sanitation facilities Provide reproductive health services Strengthening Macroeconornlc Framework/Public Exp. Mgt! Governance Reduce regional disparities in access to social services and infrastructure Develop CDD approaches to meet needs of atolls Introduce domestic tax system and broaden tax base Address public sector skill shortages No Yes Strengthen the human resources and technological capacity of the MoF and Treasury to evaluate and monitor the performance of the Public Enterprises. Decentralize administration No Yes Use ICT to increase the efficiency in the provision of Government services to the public. 1) Establish a network among government offices and other institutions for the purpose of sharing and exchanging information online or in real time. 2) Develop appropriate policies, institutional structures, security systems and the required regulatory framework to guide the development of the ICT network. Strengthen public accounting system Yes Yes Accelerate the implementation of the Government Ar:counting System (GAS) Project Develop accessible information base on public Yes Yes finances Sectoral Issues and I'rloritles Strengthen budgetary processes Develop public sector expenditure framework 148 Eliminate SOE monopolies Tourism Fisheries resources and access rights management Land-use and Urban Development No Yes Develop a cadastral map of all land parcels in Mal, followed by other urban centers in the future. 2) Administer land allocation, registration, transfer of ownership and other land related matters using state-of-the art geographic information systems. Address deficiencies in land tenure systems (titles, transfer, legal framework etc) Weaknesses in Country Assistance Strategy 1. Core benchmarks for CAS do not include any ICT indicators (see Table 4 page 17) 2. No attention is given to telecommunications and ICT infrastructure even under sector issues and priorities 3. No examples of ICT applications are mentioned in CAS 4. No advisory of knowledge transfer activities related to ICTs are reflected in CAS 5. ICT issues do not appear to be central to conSUltants with clients 6. Development outcomes and milestones do not all include ICT indicators 149 NEPAL ICT DEVELOPMENT - CAS &PRSP Comparison Fundamental Developmental Challenges and Priorities mentioned in PRSP Broad-based Economic Growth Improve pro-poor budget allocation (achieve outcome focused budgeting and monitoring) Improve efficiency of public spending Increase foreign direct investment (partly through SOE reforms) Enhance labor productivity and protection of rights Improve agricultural and access to input Yes No Enhance farmer's group based technology and credit dissemination system. Put in place an improved database and regularized reporting and review system Increase percentage of population with access to Yes Yes Strategy prescribes that all VDCs have access to telecom services to all VDCs telecom services with penetration risinq to 40 lines per 1000 inhabitants Increase percentage of population with access to electricity and roads Land reform and management No Yes Strategy recommends the development of national geographic information system, carry out plot surveys, and establish a computerized land information system as a way to eliminate dual land ownership and prepare basis for progressive taxation of land; establish an up-to-date land information and mapping system to help develop effective land management Strengthening Human Development Education: Improve quality and access to education (especially at the primary school level) Support decentralization of school and university management Improve and expand teachers training program Strengthen school monitoring and supervision system Meet national demand for basic and middle level technical human resources 150 Health: Increase access to, and delivery of public health care services to underserved populations Training, retention, and upgrading of health personnel (especially in rural areas) Increase supply of essential drugs Reduce transmission of diseases (especially HIV/AIDS) Improve coverage of sanitation services to rural populations SoclallnclUtllonand Targeted Programs Reduce out of school primary-aged children Improve delivery of services to disadvantaged groups Improve diversity of civil service to be inclusive of disadvantaged groups Implement effective mechanisms for poverty monitoring Mainstream gender in development activities Strengthening MaCroeconomic Framework/Public Exp. Mgt! Governance Pursue prudent expenditure management Strategy points out that significant progress has been made in computerizing fiscal accounts and strengthening procurement procedures. Improve domestic resource mobilization Maintain monetary stability (e.g. widen instruments for Open Market Operations) Strengthen financial system (including rural financing system) Decentralize fiscal and administration functions Yes Yes Deploy Management Information Systems in 25 A web portal for HMG/N has been created with links and put good monitoring systems in place districts to government departments' forms and programs. Improve accountability and transparency in public Yes Yes Personnel Information System and HRM in all Report mentions the creation of a computerized sector (civil service, judiciary, etc) Ministries database of civil service records department as one key area of progress. Improve operational efficiency of stock market Enhance the role of private sector in economic Yes Yes Privatize Nepal Telecommunication Corporation FM radio programming has been opened up to the activities private sector to help create public awareness Deploy anti-corruption programs Enhance national security and rehabilitation of Strategy recommends strengthening National victims of violence Vigilance Center with budgetary, physical, human and technological resources at the center as well as district levels 151 Sectoral Issues and Priorities Agriculture and Rural Development Develop local export market opportunities Increase access to rural water supply, roads, and electrification Increase access to rural telecommunications Yes Yes Private operator introduced to rural telephone service Strategy prescribes that all VDCs have access to telecom services with penetration rising to 40 lines per 1000 inhabitants Promote irrigation development Food security: Improve supply and distribution of essential commodities Develop and manage road transport network in a cost effective manner to support PSD Increase contribution of trade to economy Improve efficiency of financial service delivery (especially to the poor) Expand Electricity coverage in a reliable manner Information and Communication Technologies: Yes Yes Expansion of broadcasting services, Autonomy of Report acknowledges that progress in the telecom Improve access postal service sector has been behind target. So far, Telecom Act is enacted, private operator has been selected to provide basic telecom to 1/4 of the rural underserved communities Telecom Authority has been set up to oversee the sector Tourism, Infrastructure, Services and Promotion: Expand tourism activities Private Sector Development: Expand Industrialization and Yes Yes IT development and institutionalization of Strategy recommends the introduction of an strengthen SMEs information?? appropriate technology and information program for SMEs to enhance their competitiveness Weaknesses In Country Assistance Strategy 1. No advisory or knowledge transfer activities is directly earmarked for ICTs 2. Though the CAS highlights ICT as an important element, it is not central to the Bank's programs in the Country except through IFC's investment promotion activities 152 PAKISTAN ICT DEVELOPMENT· CAS &PRSP Comparison Fundamental Developmental Challenge~C!nd Priorities PRSP leT Applications as mentioned in the CAS leT as mentioned in the PRSP $oclallncluslon and Equity Policies Improve access to education and health for women, and children. Strengthening tfumanOeVelopment Education: Improve access to, quality of, and equity in No Yes Introduce video text books and libraries, especially primary education (Universal primary education) for accessibility in rural areas; Rs 1 Billion has been allocated under the IT component of the Khusal Pakistan Program. to deliver rural-based vocational training in computers. Increase access of vulnerable groups (e.g. No Yes Explore ICT use in the delivery of education services women) primary and secondary education for reaching ESR targets; Engage private firms in the delivery of computer education and literacy programs (e.g. the NWFP government's current program) Support reform of higher education Health: Reduce mortality and morbidity with a focus on women and children Reduce population growth rate Improve quality of private healthcare services Create mass public awareness on health matters Strengtheniflgthe Efl~bnrtg Investment Climate Promote private investment in industry (reform of Yes Yes Allow private entry into telecom services markets, Including ICT and Telecommunications Sector SOEs) and privatize PTCl Promote trade liberalization and modernization of Yes Yes Including ICT and Telecommunications Sector business regulations Promote SME development Mobilize additional Investments in infrastructure (with No Yes Reorientation of priorities in the communications strategic priority to Natural Gas sector) sector Access to Justice No Yes Automation and court formation systems $trel'lgthEtfllrtgMacrdeeonomlc Frarne'oYorkiGClverrtrrient Effectiveness 153 Enhance fiscal consolidation, reform tax administration, Yes Yes Computerized General Ledger system for all Use of IT in tax assessment, putting expenditure and transparency of budgetary processes government financial transactions in a phased reports online; Modernize of overall accounting manner systems through computerization Address widespread corruption in public sector and No Yes Cabinet is considering a Committees' civil service reforms recommendation to initiate computerization of Human Resource Management processes as one way of improving civil service professionalism and service delivery Improve competitiveness of the economy (through trade, monetary and exchange rate policies) Support devolution agenda to improve efficiency, No Yes E-government project is being launched to improve particularly of public service delivery at the district level the efficiency of government services and to generate market for local software development Sectoral Issues and Priorities Rural Development and Agriculture Strengthen rural infrastructure Improve agriculture productivity and land distribution Improve efficiency of institutional capacity to manage irrigation and drainage Strengthen community and/or farmer organizations Improve water supply and sanitation services, and access to micro credit Deep engagement in Power Sector Low engagement in the transport sector IT sector Yes Yes Promote competition and attract Software 90% telephony is already digitalized, 110% increase development project in Karachi, WBG Telecom in internet usage, 18 projects have been launched to Project produce large number of IT professionals ranging from blue collar IT workers to skilled academic degree holders. E.g. establishment of COMSATS institute of IT. Launch Islamabad Software Technology Park, Reduction of PTCL bandwidth charges by 98% Financial sector development No Yes Promoting the growth of new products in the venture capital markets especially to support IT start-ups Weaknesses in Country Assistance Strategy 1. Core benchmarks for CAS do not include any ICT indicators 2. Only very little attention is given to telecommunications and ICT applications/infrastructure under sector issues and priorities 3. No examples of ICT applications are mentioned in CAS 4. No advisory or knowledge transfer activities related to ICTs are reflected in CAS 5. ICT issues do not appear to be central to consultations with clients 6. Development outcomes and milestones do not all include ICT indicators 154 SRI LANKA ICT DEVELOPMENT· CAS & PRSP Comparison* Fundamental Developmental Challenges and Priorities CAS PRSP* ICT Applications as mentioned in the CAS ICT applications as mentioned in the PRSP Poverty Reduction al1d Economic Management Fiscal consolidation Yes No Develop public expenditure information system, develop public sector tracking system Maintain price stability and sustainable balance of payments Trade and investment policy reform Labor market reform Yes Yes Develop better information centers Automation of the payments system through introduction of a real time gross settlement system. Support e-business. Improve soundness of financial system (also address money laundering, counter-terrorism etc) Public enterprise reforms (including reforms of SOEs) Yes Yes Reform of postal service delivery Closer supervision of SOEs including Sri Lanka Post. Governments remaining stake in Sri Lanka Telecom Ltd will be divested. Introduce telephone and internet services to postal offices as part of the commercialization process. Power and energy sector reform Reduce cost of doing business Promote private sector involvement in infrastructure development Reforming Governance and Empowering the Poor Reform public services to make it more accountable No Yes Where possible, introduce automation to simplify and (e.g. improve coordination among agencies, Upgrade tax accelerate the provision of services to the public by front- administration) line government agencies Improve quality of judicial services Strengthen capacity for poverty assessment, monitoring, and evaluation Foster decentralization Improve capacity for coastal preservation, forestry, wildlife preservation, and eco-tourism Enhance legal rights of the poor Reduce discrimination of gender and other No Yes Introduce computer system to issue trilingual identity cards disadvantaged or vulnerable groups for ensuring identification procedures for all citizens Promote efficient use of urban land Reduce Conflict-related Poverty Improve delivery of relief services 155 Monitor adherence to cease-fire arrangements Resettlement of displaced persons Rehabilitation of conflict affected regions Promote ethnic reconciliation Create Opportunities for Pro-poor Growth Connect poor regions to dynamic markets No Yes Introduce spatial integration strategy that focuses on 6 main pro-poor transport and communication initiatives, including access the telecom facilities and access to internet in the country side. Bridging information to the poor (closing the digital Yes Yes Transform postal system into an information Implement the national telecoms policy. Broad band divide), especially in conflicts areas, lOPs, country side and finance portal, internet connectivity to networks will be developed and extended to the country countryside, E-Lanka Project side, and public services will be gradually automated. Develop broad band in rural areas that can be used by private providers. Develop digital community radio stations with community internet facilities Revitalize rural development to reduce rural poverty Foster SME development No Yes Provide internet connections and facilities to selected small business development promotion agencies in small towns and cities. Improve access to ICTs and use of automated computerized information and loan accounting systems to improve business services Investing in People Assist ultra poor communities with direct interventions Integrate poverty reduction into sector strategies Improve public service delivery to the urban poor No Yes Develop information systems that improve communication between employers and potential job seekers. Create Lanka Service Network as a computerized, interactive database of job seekers, and other service providers. Develop online employment service which will also be capable of handling pension payment services, disability benefit payments, and crisis management systems Deliver education services that are linked to employment markets and needs of industry Improving quality of education (especially in conflict No Yes Promote the teaching of computer science in secondary areas) schools. Improve computer facilities in secondary schools Modernizing secondary schools Match vocational training to labor market demands No Yes Provide support for private sector to establish post- secondary computer training institutes in the districts, which will be linked to proposed IT parks Improve access and quality of tertiary education No Yes Promote e-Iearning, integrate computer use into professional training in areas of engineering, medicine, and management, and teacher training. Establish Higher 156 Institute of Applied Technology to provide a recognized system of certification in the vocational trades, especially in IT. Expand university offerings, including expansion of open-university facilities in regional centers of distance education Incorporating ethnic harmony into education Health Increase knowledge of health and nutrition among the No Yes Strengthen health information, education and poor communication programs Expand access to health care services, infrastructure, and delivery to the poor/conflict areas Improve effectiveness of use of health care resources Restructure social protection system Increase knowledge of health and nutrition among the No Yes Strengthen health information, education and poor communication programs Improve urban habitats for the poor Secl6tallssues and Prlorltle9 Agriculture and rural development Improve sewage, sanitation, irrigation and water delivery systems in rural/conflict areas Foster development of micro enterprises Improve functioning of land markets No Yes Pilot IT digital mapping, data updating and land records preservation. Develop national program for accelerated IT land titling and registration Raise productivity of farm and non-farm sectors for No Yes Improve quality of rural education, vocational training and rural development information services Improve functioning of agriculture input, outputs, and Yes No Improve communication infrastructure in the Introduce IT to modernize trading and supply chain technology markets countryside management (e.g. in tea market) Telecommunications No Yes Develop an ICT strategy, constitute a Strategic Council on ICT to advice on matters of IT policy. International voice telephony and fixed wire line services will be liberalized. Foster development of IT industry as one of the major sources of skill intensive employment. Establishment of technology and science parks Weaknesses in Country Assistance Strategy 1. Core benchmarks for CAS do not include any ICT indicators 2. Attention to ICT issues it still predominantly sector oriented, but E-lanka project is providing initial impetus for a shift towards multi-sectoral approach 3. limited examples of ICT applications across sectors are mentioned in CAS 4. little or no actual/planned advisory or knowledge transfer activities related to ICTs is referenced in CAS 5. Though ICTs are recognized as one of the important areas with high potential for growth, Bank's role is still minimal as outlined in the CAS *Although with the new government changeover in Sri Lanka, the prior National Development Policy (Regaining Sri Lanka I PRSP) has be repudiated by the current government, many of the objectives and goals are being reformulated by the current government and are still relevant to Sri Lanka's economic development. 157 158