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FinanceHypothesis : - Replacement costs will form part of the economic sustainability, and cost recovery will encourage institutional sustainability.
There are many examples of ICTs projects that have made some impact on their target group. The criticism of some of these projects is that they have had hundreds of thousands of dollars, sometimes millions of donor funding put into them, and a casual cost benefit analysis does not seem to many onlookers to be reasonable. In their defence, many people would note the experimental pilot nature of ICT projects, that as the technology changes new ideas and approaches need to be investigated.
The case studies were chosen because they had limited donor funding. They are all under approximately $200,000. Having said this it is difficult to know where the system boundary is. One of the difficulties of a cost benefit analysis is defining where the system boundaries are for the costs. Most of the case studies report on how much equipment they purchased but few describe the overall costs in detail.
Revistazo has a single high specification PC, purchased at a little over $1000, although the overall project had a budget of $70,000 later reduced to $1500 per month.
The FOOD Emarketing also attempts to explain the overall balance of costs “Out of the project cost about 30% is towards capital equipment, 10% is towards salaries for the project team, 15% towards e-marketing research expenses, 25% towards training and the rest towards administrative and maintenance expenditure.”.
CARDIN, the network, built upon many institutions and while the project itself had a grant of $230,000, one would have to note that much of the technical infrastructure was already in place, and that much of the expenditure was in the soft system expenses of networking – communication, workshops, publicity.
ACISAM has ongoing grants since its work is concerned with the welfare of the community, although it has stories of replication by local people – a key indication that the costs of the project are reasonable. “The community where beneficiary interviews were conducted is run by a sugar mill. The sugar mill owners have also taken an interest in the community and the video team, and will be donating video equipment for their use. Also, the group of community video and radio teams (around 120 total) is forming an association called COPAK, with the goal of purchasing their own equipment, thus guaranteeing that the community video and radio process will continue.”
In Gyandoot, a single kiosk was estimated at $1500, although the whole project is at $50,000.
To many people who discuss ICTs one of the main concerns for sustainability focuses on the economics of the system. However as noted in the consultation one must “Be clear about what exactly it is you are trying to sustain”.
ACISAM has no aspirations for economic sustainability. As a project that is effectively social work on mental health, it is reasonable for it to expect support from either central government or benevolent outsiders.
The national service of KUMINFO, dealing with a subject that has little direct return for people but has long term benefit for the region has found that “The project is trying to charge for services but they are having difficulties with how much to charge.”
Digital Village has continually changed its cost structure to try to reach a level that can sustain its ongoing costs. While it has achieved some stability on recurrent costs it has not been able to replace equipment and has needed a further injection of capital from donors to upgrade outdated equipment.
For e-marketing the recurring expenses for FOOD has been to maintain the e-commerce server. The artisans pay between 2 to 5% to FOOD to maintain this server with credit card facilities.
Gyandoot on the other hand is seeking to make the kiosks a private enterprise that can survive. They have spent money on the backbone of the ICT infrastructure and from this the kiosks can generate enough income to pay their own operation and maintenance costs. Most of the Soochaks comfortably earn their livelihood.
One must ask the question as to whether revenue in these early years is due to an initial enthusiasm or likely to be sustainable? All indications are that it has longer term benefits and that because of this new investor such as banks are expanding the system. The answer is best illustrated by Gyandoot:-
On-line Registration of Applications (Rs. 10): The villagers can file applications for land records, driving licenses, caste/income/domicile certificates or for getting demarcation done etc. through the kiosk. They also get intimation when the certificate is ready for collection. The service leads to time and money saving for citizens. It also helps in lowering of corruption, as everyone has to work in deadlines, and there is a minimum interaction between the customer and the department official
On-line Public Grievance Redressal (Rs. 10): Complaints ensure a pro-active and super-efficient department: In the village Bagdi, the people no longer feel the need of complaining about the hand pump. A complaint was made through the kiosk about the malfunctioning of the hand pump of the village, which was corrected within 3 days. Another complaint was made of the hand pump of a nearby village, which too got corrected in a week. The administration reprimanded the department with the result that the mechanic himself keeps monitoring & inquiring about the status of hand pumps.
These anecdotes on the benefits of the Gyandoot system leads to the crucial question of benefits generally (see next section).
What then can be said about the Hypothesis? The case studies say very little about replacement costs. For example Gyandoot intends to be economically sustainable and has made significant progress towards this end, yet it still is too early to comment clearly on replacement costs.
While Gyandoot seems to be showing a case where information is important enough for users to pay for it, this is not so for other cases. Filling the information gap drains finances, and although people want the information many are not willing to pay for it. This is illustrated by comments on the difficulty to get donors to fund ICT activities made by a number of the studies. There is often a lack of recognition that to get information on the different topics together takes time and energy.
Global Voices in contrast would say that the project was never intended to be cost recovering, and therefore no provision was made for replacement. Future activities that might require other equipment would be funded externally in order to obtain the developmental benefits.
For those case studies that intend to be economically sustainable, there are indications of progress towards this end. However, it remains early days to see whether cost recovery includes replacement costs for all the equipment involved. For those who have used an ICT activity to move towards institutional sustainability, there have been signs of some cost recovery, but generally at levels insufficient for replacement of equipment. Some of the cases note a reluctance from donors to fund ICT activities that might nevertheless in the longer term increase effectiveness and efficiency. |
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