Artificial Intelligence
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ARTIFICIAL INTELLIGENCE IN EMERGING MARKETS Opportunities, Trends, and Emerging Business Models About IFC IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2019, we invested more than $19 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org. © International Finance Corporation. September 2020. All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 www.ifc.org/thoughtleadership The material in this work is copyrighted. 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ARTIFICIAL INTELLIGENCE IN EMERGING MARKETS Opportunities, Trends, and Emerging Business Models AUTHORS TONCI BAKOVIC, Chief Energy Specialist, Energy, GORDON MYERS, Chief Counsel, Technology and Global Infrastructure, IFC (Chapter 6) Private Equity, Legal and Compliance Risk, IFC, and Co-Chair, Legal and Policy Community, ITS MARGARETE BIALLAS, Digital Finance Practice Innovation Lab, World Bank Group (Chapter 5) Lead and Senior Operations Officer, Financial Institutions Group, IFC (Chapter 10) KIRIL NEJKOV, Counsel, IFC Compliance Risk, Office of the Chief Compliance Officer, Legal and MARIA LOPEZ CONDE, Research Analyst, Compliance Risk, IFC (Chapter 5) Transport, Global Infrastructure & Natural Resources, IFC (Chapter 7) MARINA NIFOROS, founder and Principal of Logos Global Advisor and also Visiting Faculty on PETER COOK, Senior Investment Officer, Disruptive Leadership at HEC Paris (École des Hautes Études Technologies and Funds, IFC (Chapter 9) Commercial) (Chapter 4) PRAJAKTA DIWAN, Consultant, Quantitative FELICITY O’NEILL, Associate Operations Officer, Analysis, Research and Analytics, Treasury, IFC Partnerships and Multilateral Engagement, IFC (Chapter 10, Box 10.3) (Chapters 9, 10) GEORGES VIVIEN HOUNGBONON, Economist, TMT AHMED NAURAIZ RANA, Associate Digital Disruptive Technologies and Funds, IFC (Chapter 1) Economy Officer, Gender and Economic Inclusion HASSAN KALEEM, Senior Economist, Global Group, Economics and Private Sector Development, Manufacturing, Sector Economics and Development IFC (Chapter 12) Impact, Economics and Private Sector Development, FRIEDEMANN ROY, Advisor to the Vice President, IFC (Chapter 11) Economics and Private Sector Development, IFC BALOKO MAKALA, Consultant, Thought Leadership, (Chapter 10, Box 10.3) Economics and Private Sector Development, IFC OMMID SABERI, Senior Industry Specialist, (Chapters 3, 6) Climate Strategy and Business Development, SUMIT MANCHANDA, Senior Private Sector Climate Business, Economics and Private Sector Specialist, Finance, Competitiveness, and Innovation Development, IFC, and its Global Technical Lead (FCI), IFC (Chapter 11) for the Excellence in Design for Greater Efficiencies (EDGE) program (Chapter 8) REBECCA MENES, Operations Officer, Climate Strategy and Business Development, Climate SABINE SCHLORKE, Manager, Global MAS, Business, Economics and Private Sector Manufacturing, Agribusiness and Services, IFC Development, IFC; she is also the Global Marketing (Chapter 11) Lead for the Excellence in Design for Greater WILLIAM SONNEBORN, Senior Director, Disruptive Efficiencies (EDGE) program (Chapter 8) Technologies and Funds, IFC (Foreword) PETER MOCKEL, Principal Industry Specialist, Climate DAVIDE STRUSANI, Principal Economist, TMT Strategy & Business Development, Economics and Disruptive Technologies and Funds, IFC (Chapter 1) Private Sector Development, IFC (Chapter 3) IAN TWINN, Manager, Transport, Global XIAOMIN MOU, Senior Investment Officer, Private Infrastructure & Natural Resources, IFC (Chapter 7) Equity Funds—Disruptive Technologies and Funds, IFC (Chapter 2) Acknowledgments The authors would like to thank the following colleagues for their review and suggestions: Tunc Alyanak (IFC), Shannon Atkeson (IFC), Ariana Batori (IFC), Thomas Bauer (IFC), Matt Benjamin (IFC), Ernest Bethe (IFC), Margarete Biallas (IFC), Alejandro Caballero (IFC), Omar Chaudry (IFC), Lena Chinchio (IFC), German Cufre (IFC), Stevon D. Darling (IFC), Prasad Gopalan (IFC), John Graham (IFC), John Hatton (IFC), Julia Heckmann (IFC), Martin Holtmann (IFC), Georges V. Houngbonon (IFC), Edward Hsu (World Bank), Ferdinand van Ingen (IFC), Anup Jagwani (IFC), Salah-Eddine Kandri (IFC), Prashant Kapoor (IFC), Jennifer Keller (IFC), Henriette Kolb (IFC), Nuru Lama (IFC), Tania Lozansky (IFC), Barry Lee (IFC), Baloko Makala (IFC), Aliza Marcus (IFC), Peter Mockel (IFC), Xiaomin Mou (IFC), Monique Mrazek (IFC), Makoto Nagakoshi (IFC), Harish Natarajan (World Bank), Charlotte Benedicta Ntim (IFC), Felicity O’Neill (IFC), Emmanuel Pouliquen (IFC), Tristan Reed (World Bank), Thomas Rehermann (IFC), Matthew Saal (IFC), Jigar V. Shah (IFC), Shalini Sankaranarayan (IFC), Gary Seidman (IFC), Yuntong Shi (IFC), Hoi Ying So (IFC), Davide Strusani (IFC), Charlene Sullivan (IFC), Karthik G. Tiruvarur (IFC), Alan F. Townsend (IFC), Mahesh Uttamchandani (World Bank) Content Advisors Economics and Private Sector Development | Neil Gregory, Thomas Rehermann, Davide Strusani, Georges Vivien Houngbonon, Philip Schellekens Disruptive Technologies and Funds | William Sonneborn, Xiaomin Mou, Lana Graf Legal and Compliance Risk | Gordon Myers, Kiril Nejkov Partnerships, Communications and Outreach | Tom Kerr, Kelly Suzanne Alderson, Nicola Vesco, Simon Andrews Project Team Project Manager | Thomas Rehermann Editors | Matt Benjamin, David Lawrence, Ann Bishop Research Assistants | Prajakta Diwan, Kevin Matthees, Ahmed Nauraiz Rana, Aarti Reddy, Maud Schmitt Composition and Design | Daniel Kohan, Rikki Campbell Ogden iv CONTENTS X | FOREWORD XII | EXECUTIVE SUMMARY ARTIFICIAL INTELLIGENCE ARTIFICIAL INTELLIGENCE IN ACROSS SECTORS SPECIFIC SECTORS 2 | CHAPTER 1 52 | CHAPTER 6 The Role of Artificial Intelligence in Power Supporting Development in Emerging 59 | CHAPTER 7 Markets Transport 12 | CHAPTER 2 67 | CHAPTER 8 Artificial Intelligence: Investment Smart Homes Trends and Selected Industry Uses 72 | CHAPTER 9 21 | CHAPTER 3 Agribusiness Artificial Intelligence and 5G Mobile Technology Can Drive Investment 80 | CHAPTER 10 Opportunities in Emerging Markets Financial Services 29 | CHAPTER 4 89 | CHAPTER 11 Bridging the Trust Gap: Blockchain’s Manufacturing Potential to Restore Trust in 98 | CHAPTER 12 Artificial Intelligence in Support of Gender Equality New Business Models 37 | CHAPTER 5 Developing AI Sustainably: Toward a Practical Code of Conduct for Disruptive Technologies 44 | CHAPTER 5—ANNEX 1 IFC Technology Code of Conduct— Progression Matrix—Public Draft 103 | REFERENCES 114 | FURTHER READING Figures, Tables, and Boxes FIGURE 1.1 Channels to Economic Development Supported by AI Technologies 6 FIGURE 2.1 Global VC Investment 2008–17 13 FIGURE 2.2 EM VC Investment 2008–17 (ex-China) 13 FIGURE 2.3 China AI Investment by Subsector (# of deals) 16 FIGURE 3.1 Spectral Efficiency of Mobile Systems 22 FIGURE 3.2 5G Deployments in Cities Around the World 22 FIGURE 3.3 Bandwidth and Latency Requirements of Potential 5G Use Cases 24 FIGURE 4.1 The Future