Digitalisation

Strong population growth poses major challenges for the international community. More and more people need food. At the same time, the available farmland is shrinking, natural resources are being exploited and biological diversity is under threat. In addition, most of the world' s poor live in rural areas. For all these reasons, development cooperation gives particular priority to agriculture and rural development . It aims to manage resources efficiently and promote rural development while at the same time protecting the environment and a wide variety of habitats. Digital solutions can make an important contribution here, as they are often used as a support tool and can have a great impact even with small components.

For example, drones and satellites are used to collect data, protect endangered areas such as rainforests or secure land rights. Special software can be used to plan and manage finances and agricultural resources, such as irrigated crops. The Internet also enables farmers to find out about price trends or tap into other markets. Weather data can be retrieved via apps or SMS; digital financial services such as online banking or insurance can also be accessed.

Digital solutions are particularly well suited to agriculture to pursue development policy objectives, which is why KfW is striving to expand these solutions in this sector.

Education creates opportunities for people's lives, increases income and fosters the economic development of a country. For this reason, securing access to and the quality of education is one of the United Nations' Sustainable Development Goals (SDGs). Digital technologies can make an important contribution to achieving this goal, as they not only promote education but also require education. In addition, computer and media skills are also becoming increasingly important in partner countries.

On the one hand, digital solutions can create new forms of learning and teaching, for example through online courses that can be accessed flexibly anywhere and anytime, and in which it is possible to respond to the individual skills and needs of learners. In structurally weak areas, digitalisation is also helping to expand educational opportunities, from basic education to vocational training and universities. Also in the context of displacement and migration, digitally supported forms of learning are available. On the other hand, special knowledge is needed for digital technologies because people have to learn to apply and deal with media ("e-literacy"). Digital skills are increasingly required in both everyday and professional life, which is why they have long been regarded as life skills. In the world of employment, they also offer better opportunities for career entry and advancement as certain digital skills ("e-skills") such as office applications are increasingly sought after. And there is a shortage of IT specialists almost everywhere in the world.

KfW Development Bank therefore supports projects that contribute to enhancing digital skills in the education sector. For example, projects that equip schools and universities with these technologies or generally help to set up IT infrastructure to enable digital learning.

Energy first lays the foundation for digital processes and unlocks the associated development potential. However, many people in developing countries have no access at all or only very limited access to electricity. Moreover, a lot of energy is lost during transmission and distribution, especially in poorer countries, which leaves large amounts of valuable electricity unused. On the other hand, digitisation can help to transmit and distribute electricity more efficiently.

An intelligent electricity grid ("smart grid") employs digital solutions to automatically link producers and consumers and improve the efficiency, reliability and cost-effectiveness of grid operation. Energy efficiency systems, such as intelligent electricity meters ("smart meters") or digital billing systems, can be used to monitor and control the energy consumption of buildings and systems. These systems are already being used in public buildings to save energy and thus lower costs.

In order to provide more people with access to a modern energy supply, to enable the integration of (fluctuating) renewable energies and to better control existing systems, KfW Development Bank is participating in projects to expand and modernise electricity grids and systems and is increasingly also relying on digital solutions.

Particularly in developing countries, many people, but also many, especially smaller companies, do not have access to financial services . What is known as "digital finance" can make an important contribution to remedying this situation. It includes financial services offered, distributed and received via digital channels. For example, digital bank accounts can be managed via mobile phones or bank transfers can be made using smart cards.

Progressive digital change creates new opportunities for developing countries where 80% of adults have mobile access but only 55% have a bank account. And because digital payment transactions are easier to track, even small companies can improve their reputation as creditors and thus obtain loans – even with little material collateral. In the public sector, digitalisation can boost transparency and efficiency while reducing the costs of monetary transactions. However, new technologies also entail risks, such as data protection or financial market stability.

By promoting "digital finance", KfW Development Bank is helping to shape progressive change and contribute to more inclusive financial systems. For example, it supports the development of digital national payment transaction systems, the expansion of mobile phone- and smartcard-based applications and, more generally, the digitalisation of microfinance institutions.

The use of digital technologies offers a host of opportunities when it comes to improving government services and making them more transparent. At the same time, they enable greater citizen participation. Governance is increasingly becoming "e-governance".

The prerequisite for e-governance is for broadband networks between different institutions to be expanded. Special software and data systems are also needed to make the work of public authorities more transparent, efficient and demand-driven. Then it will also be easier to detect abuse, for example in tax and financial administration. Particularly in structurally weak areas, digitalisation enables certain services that would otherwise be difficult to provide, for example through digital registration ("e-identity"). It can also help to better link government and society and facilitate participation in political decisions ("e-participation"), for example through feedback systems for citizens via SMS or e-mail.

The increasing availability of digital solutions, including in developing countries and emerging economies, opens up completely new avenues for better governance. Many partner countries are capitalising on these opportunities and digitising their public administrations. At the same time, however, new challenges are arising, such as issues relating to data security, which need to be addressed.

KfW Development Bank supports its partner countries in these kinds of processes by financing broadband networks for public institutions and the development, introduction and modernisation of IT solutions.

Health care is a human right, but also a key element in the fight against poverty and a prerequisite for economic development. Many people in developing countries have little or no access to adequate health care. On the one hand, because they are not – sufficiently – financially secure in the event of illness; on the other hand, because corresponding medical structures are not available everywhere (such as a lack of infrastructure or equipment, weak supply chains for medicine, lack of medical personnel, etc.).

Digitalisation helps to improve health care and coverage in the event of illness. This is then referred to as "e-health". Through telemedical applications, for example, vulnerable patients or patients living in structurally weak regions can also receive specialist medical treatment. Electronic health insurance and social transfer systems provide the basis for effective and efficient coverage in the event of illness. Hospital information systems facilitate the management of patient files or medical facilities such as blood banks or laboratories. What are known as social marketing approaches for disease prevention are also being improved and targeted by the new digital possibilities. People can thus access certain information at any time, for example for education about HIV via the Internet or apps.

Digital components can improve health care and coverage in a number of ways. For this reason, KfW Development Bank supports the expansion of e-health solutions in various projects.

Mobility is a basic prerequisite for both economic growth and social development. People need transportation to get to their places of work, schools and universities or to pay a visit to the doctor. In developing countries and emerging economies, however, the roads in rural areas are often barely developed to the great disadvantage of poorer people, who mostly live there. Transport networks generally exist in cities, but they are often very congested and not designed to be sustainable. Digital solutions can help to set up and expand transport networks in a way that is efficient, socially inclusive and climate-friendly.

For example, smart transport systems enable traffic flows in cities to be managed more efficiently and in a more environmentally-friendly manner. "Public Transport Operation Management" helps to coordinate public transport systems more effectively. Customers reach their destination more reliably and quickly as a result. Information on travel and commuting options can be accessed via mobile phone or Internet and also ensure smoother traffic flows. Digital payment and ticket systems also facilitate the use of public transport. It also makes it easier to determine capacity utilisation – and to design a traffic network systematically in line with demand.

KfW supports the economic, social and environmental development of its partner countries by expanding and modernising public transport systems. In the process, it places particular emphasis on poorer people benefiting from the measures and being able to take advantage of affordable mobility offers.

Water is a resource essential to survival. But many people have no clean drinking water or sanitation. For this reason, the sixth United Nations' Sustainable Development Goal (SDG) is dedicated to water supply. It calls for the availability and sustainable management of water and sanitation to be ensured for all by 2030. Digitalisation can help to achieve this goal in a variety of different ways.

For example, basic water-relevant data can be determined and evaluated by satellite remote sensing or terrestrial data acquisition and transmission. Digital terrain models or hydraulic simulations support project planning. Special monitoring and management systems such as digital customer registers or automated meter reading and invoicing enable or facilitate the sustainable operation of plants and help to reduce water losses. And these are just a few of many examples.

The water sector is a central field of assistance of KfW Development Bank. It supports the greater use of digital technologies in order to further improve project efficiency and effectiveness.