The IMF has estimated the value from digitalizing government payments in developing countries at US$220-$320 billion annually or 1.5 percent of revenues. Digitalization also improves efficiency of government transfers to citizens; in Brazil, switching from cash to electronic cards for distributing the Bolsa Familia social welfare payments led to a seven-fold reduction in administrative costs of from 14.7 percent to nearly 2.6 percent. The digitalization of social protection programmes can positively impact the way women participate in economies, and should be based on gender-responsive policy design and implementation.
Overview of this Catalytic Opportunity
Opportunities |
 Digitalize public financing and make public budgets and contracts transparent. |
Scale |
Governments in developing countries could gainUS$220-$320 billion annually from digitalizing payments. |
SDGs |
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citizens as.. |
Tax-payers, voters, public service users. |
Use cases |
Open Government Partnership (OGP) Estonia e-government Brazil Open Budget Transparency Portal |
Next steps |
Policy makers should make commitments and work with civil society and the private sector to increase transparency of public finances and use open government data to pursue SDG priorities. |
Greater transparency in the use of funds though open budgets and open contracts increases citizens’ confidence. For example, tax revenues as a share of GDP increased by 13 percent in Georgia and by 6 percent in Rwanda, following significant reductions in corruption. The Least Developed Countries could leapfrog siloed legacy systems and implement whole-of-government, integrated, use-case based approaches promoted by ITU’s SDG Digital Investment Framework.
Digitalization can enhance public resource mobilization: digital tax collection can plug leaking holes, advanced analytics can flag corruption risks, digitalization can encourage businesses to formalize (and pay tax), and extra revenues can be raised through taxes from digital goods and services.
Yet there has been only modest progress made in creating such ‘virtuous trust cycles’, despite existing use cases, estimated benefits, and on-going efforts of operational programs by the World Bank, international civil society organizations, funders such as the Open Society Foundation and Luminate, and multi-country platforms such as the Open Government Partnership. Change in this field is a ‘work-in-progress’, with significant investments needed in infrastructure, institutional change and the development of new capabilities.
Overcoming resistance to greater transparency is also part of the challenge. citizens need to not to fear retaliation, to have their voice to be represented (e.g. civil society) and aggregated (i.e. coalitions) effectively, and authorities require capacity to address claims while mitigating the risk of simply reconfiguring corruption. Those at the forefront of initiatives to ‘open government’ are increasingly shifting away from a ‘data first’ approach to towards an approach which starts with particular problems or challenges and considers the prevailing power dynamics and how information can create coalitions for reform.
Next Steps: Policy makers should make commitments with roadmaps and milestones to accelerate practical transparency of public finances including publishing budgets, contracting and spending information as open data. They should work with civil society to focus open government initiatives on pursuing SDG priorities.