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EGovernment, Public Sector reform, and Poverty Reduction. April 18, 2006 PREM Week.

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Presentation on theme: "EGovernment, Public Sector reform, and Poverty Reduction. April 18, 2006 PREM Week."— Presentation transcript:

1 eGovernment, Public Sector reform, and Poverty Reduction. April 18, 2006 PREM Week

2 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.

3 Measuring Impact of eGovernment a 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.

4 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

5 Links to Productivity & Growth An increase of 10 mobile phones per 100 people boosts GDP growth by 0.6% On Economic Growth A 1% increase in the number of Internet users increases total exports by 4.3%. On 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 ProductivityLabor 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.

6 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

7 Assessing Value and Return on Investment Has e-Government led to Cost Reduction? Quality Improvements? First 10 years

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

9 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.

10 Add State & Local Spending Procurement Spend ($bn)Savings US Federal$245$49 US State & Local$290$58 TOTAL$535$117billion Savings amount to more than $1,400 per US Household Source: US Department of Commerce, 2005 E-GP Savings, US economy

11 Government Services on-line (G2C) Australian Centrelink Experience: UK: Directgov UK: BusinessLink Singapore (eGov 2010 Plan): (winner of several awards) CitizenConnect and Singapore: EnterpriseOne USA: Canada’s ServiceCanada Estonia Hong Kong Korea Germany South Africa Chile Cape Verde India e-Seva Brazil Poupatempo Etc…..

12 Affordable infrastructure to access services Maximum 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.


14 Service Canada Portal


16 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


18 Access: Gaps in Coverage in Rural Areas Critical 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 Population Coverage INDIA: Teledensity in urban vs rural areas 0% 10% 20% 30% 40% 50% 200120022003200420052006 Urban teledensity Rural teledensity CHALLENGEWHAT ARE WE DOING? 5

19 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 AmericasEuropeLACSSA (IDA) PCs / 100Internet Users / 100 15x more internet users Despite impressive growth in access to voice, access to the internet remains a challenge CHALLENGEWHAT ARE WE DOING? INDIA: 150 million mobile phones vs 3 million computers 6

20 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.

21 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.

22 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.

23 Thank you!

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