How a digital approach can accelerate post-COVID economic recovery

This article by Nick Read, Chief Executive Officer at Vodafone Group, first appeared in Euractiv on 10 June 2020.

When I presented our annual results last month, I spoke about the speed of our business continuity planning amid the Covid pandemic. This allowed us to focus on a comprehensive 5-point plan to support our customers and society in this crisis.

To care for our employees, we moved 95% of Vodafone’s workforce from the office to home. For our customers, ehealth, elearning, and remote working were deployed at scale. We helped governments and health authorities reach out to citizens with essential information and services. To respond to a near 50% spike in traffic, we expedited network investments.

In a matter of days and weeks, we implemented significant changes which, in other circumstances, would likely have taken months. We also made donations and provided benefits in kind valued at €100m.

We all hope that the pandemic’s worst is now behind us. But even if this is the case, the crisis is far from over. The European Commission’s economic forecast augurs significant challenges ahead, with real GDP declining 7.4% in the EU this year and unemployment approaching 10%. The everyday struggles to make ends meet for European families and businesses must be a concern to us all. In Africa, another key region for Vodafone, over 20 million people will be pushed into extreme poverty.

The shadow of COVID is likely to be long, and, along the way, it has exposed vulnerabilities in society, business, and governments that are imperative to tackle.

Bold action is required, drawing upon the hard-earned learnings from this crisis.

The EU recovery plan announced recently is a good start. When the Commission President Ursula von der Leyen launched the plan, she said:

“The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalisation will boost jobs and growth, the resilience of our societies and the health of our environment.”

These are sentiments I fully embrace. Our collective ability to recover from challenges and difficulties—resilience—will also require strong leadership by the EU institutions and governments. We must rebuild our societies and economies to be more resilient, more sustainable, more digital, and more inclusive.

Accelerated digitisation must play a central role, recognising the essential lifeline that digital infrastructure, services and tools have played for the vast majority of European citizens and businesses during the health crisis. Also, when the U.S. and China are increasing their investments in digitisation, it is essential that Europe does the same. We need the strength of a modern, competitive Europe on the global stage. Specifically, based on the scars Covid19 has left on the face of society, I believe that there are four key elements we must focus on now:

First, we must acknowledge that this crisis touches us all very differently. Far too many of our fellow citizens are left behind, and their low—or sometimes non-existent—level of digitisation is an unseen dividing line. Resilience is important but it must benefit everyone. During the lockdowns, many EU children have endured without education for lack of basic Internet. Approximately 10% of the 8.2m students forced to do their classwork from home in Spain do not have access to the right technology, El Pais reported, often due to high hardware costs.

The task ahead is clear: No matter where they live and their income levels, citizens must have the digital access and tools, as well as literacy, to be successful in a digital world.

Second, businesses must recognise a new reality: diminished physical interaction with customers or employees. E-commerce will be even more virtual. Small and Medium Sized Enterprises (SMEs) are the EU’s economic growth engine, yet these businesses, which employ about two-thirds of the EU workforce, must be able to function digitally to be able to flourish in the future.

Poor levels of digitisation means limited ability to adapt and, especially for SMEs, this can jeopardise their survival. In Italy, there are early examples of attempts to overcome this, for example a proposed SME digitalisation voucher scheme. We now look to the EU’s recovery plan to codify and expand such schemes for companies of all sizes throughout the EU.

Third, we need to accelerate the provisioning of critical government services through digital means. While e-government have been on the agenda for a long time, COVID19 has revealed both its potential and the remaining gaps.

Governments also need to deepen their ability to understand and make use of mobility data insights—anonymised and aggregated—to steer policy interventions, finding new and better ways to partner with businesses that already have the relevant big data capabilities. Our own experience of closely collaborating with authorities in Spain and Italy shows that it is possible to forge such partnerships.

Finally, it is long overdue to bridge the perpetual digital infrastructure investment gap which, in its recovery plan, the Commission has estimated to be €42bn annually.

Mobilising private investment remains important. But the real game-changer will only happen by governments adopting a new comprehensive approach. There is a need to address scale: the 640m European mobile connections are dispersed among approximately 40 or more operators; in China there are three operators for 1.3bn connections, whereas in the U.S. there are 400m connections across the four – and soon to be three - main operators.

It is high time to face up to policy choices driving the poor returns on digital investments in Europe. Governments must put an end to extractive spectrum auctions, promote sustainable competition without artificial interventions in the market, as well as leverage subsidies and in other ways actively support more efficient ways of deploying networks.

With the pandemic hopefully nearing its end, the European Union will need to get serious on charting a new course to enhance its digital infrastructure and accelerate the digitisation of all citizens, businesses and key government services —for the benefit of society, its resilience and its future competitiveness.

We must act fast and be bold. We did so during the peak of the health crisis. We are able to do it again to overcome the economic crisis. As Vodafone, a European company operating networks in 24 countries around the world with 75% of our revenue in Europe, we are ready to play our part.

Find out more about our work to keep everyone.connected.

This article was originally published on Euractiv on 10 June 2020.