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The Information Economy Report 2011 demonstrates that effective use of information and communication technologies (ICTs) in both the private and the public sector can significantly contribute to and accelerate progress in private sector development (PSD).

Governments and their development partners should take a holistic and comprehensive approach to leveraging ICTs in PSD, although a review of PSD strategies indicates that this is often not the practice. Similarly, donor strategies often refer to the use of ICTs in PSD in a peripheral manner only, if at all. On its own, new technology will have limited effects on PSD. However, when carefully integrated into policies and processes, ICTs can reduce business costs, promote transparent, rules-based systems, and improve communication between the public and private sector.

Governments need to work with the private sector to create an investment climate and a business environment that encourage the use of ICTs within private firms as well as in government. The potential of ICTs can then be realized, through adequate infrastructure and skills, and a commitment by governments to making markets work effectively. In some areas, there is already considerable experience and evidence to guide policy initiatives. In other areas, where opportunities for ICTs to contribute to PSD have emerged only in the past few years (as in the case of mobile money services), more analysis and testing of different business models is needed to assess potential and identify best practices.

In short, the goal of “broadband connectivity for everyone” has been shelved in favor of cutting back to the minimum possible standard telephone ser- vice in the mistaken belief that this is the cheapest way to provide connectivity. This compromise is particularly tragic given recent advances in wireless technology, which make running a copper line to an analog telephone far more expensive than broad- band wireless Internet connectivity. Rather than backpedal on the goal of connecting everyone, society should be thinking, How can we establish the kernel of a user network that will grow seamlessly as the village’s economics develop? In other words, what is the basis for a progressive, market-driven migration from government seed services—e-governance—to universal broadband connectivity that local users will pay for?

DakNet, an ad hoc network that uses wireless technology to provide asynchronous digital connectivity, is evidence that the marriage of wireless and asynchronous service may indeed be that kernel—the beginning of a road to universal broad-band connectivity. Developed by MIT Media Lab researchers, DakNet has been successfully deployed in remote parts of both India and Cambodia at a cost two orders of magnitude less than that of traditional landline solutions. Villagers now get affordable Internet services—and they’re using them. As one man in a small village outside of New Delhi remarked, “This is better than a telephone!”