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Why haven’t digital platforms transformed firms in developing countries? The Rwandan tourism sector explored

Caption — Tourism is becoming an increasingly important contributor to Rwanda’s economy. Image of Homo sapiens and Gorilla beringei beringei meeting in Rwanda’s Volcanoes National Park by Andries3.

One of the great hopes for new Internet connectivity in the developing world is that it will allow those in developing countries who offer products and services to link to and profit from global customers. With the landing of undersea Internet infrastructure in East Africa, there have been hopes that as firms begin to use the Internet more extensively that improved links to markets will positively impact them.

Central to enabling new customer transactions is the emergence of platforms — digital services, websites and online exchanges — that allow more direct customer-producer interactions to occur. As part of our work exploring the impacts of growing internet connectivity and digital ICTs in East Africa, we wanted to explore how digital platforms were affecting Rwandan firms. Have Rwandan firms been able to access online platforms? What impact has access to these platforms had on firms?

Tourism is becoming an increasingly important contributor to Rwanda’s economy, with 3.1% direct contribution to GDP, and representing 7% of employment. Tourism is typically focused on affluent international tourists who come to explore the wildlife of the country, most notably as the most accessible location to see the mountain gorilla. Rwandan policy makers see tourism as a potential area for expansion, and new connectivity could be one key driver in making the country more accessible to customers.

Tourist service providers in Rwanda have a very high Internet adoption, and even the smallest hotel or tour agency is likely to have at least one mobile Internet-connected laptop. Many of the global platforms also have a presence in the region: online travel agents such as Expedia and Hotels.com work with Rwandan hotels, common social media used by tourists such as TripAdvisor and Facebook are also well-known, and firms have been encouraged by the government to integrate into payment platforms like Visa.

So, in the case of Rwandan tourism, Internet connectivity, Internet access and sector-wide platforms are certainly available for tourism firms. During our fieldwork, however (and to our surprise) we found adoption of digital tourism platforms to be low, and the impact on Rwandan tourism minimal. Why? This came down to three mismatches – essentially to do with integration, with fit, and with interactions.

Global tourism platforms offer the potential for Rwandan firms to seamlessly reach a wider range of potential tourists around the globe. However, we found that the requirements for integration into global platforms were often unclear for Rwandan firms, and there was a poor fit with the existing systems and skills. For example, hotels and lodges normally integrate into online travel agencies through integration of internal information systems, which track bookings and availability within hotels. However, in Rwanda, whilst a few larger hotels used booking systems, even the medium-sized hotels lacked internal booking systems, with booking based on custom Excel spreadsheets, or even paper diaries. When tourism firms attempted to integrate into online services they thus ran into problems, and only the large (international) hotel chains tended to be fully integrated.

Integration of East African tourism service providers into global platforms was also limited by the nature of the activities in the region. Global platforms have typically focused on providing facilities for online information, booking and payment for discrete tourism components — a hotel, a flight, a review of an attraction. However, in East Africa much international tourism is ‘packaged’, meaning a third-party (normally a tour operator) will build an itinerary and make all the bookings for customers. This means that online tourism platforms don’t provide a particularly good fit, either for tourists or Rwandan service providers. A tourist will not want the complication of booking a full itinerary online, and a small lodge that gets most of its bookings through tour operators will see little potential in integrating into a global online platform.

Interaction of Rwandan tourism service providers with online platforms is inevitably undertaken over digital networks, based on remote interactions, payments and information flows. This arms-length relationship often becomes problematic where the skills and ability of service providers are lower. For example, Rwandan tourism service providers often require additional information, help or even training on how best to use platforms which are frequently changing. In contexts where lower cost Internet can at times be inconsistent, and payment systems can be busy, having the ability to connect to local help and discuss issues is important. Yet, this is the very element that global platforms like online travel agents are often trying to remove.

So in general, we found that tourism platforms supported the large international hotels and resorts where systems and structures were already in place for seamless integration into platforms. Indeed, as the Rwandan government looks to expand the tourism sector (such as through new national parks and regional integration), there is a risk that the digital domain will support generic international chains entering the country — over the expansion of local firms.

There are potential ways forward, though. Ironically, the most successful online travel agency in Rwanda is one that has contracted a local firm in the capital Kigali to allow for ‘thicker’ interactions between Rwandan service providers and platform providers. There are also a number of South African and Kenyan online platforms in the early stages of development that are more attuned to the regional contexts of tourism (for example Safari Now, a dynamic Safari scheduling platform; Nights Bridge, an online platform for smaller hotels; and WETU, an itinerary sharing platform for service providers), and these may eventually offer a better solution for Rwandan tourism service providers.

We came to similar conclusions in the other sectors we examined as part of our research in East Africa (looking at tea production and Business Process Outsourcing) — that is, that use of online platforms faces limitations in the region. Even as firms find themselves able to access the Internet, the way these global platforms are designed presents a poor fit to the facilities, activities and needs of firms in developing countries. Indeed, in globalised sectors (such as tourism and business outsourcing) platforms can be actively exclusionary, aiding international firms entering developing countries over those local firms seeking to expand outwards.

For platform owners and developers focusing on such developing markets, the impacts of greater access to the Internet are therefore liable to come when platforms are able to balance between global reach and standards — while also being able to integrate some of the specific needs and contexts of developing countries.

Read the full report: Foster, C., and Graham, M. (2015) The Internet and Tourism in Rwanda. Value Chains and Networks of Connectivity-Based Enterprises in Rwanda. Project Report, Oxford Internet Institute, University of Oxford.

Chris Foster is a researcher at the Oxford Internet Institute. His research focus is on technologies and innovation in developing and emerging markets, with a particular interest on how ICTs can support development of low income groups.

The economic expectations and potentials of broadband Internet in East Africa

Ed: There has a lot of excitement about the potential of increased connectivity in the region: where did this come from? And what sort of benefits were promised?

Chris: Yes, at the end of the 2000s when the first fibre cables landed in East Africa, there was much anticipation about what this new connectivity would mean for the region. I remember I was in Tanzania at the time, and people were very excited about this development – being tired of the slow and expensive satellite connections where even simple websites could take a minute to load. The perception, both in the international press and from East African politicians was that the cables would be a game changer. Firms would be able to market and sell more directly to customers and reduce inefficient ‘intermediaries’. Connectivity would allow new types of digital-driven business, and it would provide opportunity for small and medium firms to become part of the global economy. We wanted to revisit this discussion. Were firms adopting internet, as it became cheaper? Had this new connectivity had the effects that were anticipated, or was it purely hype?

Ed: So what is the current level and quality of broadband access in Rwanda? ie how connected are people on the ground?

Chris: Internet access has greatly improved over the previous few years, and the costs of bandwidth have declined markedly. The government has installed a ‘backbone’ fibre network and in the private sector there has also been a growth in the number of firms providing Internet service. There are still some problems though. Prices are still are quite high, particularly for dedicated broadband connections, and in the industries we looked at (tea and tourism) many firms couldn’t afford it. Secondly, we heard a lot of complaints that lower bandwidth connections – WiMax and mobile internet – are unreliable and become saturated at peak times. So, Rwanda has come a long way, but we expect there will be more improvements in the future.

Ed: How much impact has the Internet had on Rwanda’s economy generally? And who is it actually helping, if so?

Chris: Economists in the World Bank have calculated that in developing economies a 10% improvement in Internet access leads to an increase in growth of 1.3%, so the effects should be taken seriously. In Rwanda, it’s too early to concretely see the effects in bottom line economic growth. In Rwanda, it’s too early to concretely see the effects in bottom line economic growth. In this work we wanted to examine the effect on already established sectors to get insight on Internet adoption and use. In general, we can say that firms are increasingly adopting Internet connectivity in some form, and that firms have been able take advantage and improve operations. However, it seems that wider transformational effects of connectivity have so far been limited.

Ed: And specifically in terms of the Rwandan tea and tourism industries: has the Internet had much effect?

Chris: The global tourism industry is driven by Internet use, and so tour firms, guides and hotels in Rwanda have been readily adopting it. We can see that the Internet has been beneficial, particularly for those firms coordinating tourism in Rwanda, who can better handle volumes of tourists. In the tea industry, adoption is a little lower but the Internet is used in similar ways – to coordinate the movement of tea from production to processing to selling, and this simplifies management for firms. So, connectivity has had benefits by improvements in efficiency, and this complements the fact that both sectors are looking to attract international investment and become better integrated into markets. In that sense, one can say that the growth in Internet connectivity is playing a significant role in strategies of private sector development.

Ed: The project partly focuses on value chains: ie where value is captured at different stages of a chain, leading (for example) from Rwandan tea bush to UK Tesco shelf. How have individual actors in the chain been affected? And has there been much in the way of (the often promised) disintermediation — ie are Rwandan tea farmers and tour operators now able to ‘plug directly’ into international markets?

Chris: Value chains allow us to pay more attention to who are the winners (and losers) of the processes described above, and particularly to see if this benefits Rwandan firms who are linked into global markets. One of the potential benefits originally discussed around new connectivity was that with the growth of online channels and platforms — and through social media — that firms as they became connected would have a more direct link to large markets and be able to disintermediate and improve the benefits they received. Generally, we can say that such disintermediation has not happened, for different reasons. In the tourism sector, many tourists are still reluctant to go directly to Rwandan tourist firms, for reasons related to trust (particularly around payment for holidays). In the tea sector, the value chains are very well established, and with just a few retailers in the end-markets, direct interaction with markets has simply not materialised. So, the hope of connectivity driving disintermediation in value chains has been limited by the market structure of both these sectors.

Ed: Is there any sense that the Internet is helping to ‘lock’ Rwanda into global markets and institutions: for example international standards organisations? And will greater transparency mean Rwanda is better able to compete in global markets, or will it just allow international actors to more efficiently exploit Rwanda’s resources — ie for the value in the chain to accrue to outsiders?

Chris: One of the core activities around the Internet that we found for both tea and tourism was firms using connectivity as a way to integrate themselves into logistic tracking, information systems, and quality and standards; whether this be automation in the tea sector or using global booking systems in the tourism sector. In one sense, this benefits Rwandan firms in that it’s crucial to improving efficiency in global markets, but it’s less clear that benefits of integration always accrue to those in Rwanda. It also moves away from the earlier ideas that connectivity would empower firms, unleashing a wave of innovation. To some of the firms we interviewed, it felt like this type of investment in the Internet was simply a way for others to better monitor, define and control every step they made, dictated by firms far away.

Ed. How do the project findings relate to (or comment on) the broader hopes of ICT4D developers? ie does ICT (magically) solve economic and market problems — and if so, who benefits?

Chris: For ICT developers looking to support development, there is often a tendency to look to build for actors who are struggling to find markets for their goods and services (such as apps linking buyers and producers, or market pricing information). But, the industries we looked at are quite different — actors (even farmers) are already linked via value chains to global markets, and so these types of application were less useful. In interviews, we found other informal uses of the Internet amongst lower-income actors in these sectors, which point the way towards new ICT applications: sectoral knowledge building, adapting systems to allow smallholders to better understand their costs, and systems to allow better links amongst cooperatives. More generally for those interested in ICT and development, this work highlights that changes in economies are not solely driven by connectivity, particularly in industries where rewards are already skewed towards larger global firms over those in developing countries. This calls for a context-dependent analysis of policy and structures, something that can be missed when more optimistic commentators discuss connectivity and the digital future.

Christopher Foster was talking to blog editor David Sutcliffe.

Is China shaping the Internet in Africa?

The telecommunication sector in Africa is increasingly crowded. Image of the Panel on the Future of China-Africa Relations, World Economic Forum on Africa 2011 (Cape Town) by World Economic Forum.

Ed: Concerns have been expressed (eg by Hillary Clinton and David Cameron) about the detrimental role China may play in African media sectors, by increasing authoritarianism and undermining Western efforts to promote openness and freedom of expression. Are these concerns fair?

Iginio: China’s initiatives in the communication sector abroad are burdened by the negative record of its domestic media. For the Chinese authorities this is a challenge that does not have an easy solution as they can’t really use their international broadcasters to tell a different story about Chinese media and Chinese engagement with foreign media, because they won’t be trusted. As the linguist George Lakoff has explained, if someone is told “Don’t think of an elephant!” he will likely start “summoning the bulkiness, the grayness, the trunkiness of an elephant”. That is to say, “when we negate a frame, we evoke a frame”. Saying that “Chinese interventions are not increasing authoritarianism” won’t help much. The only path China can undertake is to develop projects and use its media in ways that fall outside the realm of what is expected, creating new associations between China and the media, rather than trying to redress existing ones. In part this is already happening. For example, CCTV Africa, the new initiative of state-owned China’s Central Television (CCTV) and China’s flagship effort to win African hearts and minds, has developed a strategy aimed not at directly offering an alternative image of China, but at advancing new ways of looking at Africa, offering unprecedented resources to African journalists to report from the continent and tapping into the narrative of a “rising Africa”, as a continent of opportunities rather than of hunger, wars and underdevelopment.

Ed: Ideology has disappeared from the language of China-Africa cooperation, largely replaced by admissions of China’s interest in Africa’s resources and untapped potential. Does politics (eg China wanting to increase its international support and influence) nevertheless still inform the relationship?

China’s efforts in Africa during decolonisation were closely linked to its efforts to export and strengthen the socialist revolution on the continent. Today the language of ideology has largely disappeared from public statements, leaving less charged references to the promotion of “mutual benefit” and “sovereignty and independence” as guides of the new engagement. At the same time, this does not mean that the Chinese government has lost interest in engaging at the political/ideological level when the conditions allow. Identity of political views is not a precondition for engagement anymore but neither is it an aspiration, as China is not necessarily trying to influence local politics in ways that could promote socialism. But when there is already a resonance with the ideas embraced by its partners, Chinese authorities have not shied away from taking the engagement to a political/ideological level. This is demonstrated for example by party to party ties between the Communist Party of China (CUC) and other Socialist parties in Africa, including the Ethiopian People’s Revolutionary Democratic Front. Representative of the CUC have been invited to attend the EPRDF’s party conferences.

Ed: How much influence does China have on the domestic media / IT policies of the nations it invests in? Is it pushing the diffusion of its own strategies of media development and media control abroad? (And what are these strategies if so?)

Iginio: The Chinese government has signalled its lack of interest in exporting its own development model, and its intention to simply respond to the demands of its African partners. Ongoing research has largely confirmed that this ‘no strings attached’ approach is consistent, but this does not mean that China’s presence on the continent is neutral or has no impact on development policies and practices. China is indirectly influencing media/IT policies and practices in at least three ways.

First, while Western donors have tended to favour media projects benefiting the private sector and the civil society, often seeking to create incentives for the state to open a dialogue with other forces in society, China has exhibited a tendency to privilege government actors, thus increasing governments’ capacity vis-à-vis other critical components in the development of a media and telecommunication systems.

Second, with the launch of media projects such as CCTV Africa China has dramatically boosted its potential to shape narratives, exert soft power, and allow different voices to shape the political and development agenda. While international broadcasters such as the BBC World Service and Aljazeera have often tended to rely on civil society organisations as gatekeepers of information, CCTV has so far shown less interest in these actors, privileging the formal over the informal and also as part of its effort to provide more positive news from the continent.

Third, China’s domestic example to balance between investment in media and telecommunication and efforts to contain the risks of political instability that new technologies may bring, has the potential to act as a legitimising force for other states that share concerns of balancing both development and security, and that are actively seeking justifications for limiting voices and uses of technology that are considered potentially destabilising.

Ed: Is China developing tailored media models for abroad, or even using Africa as a “development lab”? How does China’s interest in Africa’s mediascape compare with its interest in other regions worldwide?

Iginio: There are concerns that, just as Western countries have tried to promote their models in Africa, China will try to export its own. As mentioned earlier, no studies to date have proved this to be the case. Rather, Africa indeed seems to be emerging as a “development lab”, a terrain in which to experiment and progressively find new strategies for engagement. Despite Africa’s growing importance for China as a trading and geostrategic partner, the continent is still perceived as a space where it is possible to make mistakes. In the case of the media, this is resulting in greater opportunities for journalists to experiment with new styles and enjoy freedoms that would be more difficult to obtain back in China, or even in the US, where CCTV has launched another regional initiative, CCTV America, which is more burdened, however, by the ideological confrontation between the two countries.

As part of Oxford’s Programme in Comparative Media Law and Policy‘s (PCMLP’s) ongoing research on China’s role in the media and communication sector in Africa, we have proposed a framework that can encourage understanding of Chinese engagement in the African mediasphere in terms of its original contributions, and not simply as a negative of the impression left by the West. This framework breaks down China’s actions on the continent according to China’s ability to act as a partner, a prototype, and a persuader, questioning, for example, whether or not media projects sponsored by the Chinese government are facilitating the diffusion of some aspects that characterise the Chinese domestic media system, rather than assuming this will be the case.

China’s role as a partner is evident in the significant resources it provides to African countries to implement social and economic development projects, including the laying down of infrastructure to increase Internet and mobile access. China’s perception as a prototype is linked to the ability its government has shown in balancing between investment in media and ICTs and containment of the risks of political instability new technologies may bring. Finally, China’s presence in Africa can be assessed according to its modality and ability to act as a persuader, as it seeks to shape national and international narratives.

So far we have employed this framework only to look at Chinese engagement in Africa, focusing in particular on Ghana, Ethiopia and Kenya, but we believe it can be applied also in other areas where China has stepped up its involvement in the ICT sector.

Ed: Has there been any explicit conflict yet between Chinese and non-Chinese news corporations vying for influence in this space? And how crowded is that space?

Iginio: The telecommunication sector in Africa is increasingly crowded as numerous international corporations from Europe (e.g. Vodafone), India (e.g. Airtel) and indeed China (e.g. Huawei and ZTE) are competing for shares of a profitable and growing market. Until recently Chinese companies have avoided competing with one another, but things are slowly changing. In Ethiopia, for example, after an initial project funded by the Chinese government to upgrade the telecommunication infrastructure was entirely commissioned to Chinese telecom giant ZTE, which is partially owned by the state, now ZTE has entered in competition with its Chinese (and privately owned) rival, Huawei, to benefit from an extension of the earlier project. In Kenya Huawei even decided to take ZTE to court over a project its rival won to supply the Kenyan police with a communication and surveillance system. Chinese investments in the telecommunication sectors in Africa have been part of the government’s strategy of engagement in the continent, but profit seems to have become an increasingly important factor, even if this may interfere with this strategy.

Ed: How do the recipient nations regard China’s investment and influence? For example, is there any evidence that authoritarian governments are seeking to adopt aspects of China’s own system?

Iginio: China is perceived as an example mostly by those countries that are seeking to balance between investment in ICTs and containment of the risks of political instability new technologies may bring. In a Wikileaks cable reporting a meeting between Sebhat Nega, one of the Ethiopian government’s ideologues, and the then US ambassador Donald Yamamoto, for example, Sebhat was reported to have openly declared his admiration for China and stressed that Ethiopia “needs the China model to inform the Ethiopian people”.

Iginio Gagliardone is a British Academy Post-Doctoral Research Fellow at the Centre for Socio-Legal Studies, University of Oxford. His research focuses on the role of the media in political change, especially in Sub-Saharan Africa, and the adaptation of international norms of freedom of expression in authoritarian regimes. Currently, he is exploring the role of emerging powers such as China in promoting alternative conceptions of the Internet in Africa. In particular he is analysing whether and how the ideas of state stability, development and community that characterize the Chinese model are influencing and legitimizing the development of a different conception of the information society.

Iginio Gagliardone was talking to blog editor David Sutcliffe.