Dr. Mahamudu Bawumia, the Vice President of Ghana and the flagbearer of the New Patriotic Party (NPP), said in his 2024 New Year message to Ghanaians that the NPP government will continue to develop a modern and resilient economy driven by digitisation (Yirenkyi, 2024). Juxtaposing this statement with the 24-hour economy proposed policy of the former president of Ghana and the flag bearer of the National Democratic Congress (NDC), Mr. John Dramani Mahama, I foresee “a resilient 12-hour digitised economy” and “a 24-hour economy” development strategies dominating the campaign promises of the two leading political parties towards the 2024 general elections in Ghana. Though the two economic development strategies are already ongoing in Ghana, the focus of the two leaders is to entrench and expand their operations to have a much greater impact on the Ghanaian economy.
In my article dated December 18, 2023, titled “A 24-Hour Ghanaian Economy: Realism versus Erroneousness,” published on pages 9 and 16 of the Business and Financial Times, I pointed out some of the many benefits that will accompany the running of a 24-hour economy, notwithstanding its challenges. The paper recommended, among other things, that Ghana needs to heighten its digital transformation efforts as a part of the solutions to solving the anticipated problems and enhancing itsworkings.
The objectives of this article are to: without political colours, weigh the benefits and deficiencies of a digital economy; reveal that digitisation complements other economic growth policiesand moderates their effects on economic activities and the quality of human lives in either a 12-hour or a 24-hour economy; and emphasise the significance of treating the two development policies equally with the urgency they may deserve.
“A Digitised Economy”
A “digitised economy” is one in which digital technologies (infrastructure, equipment, products, and platforms) drive economic, legal, political, social, religious, and global activities among economic agents and sectors. The digital economy is also about electronic government, industry, education, agriculture, services, and infrastructure. According to Yasar & Pratt (2023), a digital economy results from technological advancements like the internet, blockchain, virtual reality, artificial intelligence (AI), etc. The reliance on digital technologies sets the digital economy apart from the traditional economy.
A digitised economy has several benefits for the attainment of a country’s growth and development, some of which are as follows:
The digitisation of the economy creates jobs for highly skilled workers who can use technology to increase efficiency and productivity at work. According to Mandl (n.d.), digitisationtechnologies increase employment opportunities for specialists in technology, software developers and educators, experts in content and design, data scientists and analysts, statisticians, machine learning engineers, and artificial intelligence (AI).
Enhancing digital literacy and providing high-quality digital connectivity infrastructure can help public and private sector organisations and individuals fully capitalise on the opportunities digitisation presents to an economy, maximizing business profits, and customer satisfaction and retention. According to Muciaccia (2020, cited in Muciaccia & Tedeschi, 2023), the spread of Internet of Things (IoT) technology, such as 5G, is predicted to turn houses, buildings, infrastructure, and cities into “smart homes,” “smart buildings,” “smart infrastructure,” and “smart cities.”.
Furthermore, because digitalisation increases openness and improves the quality and efficiency of corporate and national governance and household management, it has the power to subdue corruption. It is a system that generates and processes invoices, receipts, and payments for goods and services electronically with little or no human intervention, resulting in accurate transactions and accountability. The Ghanaian economy’s ports, energy, banking, education, and other government and corporate sectors now conduct business electronically, which lessens the opportunities and benefits from corrupt practices. The reduction in money laundering activities and the removal of ghost names from government payrolls will maximise the gains in economic activities. According to Takefuji (2023), digitisation and digital governance can reduce the prevalence of fraud. A decline in digitisation and AI governance is typically correlated with an increase in fraudulent economic activities.
Additionally, digital systems and technologies have enhanced the effectiveness of tax administration and collection, raising government revenue for economic development. Firms use digital or electronic payment platforms and tracking systems to file tax returns and keep track of their output, sales, imports, and export volumes. Digital technology, according to Kitsios, Jalles, and Verdier (2020), offers the potential to reduce fraud and increase tax revenue for the government, and cutting the divide in half between the old economy and the frontier of digital transformation might boost revenue in low-income emerging economies above 1.5 percent of GDP.
What is more, a digitised economy can lower crime rates through the installation of security gadgets like cameras in homes, offices, and vantage points in societies. It also lowers costs and boosts the effectiveness of security measures involving people. Traffic accidents are decreasing because drivers and pedestrians who disregard traffic safety laws are compelled to do so by the presence of digital street cameras. Digital security systems have made the homes and offices of individuals and organizations more secure from break-ins. These systems notify owners of attempted break-ins and fires in people’s homes and offices, allowing for prompt police and fire service personnel responses and the preservation of properties and lives.
Digitisation facilitates domestic and international trade because it increases the ease of accessing markets and helps transact business activities online. Digitisation facilitates better relations, efficient communication, transactions, and business activities. Technology such as the Internet makes it easier for firms, individuals, and governments to interact with their counterparts within and without an economy. Firms leverage social media channels like Facebook, WhatsApp, LinkedIn, Google, cell phones, emails, Twitter, Instagram, etc. to enhance seller-customer interactions. This process helps parties avoid the high costs and dangers of actual travel. Also, there are prompt, simple, and quick payments for goods and services.
Because digitisation maximises market and government efficiency, it can minimise or eliminate some of the underlying causes of market and government failures. In compliance with market and governmental regulations, it provides equal opportunities and platforms for all economic agents to function effectively. It provides adequate access to resources and processing of information or data, improves production processes to reduce externalities, and enhances rational decision-making. Prices for goods and services will reflect private and external costs. It reduces bureaucracies, rent-seeking, and nepotism in government operations. A digitised economy will assist potential investors in avoiding the fraudulent activities of companies that flout government regulations and business ethics, as many Ponzi schemes have destroyed the lives of gullible investors. Social welfare will increase when the production and allocation of goods and services are Pareto efficient. Where economic activities and their outcomes can be readily tracked, private and public sector organisations can clearly define reward and penalty mechanisms to motivate good citizens and clean up the system.
Lastly, because digital economies offer performance-enhancing tools to boost the efficiency of the factors of production—land, labor, capital, and entrepreneurial ability—they promote rapid growth of the country’s output goods and services. A digitisedeconomy improves the productivity of production factors, lowers production costs, and equips businesses with digital skills and innovative technologies to transform their culture and worker mindsets, improve business processes, boost the production and distribution of goods and services, and increase the competitiveness of enterprises. In other words, digital transformation systems and technologies will support the country’s long-term economic growth and development because they lower production costs, increase government revenue, boost trade benefits, increase productivity and efficiency in markets and government systems, and create more business opportunities.
Deficiencies of a “Digitised Economy”
There are certain drawbacks to the digital age, including the following, that, when adequately addressed, can maximise its positive effects on an economy:
One of the problems of digital transformation is the high cost of acquiring, installing, and operating information and communication technology infrastructural facilities and digital products and platforms. Expanding network coverage and capacity to handle more users results in higher costs for Internet access providers. When a country imports almost all major technologies and human skills and cannot be proud of its citizens’ technological astuteness, the cost of digital transformation usually increases.
Once more, fraud-related cases will proliferate in areas where private and public sector organisations neglect to provide sufficient security to safeguard digital installations. Cybercriminals steal and hack digital installations (infrastructure, products, platforms), data, and money belonging to organisations and customers, causing inconvenience for private and public sector clients and service providers. In 2020, the Bank of Ghana reported that the banking sector lost GH¢1 billion because of weak digital and electronic systems (Business & Financial Times, 2022; cited in Acquah-Sam, 2022). Furthermore, the industry lost GH¢61 million in 2021 as a result of fraud and other banking malpractices emanating from an increase in the number of customers using digital and electronic services (Ghana Netherlands Business & Cultural Council, 2022; cited in Acquah-Sam, 2022). Due to their fear of losing their investments, some members of the public tend to have less faith in the digital age, which could hurt the volume of transactions, savings, capital accumulation, and rate of economic growth and development.
Because digitisation restricts unskilled workers’ responsibilities within particular institutions, necessitates their retraining and redeployment, or results in their job loss and subsequent social burden, it may lead to an increase in unemployment among this group. According to Berger & Frey (2016), Frey & Osborne (2013), and Strauss (2018), all of which are cited in Fuchs & Cumbers (2023), by reducing skill requirements and related earnings, digitisation may devalue the labour of professionals, experts, and specialists.
Substitutes or Complementary Development Strategies?
Substitute development policies achieve the same national goals of increasing national income, lowering unemployment, ensuring price stability, and maximising the overall well-being of the population. Therefore, in the absence of one, the others can achieve the same goals. Conversely, complementary development policies jointly produce the same national goals.
If key stakeholders can effectively handle its obstacles, digitisation can help eradicate or minimise inefficiencies in both the public and private sectors of a traditional 12-hour or 24-hour economy. It is better to think of “digital transformation” and “conventional 24-hour economy” as complementary development policies rather than as substitute development models or policies. The development of digital transformation, which enhances the efficiency of factors of production for rapid economic growth and improves the quality of human lives, is now crucial to emerging countries’ efforts to create an efficient, resilient, or highly productive traditional 12-hour or 24-hour economy.
Conclusion and Recommendations
Today, a developing nation’s government’s effort to create a traditional 12-hour or 24-hour economy that is highly productive, robust, and efficient hinges also on the development of digititisation, which complements other economic growth policies and moderates their effects on the production and distribution of the economy’s output of goods and services and the enjoyment of quality human lives.
A digitised economy helps eliminate inefficiencies in resource mobilisation, allocation, and use in organisations and homes. It is, however, important that private and public sector organisations make greater efforts to reduce their negative effects on society. The public’s access to high-quality Internet connectivity helps them fully take advantage of the opportunities it presents to the nation. Digitisation knits the world together, despite the differences in time zones.
The educational sector will require adjustments in curricula and orientation for schoolchildren and workers to understand the changes in modern labor market demands and the direction of economic development efforts and guide them in their choices of academic programmes and professions. Digitisation will better serve the night economy, making it reasonably cashless to prevent criminals and armed robbers from attacking individuals and businesses at night. The security of digital installations must be tightened to prevent cybercriminals from stealing equipment or hacking digital systems.
Very soon, political campaigns will begin in earnest, and I am optimistic that the NPP and NDC will campaign mostly on “a resilient 12-hour economy driven by digitisation” and “a 24-hour economy.” They must acknowledge the complementarity of their development policies so that they can give them equal attention when elected to power in 2025 to rapidly achieve Ghana’s economic growth and development aspirations. Therefore, it is my humble appeal to the winners of the 2024 general elections to mobilise resources to entrench the implementation and operation of the two policies in Ghana, bearing in mind the importance of national cohesion.
Written By Emmanuel Acquah-Sam (Ph.D.)
The writer is a senior lecturer and the Dean of the Faculty of Humanities and Social Sciences at Wisconsin International University College, Ghana