Funding, Financing Models & Incentives

Digital transformation usually requires considerable investment in connectivity infrastructure, as well as funding and financing for digital literacy efforts and the development of a digital public sector with new and specialized job roles. Longer-term funding within government lets departments undertake more significant change management, including breaking down silos between databases and deploying a holistic approach to digital technologies.

Outside of the public sector, funding and financing also extends to the business models used to advance digital transformation. Particularly when delivering digital products and services in low- and middle-income countries, digital innovators and entrepreneurs need to ensure that they are able to cater for the market effectively. This could include subscription-based models and community-sharing approaches (to mitigate up-front investments in technology) and public-private collaborations for last-mile contexts, where financial returns may be more challenging.

Country examples:

Positive societal outcome: Argentina Conectada

In 2010, the Argentina Conectada project established a fibre-optic network called Refefo (“Federal Fibre Optic Network”), connecting public institutions as well as retail providers of telecommunications. Financed by the public sector and IDB, this multi-purpose network effectively allows Argentinian government services to transfer data and share information for the provision of health care, education, social development, public security, and national defence. It now reaches 1,129 locations across the country and has led to large improvements in the quality and affordability of Internet services. With a total investment of USD 13,200 billion, and a deployment of more than 38,800 km of fibre, more than 22 million Argentines will be connected by the end of 2023.