In years to come, we will look back to 2020 as the moment that changed everything. The COVID-19 Pandemic has plunged the world into the worst recession since World War II and in 2020, the global economy shrank by 4.3% - over two and half times more than during the 2008-2009 global financial crisis. But nowhere else has unprecedented and unforeseen this higher percentage growth occurred as in the digital economy of the world and nations which have boomed amid the COVID crisis. The Digital Economy, an industry of Trillion of Dollars, represents the growing universe of people and enterprises of the world. Digital Economy refers to producers and consumers who do their business through the internet, fixed and mobile broadband infrastructure, cloud computing, digital platforms, and many more. This industry in any nation comprises technology, telecoms, media sectors, as well as newer services and activities like e-commerce and digital banking. With the integration of these digital platforms and business models in more ‘traditional’ businesses like agriculture, transport, health, tourism, education - the industry has seen surges in the digitization of everything in recent years.
The Year 2020 is always going to be the year of COVID and no one can deny this fact. With the worldwide spread of this virus, every nation of the world went into lockdown. As lockdowns became the only measure to contain the disease in early-onset in the first of 2020, the only way to operate the economy was digital. Producers and consumers flocked to digital platforms, they “went online” and so impacting the way the business was run prior to the pandemic. It is not that the world did not hope for this growth in this field. But when all-so-traditional businesses had to go online to perform, the digital economy transformed. The economy transformed when it was necessary to operate. To manage the external shocks generated by COVID, worldwide, enterprises are adept at applying digital solutions and this occurred in many nations of the world. In late 2020, the World Bank published that more than 10,000 enterprises - among them 85% of MSMEs and in 51 emerging economies - have significantly increased their use of the internet to mitigate the impacts of COVID. Amid the COVID Pandemic, e-commerce share in the global retail market has increased from 14 to 17% in 2020. e-Commerce business has increased significantly in all nations - developed and emerging - at different paces.
COVID 19 changed the way we live and work in ways that shall alter our behavior long after the pandemic subsides. Work went remote, shopping, entertainment even medicine went online and businesses everywhere scrambled to deploy digital systems to accommodate the shift. And at the heart of these changes lies the infrastructure of the internet and broadband and payment gateways - the tools of digital transformation.
With the availability of Vaccines and as the COVID-19 pandemic begins to recede, there are new hopes in the market and industries that things shall go back to normal. But this shall not be the “New Normal” or we are not going “Back to Normal”. The upcoming normal shall be the act of embracing the changes that happened during the pandemic, take the learnings and developments, and move forward to create “The Next Normal” and be “Back to Business”. This “The Next Normal” is what is characterized by Digital Transformation, which is not an end goal or simple process, but a need that defines how organizations will continue to survive in this new digital era. So, to be “Back to Business” in this next normal, there are a few challenges, major to-dos, adjustments on a policy level, about which we shall discuss on the “Fonepay Digital Economy Conclave 2021”.
Based on the study done by UNCDF on the Inclusive Digital Economy Scorecard (IDES), the overall digital economy score for Nepal in July 2020 was 47 percent. This score positions the country firmly in the early start-up stage of a digital economy. It means there is a lot to be done, by businesses and most importantly at the policy level to increase this digital readiness. Many businesses and consumers that “went digital” have helped mitigate the economic downturn created by the pandemic in Nepal. However, they have also speed up the digital transition for which not everyone is prepared. This has created a more digital divide among urban-rural communities in Nepal and big and small fishes in the market. Actions are required to ensure that this divide is mitigated and the rebound of the businesses is not uneven.
Nepal Government has initiated programs to digitize the economy keeping MSMEs at the core of digital growth through programs such as the Digital Nepal Framework. By providing access to Finance through fintech to these MSMEs and by integration of digital payment tools, MSMEs can be uplifted and be pulled into the digital market of Nepal. But not just this, to adjust to the new demands and supplies and innovations, changes need to be made at the policy level. Conversations need to flow regarding how already successful companies can uplift the economy and what the government can do to join hands with them, also how to uplift the ones who have been dormant during this time. But what else is required to be “Back to Business”?