eGovernment, Public Sector reform, and Poverty Reduction.

April 18, 2006

PREM Week

Linkages and debate around ICT and PSR

• Skepticism and perception ICT is a luxury good within WBG • Unlike the major studies on IT’s impact on private sector for the last 25 years, it is only

recently that systematic studies have been made on IT’s impact on the public sector . • Past evidence and perception that IT investments have been risky with questionable

returns and outcomes in public administration.

• IT alone no major public sector reform champions: => Isolated successes at best, no or very slow real change in the Admin/Bureaucracy’s approach to public sector management. If you are operating in that context make sure you start very small, and use all the champions/PR tools at hand to try to scale-up.

• Willingness to Reform (leadership), with no ICT : Laudable but ineffective as it ignores a whole decade of research in Impact of ICT on productivity and transformation of supply chain in private sector. If we chose that route, are we advising our clients in the most cost-effective way ?

• Willingness to Reform (leadership) + Sound Introduction of ICT applications + Sustained Change Management and technology transfer throughout political cycles: Critical success factors.

Measuring Impact of eGovernmenta must to assess linkages to poverty reduction

• Unlike the major studies on IT’s impact on private sector for the last 25 years, it is only recently that systematic studies have been made on IT’s impact on the public sector , and more recently on eGovernment’s impact.

• WSIS summits changed the perception of policy makers on ICT4D for developing countries.

• Linkages between ICT, poverty reduction & pro-poor innovation (CK Prahalad)

• Linkages between sound Admin transformation & Doing Business indicators

• Measurement frameworks developed by Consulting Firms (Accenture, Gartner, IDC, Forrester, Booz Allen Hamilton, KPMG etc.)

• EU: eGovernment Action Plan: Benchmarking Impact

• Australia’s Demand & Value Assessment methodology ($1.1 Billions saved 02)

• Italy’s modeling of eGovernment (Lucio Picci, 2005)

• World Bank Group commissioned a few studies on impact measurement.

The Impact of ICT on Poverty(Based on 2006 McKinsey &Co study on impact of Mobile phones in Asia)

Profile of Mr. Carpenter

– Age: 35

– Location: Beijing– Profession: Carpenter

who normally stands on the street waiting for work

– Monthly income: ~200 USD during the 7 months in cities (rest of time works in rural area as peasant)

– Monthly mobile bill: ~10 USD

Benefits qualification Major benefits

from mobile

• Critical for ad-hoc employment

• Time saved getting to customers’s house or by referral

• Stay connected with family members

• Stay connected with clients. Gets repeat Customers.

– Valuable time everyday (6%)

– Surplus re-used for production

– ~USD 100/ month (in additional business)

– Emotional benefits: Less frustration, more happiness, hope and free time.

– Quest for longer term value: Quality driving repeat Customer

Links to Productivity & Growth

An increase of 10 mobile phones per 100 people boosts GDP growth by 0.6%

On Economic GrowthOn Economic Growth

A 1% increase in the number of Internet users increases total exports by 4.3%.

On ProductivityOn Productivity

(1.5%)

(2.3%)

1.2%

(0.9%)

(0.7%)

1.8%

2.1%

1.2%

1.0%

(5.7%)

3.5%

2.2%

2.7%

5.2%

USA

Singapore

South Korea

Indonesia

Malaysia

Philippines

Thailand

Labor Productivity Labor Productivity without ICT

Av Annual percentage rates of labor productivity growth in Selected Countries (1995-2000)

Source: Van Ark et al. (2003)

In 2006, IT usage in China caused 38% increase in total factor productivity growth and 21% of GDP growth (Heshmati &Yang).

In US, IT was responsible for 2/3 of total factor growth in productivity and all the growth in labor productivity.

ICT Sector 06: 7% of global GDP, 10% growth, 12% jobs OECD.

eGovernment Activities: Assessing Value, Mapping processes, outputs, and costs

G2G: Transition from traditional to e-Government approach: Impact on poverty? • Public Expenditure Management (Federal, Municipal/Local)• Judicial System Management• Civil service management/payroll• Taxes & Customs• Asset Registration (land, vehicles, etc.)• Social Security and Pension Administration• Public Health Management-e-Health, clinics/drug administration & mgmt• Public Education Management, Distance learning and e-Education• Early disaster warning/prevention• ………..other G2G activities, processes and applications….• Procurement for Government (E-Procurement)G2C: One stop shop with priority services to Citizens: Impact on poverty?• E-Citizen – one stop shop• Hundreds of services (refer to Eduardo’s presentation)G2B

Assessing Value and Return on InvestmentHas e-Government led to Cost Reduction? Quality Improvements?

Savings amongst gov agenciesMore Customers,

Increased ComplianceTime savings to customers

Availability of information conducive toDemocracy, transparency

Better citizens

Back-end system, Front end Egovernment service

Capital InvestmentFor a specific project

Recurring CostsMaintenance, staff, New developments

New sites & servicesContinue integration

4th Wave: T-government

First 10 years

G2G Platform integration: Assessing Impact(Courtesy: Gartner Group, 2006)

Cost Savings: eProcurement (e-GP)

• G2G, G2B activity. Government purchases account for 15%-20% of GDP• On-line purchases, 2006: almost 13 Trillions (Forrester)• E-GPs have proven to save money for governments : Between 10-50% on

costs of goods and services based on country benchmarks.• MERX (Canada)• GEBIZ (Singapore)• eMarylandM@rketplace• Brazil: Total savings/year exceed 25% in costs of services contracted, for a

system that cost $3 millions in Capex. • ChileCompra (e-tendering and e-purchasing).• Compranet (Mexico).• Estonia.• Sri-Lanka: eProcurement funded under WBG project (too early to tell).Government savings could be re-invested in pro-poor programs.

Add State & Local SpendingProcurementSpend ($bn) Savings

US Federal $245 $49US State & Local$290 $58TOTAL $535 $117 billion

Savings amount to more than $1,400 per

US HouseholdSource: US Department of Commerce,

2005

E-GP Savings, US economy

Government Services on-line (G2C)

• Australian Centrelink Experience: australia.gov.au• UK: Directgov UK: BusinessLink• Singapore (eGov 2010 Plan): www.igov.sv (winner of several awards)• CitizenConnect and Singapore: EnterpriseOne• USA: www.usa.gov• Canada’s ServiceCanada• Estonia• Hong Kong• Korea• Germany• South Africa• Chile• Cape Verde• India e-Seva www.esevaonline.com• Brazil Poupatempo• Etc…..

Affordable infrastructure to access servicesMaximum distribution channels, and Standards

• Government e-Services Portals

• Common Access Kiosks (fee based)

(Also called Citizen Assistance Service Centers, Telecenters, service centers, community centers, etc.)

Self Service

Assisted service, Face to face

• Digital TV (T-government)

• Mobile Phone (M-government)

• At the basis: Common Enterprise architecture (Inter-operability framework)

• Common standards for data interchange

• Unique registries for citizens, businesses, and other entities/assets.

www.usa.gov

Service Canada Portal http://servicecanada.gc.ca

www.australia.gov.au

E-Government benefit study, Australia, 2002

• Australia’s eGovernment benefits (2002) study showed that 90% of egov service users thought improvements were significant over “traditional” government interaction.

• Study modeled methods of demand and value assessment and conducted intensive surveys for households and businesses

• 45% surveyed could quantify cost savings of $10-$25 per transaction, the rest of those surveyed could not quantify that saving.

• Businesses surveyed reported cost savings > $50/transaction.

• .. And they did not have to bribe to get their requests serviced in earlier model!

Cost savings to governments were • 67% improved business processes• 64% reduced costs of servicing (printing, advertisement, etc.)• 17% cross-agency collaboration• Benefits to users of egov services are estimated to be a saving of $1.1 Billion in 2002

Access: Gaps in Coverage in Rural AreasCritical for rural poor to adopt egoverment services

Universal Access Funds: Nepal, Uganda, Nigeria, Pakistan

Community Solutions: Transferring the Grameen Phone experience to other markets, MTN Nigeria – with SME department ($4.3 million TA program)

Shared infrastructure: Tanzania (with Ericsson), India rural infrastructure

New technologies: VSAT / Cellular,

Transmission over power line

70% of the population covered with only 30% of the geography

0%

20%

40%

60%

80%

100%

1% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Geographic Coverage

Po

pu

lati

on

Co

vera

ge

INDIA: Teledensity in urban vs rural areas

0%

10%

20%

30%

40%

50%

2001 2002 2003 2004 2005 2006

Urban teledensity

Rural teledensity

CHALLENGE WHAT ARE WE DOING?

5

Access: Gap in Services

PPPs for backbone infrastructure: EASSY(22 countries, 30 operators, 5 DFIs), Indonesia

New broadband solutions: WiMax (Ukraine, Uruguay)

Broadband networks on other infrastructure: Central Africa (Pipeline), DRC (Electricity Transmission). Need to work with other INF sectors.

Analytical work on importance of Broadband for trade and growth.

0.0

10.0

20.0

30.0

40.0

Americas Europe LAC SSA (IDA)

PCs / 100Internet Users / 100

15x more

internet users

15x more

internet users

Despite impressive growth in access to voice, access to the internet remains a challenge

CHALLENGE WHAT ARE WE DOING?

INDIA: 150 million mobile phones vs 3 million computers

6

Assessing Overall Savings to the Poor

• Electronic delivery: Saving citizen/customers the costs of interruptions, travel to government’s several agencies per transaction, waiting in line.

• When e-service goes to self-service, uncouples the work by government side to programming and then replication via software -- like ATM machines taking over clerical work in banks. Here the per transaction savings is typically something like 80-90%. Must be calculated based on volume and current transaction costs.

• With reengineering and modify much of the production flow and tasks, can typically save something like 30-40% of total per unit costs of service, but with substantial risk and uncertainty given the political resistance that comes to such changes.

Assessing Overall Benefits to the Poor

• Simply making things transparent improves accountability and, typically, efficiency. Useful lesson for increased information disclosure on our own projects, via local country office web sites, or the Development Gateway.

• In all the above, easier to measure cost reductions for innovations that keep the outputs the same. In reality, much of the value of innovation comes from finding entirely new things to produce, and savings to the overall structure. This is not well measured and we are still struggling to find a good econometric model to simulate the derived innovation’s benefits.

• Impossible to quantify/model benefits such as satisfaction, social cohesion, inclusion, democracy etc.

• Allow citizens to acquire ICT skills which may help towards future employment. Accessing information empowers and inspires.

Linkages eGovernment and Poverty reduction ?

• Yes if Citizen can benefit from egovernment services in terms of:

– Time, Energy, transportation savings

– Cost savings per transaction (self-service replaces bribery)

(Around R200 were paid/land record in Karnataka)

– Knowledge/information acquired to be a better citizen/worker/parent

– Innovations that benefit the citizen

– Employment possibility in the business of eGovernment

– Enhanced quality of life, service quality, ability to make good decisions.

– Social cohesion, trust and more equity in accessing opportunities

• YES If government re-invests savings from its G2G eGovernment savings in continuous delivery of public social programs targeting poverty reduction.

• YES if government keeps focusing on ICT as a tool to support and innovate in public sector reform, decentralization accountability and transparency throughout its different political cycles.

Thank you!