15 minute read 4 Oct 2022
Rural people using laptop outdoor in the nature

How governments in developing countries can close the digital divide

Authors
Alessandro Cenderello

EY Europe West Government and Infrastructure Leader; Managing Partner for EU Institutions; International Development Leader

Proud citizen of the European Union and advocate for diversity. Music, food and wine lover.

Arnauld Bertrand

EY Global Government & Public Sector Consulting Leader

Working with governments to build stronger administrations for impactful public policies. Passionate about leading teams to guide public performance, innovation and service.

15 minute read 4 Oct 2022

The road to digital transformation and inclusion is steep, and developing countries can’t be left behind.

In brief

  • Citizens’ appetite for digital public services in developing markets needs to be matched by the strategic commitment of government leaders.
  • Developing countries that bridge the digital divide will be better set to compete in today’s increasingly online world – and unlock economic development.
  • Successful digitalization requires e-government to be baked into a country’s national development plan. Learning from others can accelerate the transition.

The revolution in digital technologies promises a new era of fast, efficient, universally accessible public services. But progress toward modern e-government is uneven.

Findings from the recent UN E-Government Development Index (pdf) ranks 73 nations as “high” and 60 nations “very high” in their implementation of digital government, and developed economies dominate the list.

The story in the Global South is far less positive. The world’s least-developed economies score an average of 0.35 (on a scale of 0 to 1) on the UN E-Government Development Index; the global average is 0.61.

In an interconnected world, it is imperative to bridge this gap, says Vincenzo Aquaro, Chief of Digital Government at the Division of Public Institutions and Digital Government in the UN’s Department of Economic and Social Affairs (UNDESA).

“If you look at the global population, 50% of people worldwide lag behind,” he says. “We need to close the digital divide, not widen it, and leave no one offline — and that includes improving digital inclusion in more developed markets.”

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Chapter 1

Closing the gap

Countries need to address digital’s dividing lines: money, politics and attitudes.

National income levels are a critical factor in the digital divide, but the health of public finances is not the only explanation. Political will, strategic leadership and a country’s ideological commitment to providing digital services also influence the speed of adoption.

Countries in emerging markets that have these three attributes can speed up their development of digital infrastructure and services. In turn, they will fuel economic development.

But our experience shows us that there is another, equally important, factor: citizen participation. The EY Connected Citizens survey, based on the views of more than 13,000 people in 13 countries, reveals that there is a global demand for digital services. In particular, it shows that there is a deep desire by citizens in emerging markets to use digital tools to access public services and connect with government.

Citizens want more digital services

We believe that the emerging markets covered by the survey — India, Malaysia, Brazil, South Africa and Mexico — reflect the experience of less-developed countries as their citizens increasingly move online.

The findings show that 44% of adults in emerging markets would like to access public services seamlessly through different channels, and 66% would welcome a single digital identification (ID) when dealing with the government.

Citizens in these countries also have a clear interest in keeping up with technology change, particularly in India (85%) and South Africa (83%).

Citizens in emerging economies are also more optimistic than those in developed countries about how technology can improve how they interact with public services. It is an opinion held by 76% of the population of Malaysia, for example. And significant majorities of Indians (73%) and Brazilians (63%) hold out strong hopes for improvements in public service from digital technology.

These numbers could be attributed to the age profile of many emerging and developing markets. Demographic data indicates that about 90% of people under 30 live outside developed world economies and 40% of the workforce will be Gen Z by 2030. According to the Connected Citizens research, these young people are far more likely to be Diligent Strivers — aspirational urban-dwellers who expect seamless digital government services and are keen to take advantage of what technology can offer to get ahead in life.

To meet these citizen expectations, however, governments in emerging markets need to improve their digital infrastructure. The good news is that this is happening. Latin America is one example. The latest UN E-Government Survey (pdf) now places Argentina, Brazil, Chile, Costa Rica and Uruguay among the world’s more advanced digital economies.

Others need to accelerate their strategies, so no one is left behind.

A spotlight on Africa’s growing e-services

According to the latest UN E-Government Development Index (pdf), Africa lags the rest of the world on e-government. It scores 0.40 (on a scale of 0 to 1) — compared to the global average of 0.61.

But the continent is not standing still. More African countries have moved into a higher group of the UN index than in any other region, for instance (21 countries, or 39% since 2016). The continent is also home to some impressive individual examples, such as South Africa (0.73), Mauritius (0.72) and the Seychelles (0.67). Most African countries have an e-government policy or strategy - the key challenge has been the execution of the strategy.

Across the region, the range of non-governmental e-services is also slowly growing, especially in the financial sector. Today, more than half of the continent’s countries offer an average of 12 services online with five countries (Nigeria, Rwanda, Angola, Egypt and South Africa) offering between 20-21 online services, according to the latest UN figures. 

Public Finance Management is the first step

Most African governments have invested in base, operational digital systems: financial (budgeting, expenditure and revenue management systems), financial trading and HR systems. However, these systems have yet to be developed to provide better service delivery to citizens.

One area where governments often focus their initial efforts is public financial management. This is a sensible first step, given low tax compliance, limited transparency and the difficulty that many African governments face in monitoring public spending.

“The focus for many administrations has been putting a dependable, efficient treasury management system in place, as well as creating and strengthening revenue agencies,” says Joe Cosma, EY Africa Government & Infrastructure, Advisory Sector Leader. “Then you can build from there, creating digital services that bring efficiency to government and that are more focused on service delivery for citizens.”

In Ghana, the Ghana Revenue Authority has designed and implemented a data warehouse and data analytics system. The project aims to widen the tax net by aggregating data from multiple sources and providing a comprehensive view of taxpayer obligations. It is part of the Ghana Economic Management Strengthening Technical Assistance Project, funded by the World Bank.

In Nigeria, the Federal Ministry of Finance is rolling out a software-as-a-service (SaaS) e-procurement solution across the country’s 36 states. The program is part of the World Bank’s States Fiscal Transparency, Accountability and Sustainability (SFTAS) Program for Results, which aims to strengthen fiscal transparency to help build trust in government, increase accountability in public resource management and ensure sustainability in the participating states. 

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Chapter 2

Digital pathways

The next stage of digital government in developing markets.

Even when governments invest in digitalizing public services, citizens do not always have the electronic devices or internet access they need to use them. According to new figures from the International Telecommunications Union (ITU), “vast swaths” of humanity are currently excluded from the online experience.

“While the number of Internet users surged from just a few million in the early 1990s to almost 5 billion today, 2.9 billion people remain totally offline,” says the ITU’s Global Connectivity Report 2022.

Many hundreds of millions more worldwide struggle with expensive, poor-quality internet access that does little to materially improve their lives, according to the report. The diverging speed of e-government adoption rates risks exacerbating existing imbalances, which goes against the UN’s Sustainable Development Goal (SDG) of “Reducing inequality within and among countries.”

Digitalized public services rest on strategy, not piecemeal projects

As a result of this inequality, “ensuring no one is left behind” has become a rallying cry for government technologists. But that goal will take work, and the first and most obvious steps are on the supply side. Governments will need to:

  • Install robust internet infrastructure.
  • Digitalize services.
  • Recruit skilled public servants to fulfil the service.

Only an integrated, embedded strategy can secure the political leadership, coherent vision and cross-governmental cooperation that this transformation needs. In our experience, leaders rush to create services at the front end that are visible to citizens, but often these projects are piecemeal and lack established digital foundations and governance to ensure sustainable digital development.

“You need the core enablers of digital government: connectivity, digital identity, interoperability and data registries,” says Arturas Piliponis, EY Digital Leader for EU institutions. “It’s hard work, but without these coupled with user centric service design approach you cannot build effective digital services and respectively digital state.”

Policymakers need to be enthusiastic — and joined up

To get internal support for digitalization, politicians and other senior policymakers need to understand how digital government can address service shortfalls. For a developing economy struggling to provide universal education or supply its citizens with clean water, e-government can feel like a luxury. But if digitalization is shown to be a necessary aid, rather than an optional extra, that perception begins to shift.

Alongside that changed mindset, a successful digital transition needs joined-up digital and development policymaking at both local and regional levels.

Bureaucratic and institutional silos are the enemy of public e-services. At a technical level, it is perfectly possible for individual government departments to digitalize their own activities, and many do. But the result is likely to be a piecemeal, disjointed system that overlooks possibilities for service integration and is an unsatisfactory experience for the user.

Skills for digitalization go beyond technology

In developing markets, where internet access and digital knowhow are often in short supply, any credible pathway to e-government must be based on skills. Government teams will need to know about cloud computing, artificial intelligence, machine learning, data security, and web 3.0 among other core digital capabilities.

Alongside technicians, effective digital government requires managers with experience in relevant policy areas (e.g., administrative law, privacy rules, data protection) and institutional change (e.g., strategy and planning, cultural transformation, risk management).

One proven route to a more joined-up approach is through data management. Data is the backbone of any digital project. Therefore, establish the policies and protocols for sharing information early, and a more coordinated system architecture will follow. This sharing reflects citizens’ own openness to the sharing of their data with other government departments if it leads to improvements in services.

An example here is the Brazilian city of Belo Horizonte. With technical support from EY teams, the city government developed a comprehensive data management system to determine the transport needs and mobility patterns of its citizens.

Using data insights, the city government has been able to develop a “smart” inter-modal public transportation system that can match supply to demand, particularly for low-income passengers, people with disabilities and other historically excluded groups.

Digital transformation pathways should also include a vision for joining up digital policy with public sector reform. Colombia is an example. When its government recently embarked on a US$250m program to digitalize its tax and customs authority, it tied it to a revamp of tax-collection processes.

Digital IDs are accelerators

Identification numbers are the gateway to government services. Without these, citizens are invisible to government agencies and at risk of missing out on the most basic services. In theory, digital IDs are revolutionary. Citizens in the 161 countries that use digital ID systems should be able to log on, submit their key personal details, and obtain a unique identification number. This number provides access to a range of different public services, cuts the time and money previously lost to bureaucracy, and can unlock a suite of cloud-stored personal documents, such as driving licenses, voter cards and education certificates.

The appetite for digital IDs is high among citizens in low-income countries. According to EY Connected Citizens research, 66% of adults in emerging markets would like a single digital ID that they use for every operation they carry out using public services. 

The robustness of digital ID systems will influence users’ level of confidence in them. In countries where citizens may not want to trust the authorities with their data, moving government services online could provoke anxiety. Therefore strict privacy and security protocols will be crucial, and these feature toward the top of the best-practice list promoted by the World Bank’s digital ID project, ID4D (pdf).

Countries rolling out digital ID systems in 2022 with the World Bank’s support include Morocco, Nigeria, Samoa and Togo. In total, the ID4D program is supporting similar projects in 35 countries, which could benefit 470 million people.

Implementing the world’s largest biometric ID program in India

India’s biometric identification system, which is the largest of its kind in the world, has been widely praised. Known as Aadhaar, the nationwide system gives each of the country’s 1.33 billion residents a unique 12-digit number. The scheme is voluntary, but most Indians have signed up since it was launched over a decade ago. 

Carriers of an Aadhaar number have access to as many as 300 central government services and up to 400 state-run schemes. The government has saved an estimated INR100b (US$1.27b) simply by paying state benefits directly to citizens, which has avoided considerable bureaucracy and opportunities for corruption.

The Aadhaar system has also spawned multiple innovations. For example, the digital storage facility DigiLocker. This app-based service enables citizens to upload their key documentation, which streamlines their interactions with government bodies as well as many fintech services and insurers. It now has more than 100 million users and holds more than five billion documents.

Rahul Rishi, EY India Consulting GPS Leader, says “The digital ID is just identifying that citizen, but what else can be offered to various groups or beneficiaries?”

Rishi gives the example of the Indian government’s Unified Mobile Application for New-age Governance (UMANG). The kind of super app seeks to democratize data across departments. The interface allows any citizen to download a single mobile application on their smartphone to discover and use the services that are available from local, state or federal governments.

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Chapter 3

Collective intelligence

What developing markets can learn from the best — and the rest.

What is clear from the world’s e‑government pioneers is that responsibility for digitalization cannot be siloed in a single department or division. Instead, a country’s digital transition needs to sit at the heart of political decision-making, and preferably overseen by a digital minister with a senior position.

New Zealand is an exemplar of digital governance. Ranked fourth in the UN’s E-Government Development Index, it has a minister for government digital services, a chief digital officer, a chief data steward and a chief information security officer.

Pooling resources is good for everyone

New Zealand aside, over two-thirds (70%) of the top digital governments are in Europe, notes Aquaro. Why? “Because they all work together under a broader framework; policy, institutional and legal,” he says.

The Middle East is showing evidence of following suit, Aquaro adds. While there is an element of “positive competition” between the region’s leading players, such as Bahrain, Saudi Arabia, Oman and the UAE, he also identifies a spirit of “strong collaboration.”

A similar picture is emerging in the Americas, he says: “Before, you only had the US and Canada. Now, you have Uruguay, Argentina, Chile, Mexico and Brazil that are very close to the level of those two.”

Regional leadership and collaboration have a growing role to play in closing the digital divide, according to the UN’s global study: “Joint initiatives such as Smart Africa, the ESCWA e-leaders initiative, eLAC2020/Red GEALC, and the Digital Agenda for Europe are manifestations of a growing understanding that the challenges and opportunities associated with digital transformation are best addressed through interregional and intraregional cooperation.”

Cooperation should also include the public

Vital as it is to cooperate regionally and establish a national strategy and central decision-making structure, digitalization also needs citizen participation. According to the UN’s survey, the public wants to know that their views are heard and to what extent they have been acted upon: “Two decades of experience … have shown the critical importance of linking e-participation initiatives with formal institutional processes, in order for people to see that participation has an impact.”

When we analyze any failed attempt at e-government, a narrow, top-down approach is usually to blame. Successful examples, on the other hand, involve the public throughout the process. Estonia, for instance, has an open-access portal (rahvaalgatus.ee) through which any citizen can submit a policy proposal, hold a discussion or send a collective address to parliament.

Another good example is Madrid. Through its Decide Madrid web platform, the municipal government of the Spanish capital invites the public to propose improvements to the city. Through the same website, residents can vote for the ideas they like most. The initiative also contains an element of participatory budgeting, whereby the city council earmarks a specified amount of money for projects proposed and voted on by residents.

Trust in digital government is crucial to participation

Public administrators can provide a sophisticated e-service system, but it will go unused if citizens feel disengaged or distrust the architects behind it. Ideally, governments will not just listen to their end users — they will also draw on their active participation to co-create services that resonate with their opinions and meet their needs. 

In his recent Our Common Agenda report (pdf), UN Secretary General, António Guterres, comments on the mistrust that still surrounds technology and the digital space. In light of this, he suggests, “Institutions could establish better ways of listening to people whom they are meant to serve and taking their views into account.” When it comes to e-government, the evidence from the sector’s leading lights suggests that the “could” in Guterres’s phrase is really a “should.”

Partners in transformation

To date, multilateral development banks and development finance institutions have been instrumental in providing a significant amount of the capital required. This investment is spread across a range of areas, from emerging technologies and e-participation through to technology infrastructure and service delivery. But the majority – 75% according to our analysis – is directed toward digital transformation: the articulation of relevant standards and policies, the development of data governance, and capacity building, among other activities.

“Investment in digitalization of federal public services was an accelerator for Brazil’s improvement in the UN Digital Government Index,” says Roberto Silva, Executive Director at Ernst & Young Assessoria Empresarial Ltda. “Brazil has other digital transformation programs in place, such as Brasil +Digital, which is worth R$1b to be invested over the next 10 years.”

It’s clear that governments in developing countries can learn many lessons from other countries that would accelerate their progress to a more digital-enabled government and economy, closing the digital divide. Leaders must make decisive steps if they are to meet the needs of their citizens, prevent getting left behind more developed markets and embrace the new digital world.

Summary

When connectivity, digital identity, interoperability and data registries – the four pillars of digital government – are well funded, better service provision will follow. However, the latest figures from the UN show that much more is needed to help bridge the digital divide. By bringing together neighboring governments, donor organizations and the private sector, developing countries can feel more confident about the journey ahead.

About this article

Authors
Alessandro Cenderello

EY Europe West Government and Infrastructure Leader; Managing Partner for EU Institutions; International Development Leader

Proud citizen of the European Union and advocate for diversity. Music, food and wine lover.

Arnauld Bertrand

EY Global Government & Public Sector Consulting Leader

Working with governments to build stronger administrations for impactful public policies. Passionate about leading teams to guide public performance, innovation and service.