Grow digital ID system for emergency and reap long term rewards, World Bank says
The response of governments to the economic impacts of the COVID-19 pandemic highlight the importance of digital ID, according to the World Bank.
In a blog post co-written by five senior World Bank officials, the institution makes the case that those countries with advanced payment ecosystems capable of reaching all people are poised to rapidly deliver cash transfers.
Different ways of delivering cash transfers directly from governments to individuals are discussed, as 84 countries have announced changes to their social protection systems, and 58 have announced increased cash transfer schemes. In many developing countries, these moves are unprecedented, according to the post, and with 656 million people around the world living in extreme poverty, the long-term benefits of improving these systems could be enormous.
As examples, the substantially different approaches taken by Chile, Peru, and Thailand to allow efficient financial aid distribution are described.
“These countries have the added advantage of digital ID systems that uniquely identify recipients, which allows them to determine eligibility and deposit directly to the account the beneficiary has linked to their ID,” the report states. “Importantly, both countries were also able to quickly rollout substantial cash transfer programs to mitigate the impact of COVID-19 on informal workers. More broadly countries with greater adoption of digital financial services (DFS) will find it relatively easier to ensure continued access to financial services and take advantage of and support digital economy developments like e-commerce, tele-medicine and distance learning.”
Cash transfer mechanisms can become tools for social inclusion, particularly for women, though digitalization also comes with its own privacy concerns, according to the post. The World Bank Group already held modernizing systems for government-to-person (G2P) payments as a long-term priority, and doing so has suddenly become a priority for all countries restarting their economies, and the institution urges coordination and collaboration to do it the right way.