Valuing Impact for ICT Investment: Helping Funders and Policymakers Make Sustainable Digital Investments

Every investment presumes a trade-off or an opportunity cost, and digital investments are no exception. Moreover, the lack of investment in digital infrastructure and digital innovation creates long-term challenges particularly for low-income countries, with both direct and indirect costs.

The trade-off with digital investments may come in the form of a different technology platform or, as is often the case for public investments, other strategic priorities. We are seeing this reality firsthand with the COVID-19 pandemic. Countries with lower levels of digital infrastructure development and technology adoption have a harder time switching to technology-mediated remote work, promoting cashless payment transactions, and disseminating health communication messages.

However, even as the need for digitization to support citizen services has become apparent, policymakers still need to make the case for these investments to their constituents. They need to demonstrate why it makes more sense to invest in digital infrastructure and innovation, which oftentimes has high costs with largely medium-to-long-term benefits, rather than funding other short-term national priorities.

These types of considerations are the reality of managing limited public resources in the face of competing priorities. As a result, decision-making requires some analytical rigor to assess investment and policy decisions and ensure the best value for money.

In light of this issue, the Digital Impact Alliance (DIAL) and NEF Consulting worked together to develop a new toolkit that helps decision makers choose between investment priorities and alternatives. The result, called the Valuing Impact Toolkit for ICT Investments highlights five key methodologies, namely: Cost-Effectiveness Analysis, Cost-Benefit Analysis, Social Return On Investment, Multi-Criteria Analysis and Econometrics, which can be used to measure the value created by digital investments made (retrospective evaluation) or forecast the future value of investment options (prospective evaluation).

Developing the Valuing Impact Toolkit for ICT Investment was a key step for DIAL in delivering a three-pronged approach to addressing the question of valuing socioeconomic returns of ICT investments. This includes:

  • Mainstreaming value for money methodologies and competencies for practitioners,
  • Building a community of practice and growing the body of evidence and case examples of costs-benefits analysis of ICT investments, and
  • Promoting accountability and evidence-based advocacy to leverage more resources for ICT.

The methodologies considered vary in their application, but they largely explore the relationship between investment costs, related activities and outputs, and the desired change in outcome or impact. Implementing these methodologies can be complex and resource intensive depending on the scope and level of detail desired, but we hope that the guidance and case studies in the toolkit help strike the appropriate balance between available resources and needed evidence as practitioners assess the merits of their ICT-enabled interventions.

We are excited to share this resource and welcome your feedback to us at info@digitalimpactalliance.org. We will also be organizing a webinar in November to help convene the community that has been built up around this project.

Please do not hesitate to reach out if you work on a related initiative, and you can also sign up for our newsletter to get updates on our work and activities in these areas.