Enhancing soft infrastructure budget in the 4-IR

In the recent past Tanzania’s budgets have been infrastructure-heavy. Indeed, this is the case not just in Tanzania but also across East Africa. Whereas this is very good in a country with huge infrastructure deficit, it is very important to have adequate focus not just on hard infrastructure but also on soft infrastructure. This is becoming more important in such times as these of the Fourth Industrial Revolution (4-IR) where a lot of things are done in the digital space.

On its part, the digital space is characterized by a lot of emerging technologies that demand soft infrastructure. This piece highlights the need for adequate budgetary allocations for soft infrastructure in these times of the 4-IR.

The 4-IR

Since the middle of the 20th Century, the world has seen a transition to the 4-IR which is in its relative infancy stage of development and still taking shape.

Characterized by digitization, the FIR is a digital revolution building on the third industrial revolution.

What is unique in it is its characteristic of a fusion of technologies related to the physical, digital and biological spheres.

The revolution is characterized by disruption in virtually all industries across the world. It is transforming all production, management, governance and many other systems. The disruptive technologies of the FIR necessarily need more soft than hard infrastructure.

Hard infrastructure

Hard infrastructure are also known as traditional or orthodox infrastructure. They include roads, ports, airports, railways, dams, power stations and related structures. These are very important economic infrastructure needed in unlocking and increasing a country’s productive capacity.

The more the quantity and quality of these infrastructure, the more the development and vice versa all other factors remaining consultant.

Soft infrastructure

Soft infrastructure are mainly related to telecommunication including the Internet.

The economy is increasingly going digital thanks to the Fourth Industrial Revolution and its technologies that are disrupting business models among other things.

Digital economy is the new normal especially among the millennials who are increasingly becoming digital natives. It is seen in the context of Artificial Intelligent, Internet of Things, robots, driverless vehicles and the like. Digital economy is a reality not only in the more developed parts of the world but in Tanzania as well. Typical example is in the banking sector thanks to Financial Technology (FinTech) firms. Given the real situation of the global economy, the need for adequate budgetary allocations for soft infrastructure is undisputed.

Budgetary allocations

In infrastructure-deficit country, there are needs to have adequate budgetary allocations for both hard and soft infrastructure.

Arguably, soft infrastructure handles and transmits more values today than that done by hard infrastructure. These include various local and international transactions and communications done online.

Indeed, competitiveness of countries is increasingly becoming a function of the quantity and quality of its soft, not just hard, infrastructure. Adequate budgetary allocations are needed to ensure among other things the needed quantity and quality of soft infrastructure.

Issues of efficiency, speed, reliability, availability and most importantly security in the soft infrastructure space are central for today’s economic competitiveness of a country like Tanzania.

Soft infrastructure investment

Having adequate quantity and quality of budgetary allocation for soft infrastructure is investing on improving investment climate and business environment.

These are highly needed for attracting and retaining investors of all kinds. The need for more investments in Tanzania cannot be overemphasized. Soft infrastructure is also important in delivering a lot of social services such as water, health, education and much more.

Among the typical examples of having the need for high quantity and quality of soft infrastructure is the case of disruption in the electricity purchase via online platforms at Tanesco in the week from May 17, 2021.

Ways forward

Both hard and soft infrastructure are very important for development. Now that budgetary allocations have arguably been more skewed towards hard infrastructure, there is a need for dedicated efforts to have budgetary allocations for soft infrastructure.

This should be the case at all levels not just in the national but also institutional budgets. Educational institutions for example, should budget for more soft infrastructure that support e-learning than hard infrastructure needed in brick and mortar teaching and learning spaces.

The author is Associate Professor of Economics at Mzumbe University and Principal Mzumbe University Dar es Salaam Campus College