5 Factors That Will Shape E-governance in Emerging Markets
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5 Factors That Will Shape E-governance in Emerging Markets
By Saniya Fatima, Research Analyst, Botho Emerging Markets Group
March 30, 2022
Covid-19 has made sure that digitization is no longer a “nice to have” - for both the public and private sectors. For governments, in particular, digital transformation has been at the center of most emerging market governments’ development priorities. This has pushed states that are digitizing services on a mass scale to engage with the private sector as not just vendors, but also co-creators. In pursuit of digital economies of the future, what are the key considerations for governments and private players who are jointly driving digital e-governance initiatives?
Botho Emerging Markets Group co-hosted a panel discussion with the Estonian pavilion at Expo 2020 on, “The Impact of the Government's Digitalisation Efforts on Public-Private Partnership Dynamics”. Here are some of the key takeaways from the discussion:
REThink the public-private partnership engagement to offset risks for private partners
In emerging markets, limited internet penetration and digital literacy reduce the market size of digitization projects, making markets less lucrative to private sector players. One panelist suggested that like-minded policymakers from different emerging markets that are smaller in size should work together and collaborate with private sector players to attract investments and offset some of the risks associated with small market sizes. This would not only foster cross-border integration, but also offer greater opportunities for private sector participation.
2. The successful digital transformation of governments and nations is only possible through fostering tech entrepreneurship
Often, public sector players fall into the trap of aligning their digital transformation initiatives with legacy companies and big names to showcase the success of their policies or programs. However, another panelist noted that innovation may be difficult to deliver for large companies due to their (complex) structures. Entrepreneurs, who are often able to create solutions for problems in more reflexive and dynamic ways, help bridge that gap. Moreover, beyond the usual advantages of fostering entrepreneurship, integrating tech entrepreneurship into their policy vision can help governments address the unemployment challenge and employment insecurity associated with increased automation due to digitization.
3. Technology is only a means to digital transformation, not the end.
Panelists also pointed out that for private players looking to deliver e-governance infrastructure or partner in digital transformation initiatives, thinking beyond securing their intellectual property with respect to technology is critical, especially since technology evolves and replicates quickly, often making tech IPs redundant. Nortal, for example, has delivered 40% of Estonia’s digital infrastructure and expanded across Europe and the Middle East by adopting open-source technology. In the company’s experience, digital transformation is only a tool, and the success of private sector players lies in their ability to deliver a transformative vision and facilitate the exchange of ideas. This also helps ensure the interoperability of digital infrastructure.
4. Digital transformation is as much cultural and contextual as it is technological.
It is essential for private sector players to understand cultural and social nuances, as they partner with public institutions to help transform governance. Cultural and social contexts affect how the public adopts technology and uses public services, and also how the government interacts with the digital governance infrastructure itself. The goal of introducing technology may, hence, differ from country to country. Referencing his experience, one panelist noted that while European countries often focus on capital and labor efficiency, Middle East markets aim to promote innovation. Reinforcing the sentiments of other panelists, he stated that the primary aim in emerging markets is often to improve accessibility to fundamental public services, like education and health. It is, therefore, important for private sector players to understand local contexts, both in terms of government goals, as well as citizen attitudes when offering e-governance solutions.
5. Multilateral Institutions Can Facilitate Capacity and Knowledge Transfer
Finally, one panelist highlighted the role of multilateral institutions in facilitating capacity building by identifying the gaps in member states’ understanding of digital transformation and technological access. He emphasized the need to provide training and knowledge transfer amongst policymakers as a way forward to drive digitization in emerging regions. This would also enable a more inclusive digital transformation and help bridge the digital divide, not just between citizens, but also government institutions.
In emerging markets, digitization has been a silver lining to the looming cloud that has been the COVID-19 pandemic. However, as private sector interest continues to grow in these countries, governments need to ensure that their policies are proactive instead of reactive to private sector moves, while also securing public confidence in the technology in question itself.
We would like to thank our moderator and panelists Zahara Malik, Artur Assor, Philip Joel Cole, Issaka Garba Abdou, Hans Henrik Christensen, and our very own Isaac Kwaku Fokuo for their insightful contributions to this discussion.
Saniya Fatima is a Research Analyst at Botho Emerging Markets Group