Sri Lanka is in trouble. The economy is being wrecked by Covid-19, and the country has massive debt repayments coming up this year. The year 2020 was extremely bad economically, and indications are that 2021 may be worse. Until sufficient stocks of vaccines are procured to immunise at least 70% of the population, our economy cannot go back to any semblance of normalcy.
There’s no use blaming this Government, the last regime, or anyone else. Blame Nature. Blame the virus. This was something that no country was prepared for.
Sri Lanka needs to attract Foreign Direct Investments and foreign tourists to survive. But our level of competitiveness on the global stage is dismal, and we simply don’t have any major Unique Selling Propositions (USPs) to spark the interest of global investors. There’s no use talking about high literacy and longevity, and a strategic location geographically. Lots of countries have all of that.
We need to increase our efficiency and ease of doing business. That means installing technology. Just try to do business through the websites of most Sri Lankan organisations – State, private, individual, etc. Most have the functionality of glorified newspaper pages, and there’s little actual digital capability. To impress foreign investors and foreign travelers, we need to digitalise and look attractive. Every aspect of our country that has slow old manual systems needs to be changed, to show the world that we are a nation of the New Millennium and not one that’s still struggling with antiquated systems of the last century.
This is not a choice anymore. It’s a matter of survival.
A welcome decision that requires the country’s full support
A few weeks ago, the President brought the Ministry of Technology directly under his purview. He is the Subject Minister for it, which gives national priority to this crucial area. This is a welcome move indeed. But this decision needs the full support of all sections of the State and private sector to empower it to work, to drag Sri Lanka into the digital age in all the areas that Sri Lanka is lagging behind.
But this Ministry cannot be effective if its directives are not followed by every government institution, including all other Ministries. If other Ministries do not properly digitalise, or follow their own standards in digitalisation, then the national effort will be incoherent and fall apart. It is therefore vital that the Ministry of Technology be given absolute powers to enforce rapid digitalisation.
Why should investors come to Sri Lanka, and not Malaysia or Singapore?
Investors look for ease of doing business, because they want rapid returns on investments. They don’t want to get stuck in ancient manual systems for years. The higher the level of digitalisation, the more attractive a country becomes. It’s that simple.
What is digitalisation?
Simply put, it’s the ability of a person living in the depths of Monaragala to seamlessly market his product to a customer in Las Vegas. The keyword here is ‘seamless’. If the proper digitalisation hasn’t been enabled by government agencies, banks, internet service providers, Customs, the Central Bank, etc., there is no way that this can work. This is not about putting up a fancy looking website. It is about making every existing process as fast as possible, and facilitating the introduction of new and better digital processes that are used internationally.
Cost
If you think digitalisation is a costly process that would require billions of rupees at every institution, think again. Much of the digitalisation can be carried out at very low cost, as long as it is done by competent persons who are well versed in global best practices. This should not be another method for every Minister’s cousin to rake in nefarious profits.
Up-to-date digital systems
There’s little point in implementing digital systems and letting them languish for years as they become obsolete. Every institution must have a continuous process to keep digital systems up to date with advancing technology and processes.
Paperless
Digitalisation in Sri Lanka has too often simply been the adding on of a digital system while continuing to maintain the manual system. This defeats the whole purpose, since it is adding to the waste of time. Once a digital system is implemented, the paper system must be discontinued and the process must become truly paperless.
Get rid of the red tape
Digitalisation in itself is useless if it is only transferring bureaucratic red tape onto our computers. The entire process of digitalisation needs to include the key aspect of wiping out red tape. There’s no use going digital if you still need your Grama Niladari to authorise every decision you make, and your Grama Niladari is only available two days of the week.
Bandwidth and nationwide reach
The private sector has a vital role to play in digitalisation – mainly in the areas of nationwide coverage and sufficient bandwidth – and in banking. The person in Monaragala shouldn’t have to climb a coconut tree to obtain an internet signal. Neither should they suffer from insufficient bandwidth that would prevent them from having online meetings with customers.
Appointment systems
A key aspect of digitalisation in the battle against red tape is in the setting up of appointment systems for all organisations, which would drastically reduce physical waiting times in dealing with government institutions, and also private sector institutions. This column covered this topic extensively in an article titled “Is Sri Lanka better prepared to work from home?”
E-wallet and QR Codes
The private sector must lead by leveraging technology to help popularise the use of cashless payments in the country. This would greatly help a wide range of customers including micro-enterprises and SMEs to develop their business without the expense, burdens, and security issues that come with cash management. Electronic payments typically save up to 1-2% of a country's GDP. E-Payments providers offer a streamlined and realistic payment choice for daily needs, from travel and on-demand food and delivery to both online and offline transactions, and even mobile prepaid upgrades via growing ecosystem of services and networks of partners.
Furthermore, e-Payments can partner with third parties, strengthening the seamless adoption of email wallets across the nation. This allows users to make payments from mobile apps for participating banks and e-wallets and requires merchants to show only one QR code for payments. At present, several Sri Lankan banks have recently rolled out e-wallet systems, but their acceptance among both customers and merchants is very low.
Ad hoc decision making
Digitalisation also cannot undo the curse of ad hoc decision making that plagues Sri Lanka’s state sector. It is clear that the vast majority of decisions are taken on a 'gut feeling’ or ‘experience’ basis, with little or no consultative processes or examination through statistical and global data of the impact of decisions that significantly affect policy. Both the state and private sectors need to firmly adopt scientific thinking, which has a far greater connection to reality.
Foreign Direct Investments (FDI)
By 2022, the Government expects FDI to hit $ 4 billion, which is a more than three-fold increase; but in the first eight months of 2019, FDIs into Sri Lanka decreased by 65% to $ 501 million from $ 1.42 billion, according to the latest data released by the Central Bank, as shown in Fig. 1. Granted, Covid-19 is currently a dominating factor in global FDI. But when one examines FDI into Sri Lanka from 2009 onwards, when our war ended, one gets the bad feeling that FDI growth is only meandering slowly upwards, and not skyrocketing as we need it to do.
Digital technology
We exist today in a digital world. Digital technology is quickly moving forward, linking people worldwide and generating exciting new possibilities. More than at any time in human history, as a result of technological advances, people have better access to information, facilities, and resources. In almost all nations, in industries and daily lives, the influence of the automating method, artificial intelligence and the Internet of Things (IoT) is felt. Although the effect of digitalisation is widespread, the benefits it produces are unevenly distributed. To help build a more inclusive future for all, it is crucial to understand a country's digital readiness.
Digital economy
The world economy is also experiencing digital transition at a frantic pace. What's the digital economy, then? It’s the economic activity that is the result of billions of online interactions between individuals, companies, devices, knowledge, and processes every day. The cornerstone of the digital economy is the hyperlink ability, which means that individuals, entities and machines that come from the internet, mobile systems, and the internet itself, are increasingly interconnected. The digital economy forms and undermines traditional ideas as to how companies are organised, how companies communicate, and what services, knowledge, and products customers receive.
All consumers – business-to-business (B2B), business-to-consumer (B2C), as well as business-to-business- to consumer (B2B2C) – choose to connect with companies when and wherever and in the most convenient way in the digital economy. Moreover, consumers wish to work with brands through seamless, omnichannel, transparent, contextual and personalised experiences.
Digital experience
People now work from various locations – workplaces, homes, or coffee shops on a daily basis. The degree of communication in the physical office as we work has changed. The growth of this diverse global connectivity requires the managing of a diverse talent environment and the allowing of digital business processes of the next generation to be successful, even if it is spread across different locations and timeframes.
Digital payments
The way everyday transactions are carried out is becoming increasingly digitalised. Cashless payment options, such as the e-wallet, which plays an integral role in taking the market toward a digital future, are becoming commonplace to support the digital economy's development and growth. PayPal is available in over 200 countries and regions, but one of the very few places on earth that you can’t use PayPal is Sri Lanka.
For many years, we have lamented the fact that global payment systems such as PayPal are not available in Sri Lanka. PayPal teams have visited the country; successive governments have promised to get it done; but nothing has happened. That means that a major method of transferring foreign currency into our country simply isn’t there; a system that much of the world now prefers.
In practical terms, how can Sri Lankan individuals and companies market themselves globally, if their potential customers can’t seamlessly remit payments? This is a huge issue for individuals, SMEs, etc., since they are forced to rely on ancient systems that are costly. We are still fiddling around with cheques, bank guarantees, etc. At least we have credit card payment facilities; but that is usually too costly for many SMEs.
Global context
Fig. 2 shows the Digital Competitiveness Ranking of nations. The Digital Readiness assessment is based on seven components: basic needs, human capital, ease of doing business, business and government investment, startup environment, technology adoption, and technology infrastructure. Figs. 3, 4, 5 and 6 give a very good picture of the various stages of digitalisation of countries around the world, and also demonstrate that Sri Lanka is at the bottom end of digitalisation and global competitiveness, and needs to get its act together to become more attractive for investment.
As Fig. 6 shows, higher countries with higher ICT investment clearly demonstrated significantly higher per capita GDP, with lower ICT investors having lower GDP.
We are no longer living in the technological eras of King Mahasena and King Parakramabahu. Sri Lanka needs to wake up and look around at what has been going on in the rest of the world. Technology impacts the efficiency of corporations, as well as how economies operate and plan for the future. Governments worldwide invest heavily in their digital economies to boost the development of value and prosperity.
The Top 5 countries share a common thread in terms of information creation, but each approach is different in terms of digital competitiveness. The US and Sweden implement a balanced approach between generating awareness, fostering a supportive and creative atmosphere for technology growth. One or two variables are prioritised by Singapore, Denmark and Switzerland.
One out of five businesses on the other end of the continuum may be considered technologically innovative in line with global standards such as Amazon, Google, or Microsoft. Companies at this stage have a digitally integrated strategy, backed by a digital community, completely integrated with their platforms and functions.
The vast majority of businesses use digital for enhancing decision-making, improving efficiency, simplifying and automating processes, strengthening customer engagement and finding market opportunities, among others. Many companies use technology as a way to boost operations including the use of IT systems (HR, procurement & finance, CRM & support), digital payment and cloud-based work.
Technologies are used to enhance the goods and services to external customers (automated supply chain) – typically including front end platforms for customer interaction including improving business or brand recognition online through digital marketing, optimising the search engine website or e-commerce platform.
Way forward
- The Ministry of Technology must be given sweeping powers to implement digitalisation in every government institution.
- Every government institution should have a special department that would facilitate and implement the directives of the Ministry of Technology.
- Rapid timelines should be established for nationwide digitalisation that would include a short period for study of global best practices; planning of short-term, mid-term and long-term digitalisation initiatives; cost comparisons; procurement processes; testing and implementation; constant follow up and evaluation.
- Costly solutions must be avoided.
Copyright Dr. Nicholas Ruwan Dias and Niresh Eliatamby
Dr. Nicholas Ruwan Dias, BSc, MSc, PhD, and Niresh Eliatamby, LL.B., LL.M., MBA, are Managing Partners of Cogitaro.com, a consultancy that finds practical solutions for challenges facing society, the environment and all types of industries.
Dr. Dias is a digital architect and educationist based in Kuala Lumpur, Malaysia. ruwan@cogitaro.com
Eliatamby is an author, marketer and educationist based in Colombo, Sri Lanka. niresh@cogitaro.com