How AI can help developing countries rebuild after the pandemic

Technology has been a lifeline to developing countries during the COVID-19 crisis, helping to ug-business owner uses her phone for mobile banking-Anna Koblanck IFCmaintain essential services and keep companies in business. It has also offered a glimpse of a brighter future, one in which gains in income and employment are driven by technologies such as artificial intelligence.

Even before the pandemic, commercial uses for AI were expanding rapidly in emerging markets, in fields ranging from manufacturing and energy to education and financial services. The necessary lockdowns and travel restrictions imposed by countries have accelerated that trend. Companies like Clinicas de Azucar in Mexico are using AI to analyze data and improve health outcomes for thousands of at-risk diabetic patients. In India, 1mg uses AI to help customers compare prices for medical services from different labs.

To be sure, many developing countries face a long, hard recovery. The pandemic has triggered what’s likely to be the deepest global recession since World War II, threatening decades of hard-won development gains. But the strategic embrace of technologies such as AI can be an important part of the rebuilding effort, helping to boost productivity and foster a new generation of innovative companies.

To seize this opportunity, policymakers should take steps now to prepare for this AI-driven future. Using AI to automate tasks can sometimes threaten to replace workers, including in industries that drive economic development. There are privacy concerns, too, as some companies can harvest and sell consumer data for profit. And there are increasing questions about how big data will affect the digital divide.

It will be important to put in place safeguards, such as industry standards and regulatory frameworks, to guide the growth of the tech sector in a way that builds public trust. Guaranteeing data privacy and creating an environment conducive to inclusive technological diffusion will be essential.

A new IFC report, “Artificial Intelligence in Emerging Markets – Opportunities, Trends, and Emerging Business Models” includes several examples of how AI is having a transformational impact by helping countries unlock the power of innovation.

Building the complex and expensive infrastructure needed for transportation, energy, healthcare, and education is a long process that can take decades and the efforts of entire generations. Luckily, AI is creating innovative digital solutions that allow developing countries to overcome more quickly and efficiently existing infrastructure gaps. In some sectors, AI offers countries new ways to increase productivity; in others, it allows them to completely leapfrog traditional development models, skipping the need to build expensive infrastructure—or, at least, making it much less capital intensive.

Consider the energy sector. There are 1.2 billion people who currently don’t have access to power grids. Tech start-ups around the world are tapping into AI to develop new solutions. For instance, Azuri Technologies has developed a solar-powered pay-as-you-go model for rural homes in 12 countries across East and West Africa. The service comes with a charging system for multiple devices that utilizes AI to optimize power consumption—it learns home energy needs and adjusts power output accordingly by automatically dimming lights, slowing fans, or managing how quickly devices are charged. This solution has great potential, and the company recently secured a $26 million private equity investment to expand across Africa.

AI is also transforming the financial sector, bringing services to typically underserved communities. Farmers, for instance, need access to credit and insurance to expand their businesses and enhance the resilience of their operations. Traditionally, pricing their risk and collateral would require a large network of branches and insurance agents covering vast rural areas. This model often does not generate enough revenue to justify the cost, so most remote regions end up lacking access to these services. AI and digital technology have the potential to solve these issues by freeing service providers from the need for expensive infrastructure. In Kenya, M-Shwari allows customers to apply for unsecured loans online. Instead of relying on physical branches, the company uses AI to predict the probability of default of loan applicants. This approach works: By the end of 2017, M-Shwari provided small loans to 21 million Kenyans.

Finally, start-up businesses across the world are combining 3D printing technology with AI and machine learning to build low-income housing 10 times faster and at a 75 percent reduction in cost. The applicability of this technology to emerging markets, where urbanization is rapidly increasing, is enormous.

These are just a few of the hundreds of AI applications being developed every day. AI is quickly allowing developing countries to solve pressing challenges in critical sectors like health, energy, agriculture, and financial services. Rebuilding better will be vital to helping developing countries drive sustainable, inclusive growth once the crisis subsides, and AI can be a key building block in that effort.

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