Digital identification has become a focus for development policies and programs, and not a moment too soon. Identification Revolution: Can Digital ID be Harnessed for Development considers where these trends are heading.
CGD Policy Blogs
The informal sector is a major source of economic activity and job opportunities in poor countries as well as emerging economies. In sub-Saharan Africa, the size of the informal sector is estimated to employ over 70 percent of the population. Why do businesses remain informal? What gains in productivity or profitability do they forego by as a result of that choice?
Many emerging economies could benefit from insurance against this backdrop of volatility. Fortunately, cheap and no-strings-attached liquidity insurance exists, in the form of the IMF’s Flexible Credit Line (FCL) for countries with very strong policy fundamentals; for countries with somewhat weaker, but still sound fundamentals, the Precautionary and Liquidity Line (PLL) offers a similarly good deal. But these precautionary instruments remain underutilized. We have some suggestions on how the IMF could fix this.
In the modern world, many everyday transactions—such as opening a bank account, registering for school, activating a SIM card or mobile phone, obtaining formal employment, or receiving social transfers—require individuals to prove who they are. For an estimated 1.5 billion people in developing countries, this creates a serious obstacle for full participation in formal economic, social, and political life. With this in mind, more than 15 global organizations have jointly developed a set of shared Principles that are fundamental to maximizing the benefits of identification systems for sustainable development while mitigating many of the risks.
Here we offer four specific suggestions to help implement Sustainable Development Goal target 16.9, "legal identify for all," as countries strengthen their identity management systems, often with the support of development partners.
These recent developments in identification, combined with rising mobile phone ownership, broadening Internet access, and innovative payment delivery mechanisms, can be harnessed to transform the way states implement poverty-reduction programs and improve the lives of their citizens. Digital payments promise faster, more transparent, and lower-cost delivery for existing cash-based government transfers, and can also transform the way governments deliver subsidies. In a new background paper, Dan Radcliffe reviews the evidence on the gains from digital payments and pinpoints four ways in which they can improve development outcomes.
We have long advocated for more widespread use of median income or median consumption to compare individuals’ material well-being between countries and its development over time, and we are happy to report that the World Bank team that manages the (impressive) PovcalNet database has come through: as of October 1, the median monthly per capita income or consumption for each country is now part of the standard indicators displayed for any country query on PovcalNet.
India’s shift towards direct benefit transfers (DBTs) is on the fast track. According to official statements, in the 2015-16 fiscal year the central government deposited nearly $5 billion of subsidy and welfare payments directly into the bank accounts of 300 million beneficiaries. It has also set an ambitious target to transfer all payments to the Aadhaar-based biometric DBT platform by the end of 2017. This will surely be the greatest subsidy reform in the world, but we need more data to accurately evaluate its impact.
Identification & Development: What Have We Learnt and Where Are We Going? Comments Requested for Upcoming Book
Effective identification is increasingly seen as a crucial step towards the achievement of several other development goals. In fact, developing countries have been implementing new ID programs at a breakneck speed. To provide a relatively comprehensive picture of these rapidly changing trends, fast-evolving systems, and mushrooming applications is no easy feat, but we have tried to assemble a rough overview of those ID- and development-related topics that struck us as most relevant in the form of a Preliminary Discussion Paper.
Biometric voter registration and verification technology is rapidly becoming a staple of elections in the developing world, but where and how will this technology be most efficiently deployed?