Responsible Finance Forum

DIGITAL ID AND THE DATA PROTECTION CHALLENGE: PRACTITIONER’S NOTE

01 October 2019

Inclusive and robust identification systems can offer many concrete benefits for governments, as well as individuals, private companies, and development partners. By providing a secure and accurate way of identifying the population, these systems can facilitate the delivery of a wide variety of services that expand financial inclusion, boost economic opportunities, improve access to social safety nets, increase gender equality, and more. In addition to these developmental uses, evidence suggests that strong identification systems have the potential to generate savings and revenue for the public sector, to the tune of millions of dollars per year (or even billions for larger economies). To date, however, our understanding of the full fiscal impact of identification systems is limited due to the scarcity of publicly available data and the methodological challenges associated with quantifying and attributing the effects of these systems. This paper is a first step toward filling this gap. Using the experiences of a handful of countries where data are available, it attempts to summarize existing case studies and build a framework for analyzing the potential fiscal benefits associated with investment in identification systems, including the features, mechanisms, and conditions that may generate (or limit) savings and revenue. In addition to aggregating existing knowledge and developing an analytical framework, this paper also provides a Guide for Practitioners with concrete steps to assist governments and other stakeholders when estimating expected savings and revenue from investment in identification systems. In order to conduct a full cost-benefit analysis, readers are encouraged to consult a complimentary World Bank report on the cost of identification systems (World Bank 2018d) and a companion paper on the financial benefits of these systems for the private sector (World Bank 2018c). We hope that these resources will not only broaden the evidence base and tools available to implementers, but will also encourage practitioners and researchers to undertake more rigorous evaluations of the impact of identification systems on public finances and the broader economy.

Originally posted on World Bank’s website. See additional ID4D publications here.