Leveraging digital technology for development: Does ICT contribute to poverty reduction?

Abstract

The Sustainable Development Goal (SDG) 1 requires countries to end poverty of all forms. At the same time, SDG 9 target 9.c calls for increasing Information and Communication Technology (ICT) access and striving to provide universal and affordable access to the internet in the least developed countries by 2020. While the existing studies have explored the effect of ICT on economic growth, there is a limited empirical study on the effect of ICT on poverty reduction. This article, therefore, investigates the effect of ICT on poverty reduction using comprehensive panel data for 44 sub-Saharan Africa (SSA) countries from 2010 to 2019. Using the dynamic system-generalized method of moment estimator to control endogeneity, the findings show that telephone penetration, mobile phone penetration, and ICT goods imported contribute to poverty reduction, while internet penetration, broadband penetration, and ICT goods exported increase poverty rate regardless of gender and age group. The net effect estimates reveal that at the maximum value of most ICT variables, economic growth, income inequality, and access to credit significantly increase poverty rate regardless of the age group. We argue that for SSA to leverage ICT to drive economic prosperity, policies that seek to drive ICT availability and affordability should be supported with policies that ensure income redistribution, trickle-down development, and minimizing the cost of accessing credit.