As the world grapples with COVID-19, governments face a daunting challenge: limiting the adverse impact of a pandemic that has ground economic activity to a halt, affecting people at a scale rarely seen before. More than 50 countries, including the United States, have announced some form of cash transfer or social assistance to help tide over the immediate challenges faced by their citizens. While many of these efforts are one-off measures to mitigate the immediate impact, some may turn out to be more long-term depending on how widespread the economic and human cost of the pandemic turns out to be.
Delivering on these promises will require an enormous increase in the capacity of states to make payments to their citizens, or government-to-people (G2P) transfers, as they are widely known. Every government transfers money to people in some form—public sector salaries, pensions, scholarships, grants and vouchers to the poor, and so on—so there is existing capacity, including delivery mechanisms, to draw upon. But in most countries existing systems will not be adequate, either in volume or coverage, to help those affected make it through the economic disruption. The immediate challenge is how to make G2P transfers efficiently, equitably, and at scale—and how best to use technology to do so. And once the crisis is passed, the development challenge remains: How can digital technologies help accelerate global efforts to achieve the Sustainable Development Goals (SDGs) and eliminate poverty?
Even before the onset of the COVID-19 pandemic, we have attempted to answer some of these questions in a three-year project at CGD, culminating in our newly launched Citizens and States report. It has taken us on a journey through three continents—Asia, Africa, and Latin America—to understand how digital technologies are shaping the future of governance.
We travelled through villages in India to see how people receive food subsidies and pensions using the country’s biometric ID, Aadhaar, and how they perceive the new system compared to the old one. We have accompanied community health workers in Bangladesh as they deliver maternal health services using their mobile phones. We talked to agents in rural Kenya who are at the frontlines of the mobile money revolution that is now a global phenomenon.
Through our collaborators, we have tried to understand the challenges of delivering cash transfers to rural women in Pakistan, providing fertilizer e-vouchers to farmers in Nigeria, and opening bank accounts in remote areas in Mexico. We also documented how governments can replace wasteful fuel subsidies by converting them into individualized cash transfers delivered through bank or mobile money accounts and use the savings to expand access to clean energy, for example, providing LPG cooking gas for poor women in rural India.
Finally, we saw how governments are creating the infrastructure to harness the power of data to monitor the delivery of services and subsidies in real time, improving accountability of providers and voice of the citizens.
Our experience makes us hopeful for the future, especially when we see how developing countries are transforming their ability to deliver public services, subsidies, and transfers. Leveraging the almost-universal coverage of Aadhaar, bank accounts, and mobile phones, India now electronically transfers nearly $350 billion to over 800 million people every year. The just-passed US plan to give $1,200 to every citizen—including in some cases by check—will be far more logistically challenging for the US government than transferring the payment digitally, as India has been doing for government payments for the last seven years, and far more subject to errors and fraud. Many developing countries will similarly struggle to distribute payments, but others have built up robust systems that they can now leverage in a crisis.
In Bangladesh, a mother can now receive her child’s education scholarship through her mobile phone account instead of having to stand in long lines at the school on a pre-arranged day for a cash handout. Not only does this save her time and effort and provide accurate and documented payment, it also relieves school officials of a burdensome administrative process and of the risk that—rightly or wrongly—they can be accused of corrupt handling of funds.
In Kenya, a farmer can invest his or her savings directly in a small slice of a government bond through a mobile phone. He can become eligible for a small loan on the basis of a stable record of receipts and payments on his mobile account without posting collateral.
In Andhra Pradesh, a state in India with 50 million people, the authorities can drill down through state-wide reporting data on government programs in real time and across thousands of delivery points, to monitor the state’s provision of rations to poor beneficiaries. They can detect transaction failures almost immediately and instruct local officials to rapidly follow up and remediate the error.
These are just a few examples of how digital technologies are changing the lives of people in the developing world. With the spread of digital identification, access to financial accounts, and mobile phones, citizens increasingly demand the same convenience and responsiveness in dealing with their governments that they experience in their personal lives. In turn, governments around the world are moving rapidly to harness the power of technology to improve their ability to serve people—in other words, increasing state capacity in an increasingly interconnected, digital world.
In the current dynamic and evolving context, how can digital technologies play a positive role to achieve the ambitious objectives and targets embodied in the Sustainable Development Goals? What can we learn from the experiences of digital reform in developing countries? What can we say about the future trajectory of digital governance—the guiding principles, the harmonization of policy design and technology, and the challenges going forward? Finally, how can technology both empower citizens and improve state capacity? We offer some answers to these questions but recognize that there is still much more research ahead.
We also see that technology is only a tool. It opens up new opportunities to make the state more capable and efficient. But technology amplifies the power of data, and its impact on development depends on how this power is used. States can use data to improve service delivery, but they may not be benign users of data. The rapidly evolving tools available to governments also have the potential to further isolate marginalized groups and to track citizens. New checks and balances will be needed to ensure that digital technology serves the needs of all citizens—to make the capable state a good state.
It has been both exciting and challenging to bring the lessons together in a single report. Our experience leads us to believe that we are only just beginning to understand how digital tools can be used to achieve the SDGs, which we use as our guiding framework in the report. The SDGs recognize that development policies and programs are increasingly embedded in the digital world, and that digital applications cannot be leveraged to reform the citizen-state relationship unless all are able to use them. We agree: some of the leading cases that we examine offer a picture of the potential to implement digital governance at scale, but these are still isolated examples on the global stage. There is still much to learn about the application of digital technologies to development—and much to reflect on the possibilities as the world recovers from the COVID-19 pandemic.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.