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Biometrics, foreign aid, Africa, economics of resource-rich countries, growth and development, transition economies
Alan Gelb is a senior fellow at the Center for Global Development. His recent research includes aid and development outcomes, the transition from planned to market economies, the development applications of biometric ID technology, and the special development challenges of resource-rich countries.
He was previously director of development policy at the World Bank and chief economist for the bank’s Africa region and staff director for the 1996 World Development Report “From Plan to Market.”
Uganda has sought to finance its development agenda with oil since discovering the resource in its Albertine Lakes Basin in 2009. This paper considers alternative methods for distributing the rents from oil that mitigate some of the governance risks associated with natural resource revenues.
With the expansion of cell coverage and mobile banking, millions of poor and rural people can now access financial services. But as financial institutions reach new populations, it is becoming clear that there are other issues keeping people from formal banking, such as the need for identification. Thankfully, there seems to be an easy solution. Just as mobile phones have helped overcome the issue of proximity for banking, biometrics could do the same for identification.
The World Bank’s Shanta Devarajan and Marcelo Giugale in yesterday’s Guardian Poverty Matters blog write:
Except for Botswana, the track record of Africa's mineral and hydrocarbon exporters is sobering. While Africa's central banks are today better equipped to deal with currency appreciation, and its civil society more alert to environmental hazards, the institutions that control graft are not strong. They must be improved. However, this will take time. Is there a shortcut to better accountability in the management of natural resources? Yes, there is: direct transfers of resource dividends to citizens.
According to its website, the United Nations Educational, Scientific and Cultural Organization (UNESCO) has stopped accepting nominations for its UNESCO-Obiang Nguema Mbasogo International Prize for Research in the Life Sciences. But we are guessing that the applicant pool remains quite small. Frankly, who would want his or her name affiliated with one of Africa’s worst dictators? Besides UNESCO, that is.
Center for Global Development
WASHINGTON – As governments across the globe begin to use direct transfers to get money to citizens unable to work, a new report from the Center for Global Development (CGD) finds that just 56% of citizens across 99 developing countries have access to a phone, a bank account, and an ID. Those three things, the researchers find, are the building blocks for the successful rollout of digital government transfers, from emergency cash transfers in a pandemic to everyday government programs like pensions and food subsidies.
“Governments around the world are moving full-steam ahead to get money in the hands of their citizens who are out of work due to the coronavirus. But we found that for digital payments from governments to work well, countries need to have the digital basics in place: bank accounts, IDs, and phones. And far too many developing countries are running behind on making sure their citizens have access to those basics,” said Alan Gelb, one of the authors of the study and a senior fellow at CGD.
“There are a lot of advantages to bringing government payments online. It can cut out costly middlemen and time-wasting activities like waiting in line to pick up a ration payment, as well as providing a much stronger defense against corruption, “Gelb said. “And, in a crisis like this, it means you have the digital infrastructure ready to go for something like emergency cash transfers.
“India has been at the forefront, digitizing programs like pensions and subsidies to buy cooking gas for poor families. And what India’s experience illustrates is how you need a trio of digital basics to make payments work: a digital ID to prove a person is who they say they are, a financial account to for them receive the money, and a mobile phone that can be both an information hub and a tool to access that money,” said Anit Mukherjee, a policy fellow at CGD and another author of the study.
The researchers found that while many governments had focused on rolling out national biometric ID programs, like India’s Aadhaar system, financial inclusion is the biggest hurdle for most. About 34% of the population in the 99 countries they examined lacked a financial account, and in the lowest-performing countries, more than two thirds of the population did not have access to a financial account.
“We found that the lack of bank and mobile money accounts is the biggest gap in digital readiness. It’s hard to get money to citizens who don’t have either,” said Mukherjee.
The report found:
There are significant gender gaps in access to phones, IDs, and especially bank accounts. In sub-Saharan African countries, men were at least 9 percentage points more likely to have access to each of the three than women.
More than twenty percent of women in Pakistan don’t have access to even one of a bank account, mobile phone, or ID, four times the rate of men.
Sub-Saharan African countries tend to have relatively high rates of financial inclusion, thanks to widespread use of mobile money in many countries, led by Kenya, which did better than much richer countries on that front.
Financial inclusion remains relatively low in Latin America. While nearly 80% of Latin Americans had access to a mobile phone, barely more than 50% had a bank or mobile money account.
The good news, they found, is that building on one part of the basics helps expands others. Everything else being equal, having an ID and a mobile phone increases the likelihood that a person will have access to a financial account, particularly for groups that are disadvantaged. Also, even as access makes it easier to implement social transfers, transfers can themselves be a powerful force for increasing financial inclusion.
“None of these numbers are set in stone. Governments can and should work to expand their citizens’ access to the digital basics. And they should need to ensure that they do it in ways that don’t reinforce existing inequalities,” Gelb said.
The full report is available at https://www.cgdev.org/publication/citizens-and-states-how-can-digital-id-and-payments-improve-state-capacity.
On the surface, it’s hard to see how requiring a photo ID for elections could be problematic. What’s the big deal? Nearly everyone we know has at least one photo ID—a driver’s license, state ID, or passport. Plus, preventing double or illegitimate voting is a favorable goal in any democracy. Who could argue with a law that promises to protect electoral integrity?
Browsing through Wikileaks to try to understand what the fuss was all about, Alan came on an interesting cable (10Beijing367) about African views on possible cooperation between China and Western donors on aid to Africa. According the summary of a cable from the U.S. embassy in Beijing, reporting on the views of African diplomats stationed there: