HPE: Closing the Digital Divide

How do you define the digital divide? Has your definition evolved over time?
Yes, the definition of the digital divide has definitely changed over time. When digital accessibility was dependent upon large mainframes and desktop devices that required large capital investments and massive line connections, clearly huge swaths of people—in fact whole geographies—were being excluded.

But as we all know technology has evolved. And as we’ve become more agile and cloud-based, digital technology has become accessible to almost everyone. I think there’s a misconception out there about how widespread common digital access has become. By 2017, 97% of Africans will have a mobile phone and 30% of the population will have a smart phone or access to a smart phone connection. Seven in 10 young Africans are currently using social media and one in five young Africans surveyed in the Deloitte Africa Consumer Review 2015 have bought a product or service using their mobile.

So today, the digital divide issue isn’t about access to technology, but rather access to technological services that serve fundamental needs. To my mind, I think there is now a sophistication divide. Many of today’s digital advancements are geared toward meeting sophisticated Western needs. But there’s a huge opportunity for people in developing countries to access basic services through technology that currently aren’t being provided. It’s as though we’ve skipped the most basic entry level and jumped right into offering sophisticated products and applications.

What do you think are our greatest opportunities in closing this gap?
Providing a simple, easy way for people to access basic, secure financial services is both an opportunity and a challenge. There are millions of people whose needs aren’t being met by traditional financial systems. More than 50% of people in our operating markets don’t have a formal bank account and in some of the most populous emerging markets more than 85% do not participate in the formal banking system.

These are people with very simple financial needs who don’t have a credit history. People who might be able to save a little money they want to put somewhere, but don’t have anywhere to go. And even if they could access some kind of financial system, many of the developing markets aren’t well regulated, making security a real issue.

Another opportunity exists to enable groups to save. In Africa, India and other developing countries, huge numbers of people save money by banding together into informal savings groups. But there isn’t yet a commercially available mechanism that helps groups save. A mobile payment solution for group-based savings schemes holds great potential.

What do you think are the biggest obstacles to closing the gap?
Affordability is one big obstacle. The reality is that the financial services model is based on pooling lots of money and then charging fees. The challenge then is making services available to people who have very little money, without charging fees they can’t afford. In order to build an accessible, sustainable model, we need to find a way to keep our administration costs and fees down.

Education is another critical obstacle. In many underdeveloped areas people have no understanding of basic financial concepts. A simple concept like the advantages of saving a little bit of money regularly, and then benefiting from compound interest, is completely unknown. But the importance of knowing how to manage money is such a fundamental skill. I sometimes think personal finance should be taught in school before history!

The lack of education about sound personal financial management is tragic. In South Africa, 60% of households permanently live on overdrafts. People get onto a terrible hamster wheel where they earn money to pay off their debts—not save, not improve their lives—just pay off never-ending debt. They don’t understand the concept of debt consolidation which can allow you to take back control of your income and your life.

That’s why technology is so exciting—it holds tremendous power for making education available. At Old Mutual, our vision is to take financial education much more broadly to the masses. We developed a simple online site called MoneyVersity that explains basic financial concepts very simply.

Once people understand these concepts they become open to all kinds of opportunities. We have a micro-insurance program called Kilimo Salama (Safe Agriculture) that we introduced in Kenya and are now piloting in Zimbabwe. Smallhold farmers are completely reliant on the weather. A bad year can mean disaster. But agricultural micro insurance can reduce the impact of bad weather and give insured farmers the ability to buy better seeds and fertilizers.

Are you optimistic about the future and being able to find answers to these problems?
I am very, very optimistic. I think science and technology are our potential saviors. I believe how we choose to use the potential of technology will determine our future. Just look at the astounding innovations that are coming out—you can make a prosthetic limb by 3D printing—how incredible! The question with regard to helping to bridge the digital divide is: How can we encourage inclusive growth more broadly?

I’m extremely optimistic about the opportunities technology provides and how it enables collaboration between groups of people who wouldn’t naturally meet. If we can create partnerships between people in developing countries who really understand what they need (as opposed to people in developed countries who think they know) and connect them with people who have the ability to harness technological solutions—the opportunities for transformative breakthroughs are astounding.

You were at Unilever for nearly three decades, including serving as their CSO. What did you take from that experience that fuels your passion and focus today at Old Mutual?
I joined Unilever because I believed that business should be used as a force for good. Not just to make a profit but as a means to improve society. I’ve spent my whole life with this as my goal. I’ve brought this same approach with me to Old Mutual. I made the decision to change industries and move to a financial services company because it was clear that we needed to get capital moving in the right direction and address people’s ability to make a living. The issues we’re addressing at Old Mutual are different, but my passion is the same!

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