In digital transformation, the devil is in the data
Living through COVID-19 focused political minds on the urgency of digital transformation. We all saw how countries that had previously invested in digital infrastructure such as identification or payment systems were able to respond to the crisis quickly and effectively by leveraging these systems for cash transfers, vaccine roll-out, and other relief efforts. The urgency of the moment drove innovations that paved the way for longer term improvements in the speed, reach, and targeting of public services through digital investments.
This is one of the key issues that emerged during a meeting in Bali last week of the world’s richest countries. G20 leaders formally recognized that digital investments are a critical part of the infrastructure of modern administrations, and they committed to advancing “more inclusive, human-centric, empowering, and sustainable digital transformation.”
During the event, the United Nations Secretary-General called on all countries to support a Global Digital Compact to promote an “open, free, inclusive, and secure digital future for all,” to be agreed upon in 2024.
This is a goal that everyone should support. But making digital economies work for everyone is a complex challenge rooted in how the data that is produced and used by these systems is managed and governed. Without the capacity and resources to make the most of data produced by digital systems, governments will fail to harness their full potential, leaving many people behind. In other words, in seeking to make the most of digital transformation, the devil is in the data.
Locating data in digital systems
Digital tools and systems run on data. Their power to transform relies on their ability to collate, analyze, and use vast amounts of data for new insights, smoother processes, and targeted action.
Countries like Togo are reaping the benefits of a digital system that runs on data. In the early days of the COVID-19 pandemic, the Government of Togo worked with three organizations to deliver cash transfers to 138,000 people living in poverty. These partners brought together satellite data and phone records to identify the neediest populations. People were then invited to opt in using their identification number, and they received the transfer directly to their mobile phones. Integral to the system, called MobileAid, was having a national identity system that covered 93 percent of adults in the country and provided a usable population registry. Unlike in the United States, where citizens waited months for the government to deliver paper checks often against outdated address information, Togo’s data-enabled digital system delivered relief quickly and efficiently.
Like MobileAid, many of the most transformative digital reforms are built on investments in digital public infrastructure. Like roads and bridges but online, digital public infrastructure creates the technology foundations for digital transformation at societal scale. Common examples of digital public infrastructure include identity systems, payment systems, and sector information systems like DHIS2 in health.
The databases that underpin digital public infrastructure often hold personal and sensitive information, including names, addresses, identification numbers, health and wellness information, bank details, transaction records, and, in many places, biometric data like fingerprints and pictures. Questions around who has access to this data, whether it can be shared, and how it can be used are fundamental to protecting people’s rights and determining who benefits from the data.
For example, should governments be allowed to share your health records with banks or insurance companies to evaluate your creditworthiness or insurability? Should a police service be able to find out if you’re HIV positive or if you have had an abortion? What if the political party in power uses financial transaction records to discredit its opponents?
Centering the role of data by examining how it is produced, managed, and used by digital systems—and how this impacts on people—helps to ensure that digital transformation leads to more equitable outcomes and not just greater efficiency.
Building trustworthy digital systems
It’s easy to get carried away with the promise of new technology, and for governments and donors to focus on building shiny new things. Often this is exactly what the world needs, but without establishing public trust in these new systems through effective data governance, the shiny new technology risks underperforming or even causing harm.
Controversies surrounding digital identity systems that collect biometric data highlight these risks. While India’s Aadhaar system has been heralded as improving the delivery of social welfare benefits and reducing corruption and waste, widespread reports have identified poor handling of data and inadequate safeguards. This has resulted in serious data breaches and caused a vast amount of people’s personal data to be exposed and used to exclude marginalized groups from services. Similar concerns arose in Kenya when the government began to roll-out the Huduma Namba. In both cases, legal challenges resulted in the countries’ top courts halting the ID system roll-outs until adequate data protection legislation and other safeguards were put in place.
What digital ID, payment systems, and sectoral information management systems have in common is the vast amounts of personal and often sensitive data they collect and hold in large databases. The greatest potential for improved service delivery and decision-making comes from linking and mining these databases. Critics have argued that this creates a gateway to surveillance—by both the state and the corporations that are subcontracted to run these systems—and loss of individual autonomy. But it doesn’t have to be that way. How the data produced and used by these systems is governed determines whether, on balance, they provide more help or harm.
Legislation, institutions, and other formal mechanisms of data governance provide critical guardrails as we’ve seen in India and Kenya. Also important are civil society watchdogs and citizens groups that can question digital investments and interrogate whether the safeguards are robust enough. Data governance mechanisms also need to give affected people and communities opportunities to weigh in on how their data will be collected and used by digital systems. Expanding participation in data governance has been shown to promote greater accountability and transparency, create checks and balances, and lead to more trustworthy and equitable digital systems.
Maximizing the potential of digital transformation
Leveraging the full power of digital transformation, and doing so in a way that commands public support, requires that governments have the institutions, skills, and infrastructure to store, process, analyze, govern, and use the data they produce. As the World Bank argues, this requires integrated national data systems that can set and maintain data quality standards, conduct routine data collection and analysis, store and manage that data effectively, bring together traditional and new data sources, and govern data in a responsible manner.
Many countries lack these basic capacities. For example, two thirds of low- and middle income countries lack sufficient resources to meet the demands for data created by the COVID-19 pandemic. There are only six out of the 17 SDGs for which more than two thirds of countries have data to report. In our work at the Global Partnership, we find that colleagues from National Statistical Offices are eager to leverage new data and technology but often lack the infrastructure and human resources in data science, geospatial data processing, and data management and governance to take full advantage of digitization.
Despite these persistent challenges, investments in data and statistical systems in low- and middle-income countries have stagnated in the last decade, hovering around $450-650 million and now representing a meager 0.3 percent of Official Development Assistance (ODA). This is a shame because, at just $700 million, the funding gap is not actually very large, and these investments lead to significant returns.
Investing in data systems is spending to save. A recent study by Dalberg Development Advisors for the Data with Purpose campaign calculates that every dollar invested in foundational data systems produces an average return of $32. More effective data systems improve decision making, create efficiencies through better targeted services, and generate more equitable outcomes. Strengthening legal frameworks, institutions, and processes of data governance will contribute to more inclusive, empowering, and trustworthy environments for digital transformation.
The Dalberg study advocates for all bilateral and philanthropic donors to allocate a minimum of 0.8 percent of annual ODA investment to data systems. Allocating less than one percent of the hundreds of millions of dollars poured each year into digital transformation seems like a small price to build firm data foundations for digital systems, particularly since these systems can’t run without the data.
Looking to the future
Building effective and trustworthy data systems to underpin digital transformation requires a foundation of shared values and reliable investment. Together with a growing movement of partners, the Global Partnership launched the #DataValues Manifesto and kicked off the Data Values campaign in September. The Manifesto envisions a fairer data future and provides a five-point plan to get there. It is both the culmination of a year-long consultation with more than 350 people from over 60 countries and also a starting point for advocacy and action on #DataValues. The Manifesto and accompanying white paper offer ideas and examples to shape data governance and center data values in digital transformation. In the coming year, we’ll be working with partners to promote the Data Values agenda and we’ll be supporting and learning from their efforts to take action on the Manifesto messages.
We are also proud to be a part of the Data with Purpose campaign, which just launched the Dalberg report and has seen numerous influential political and corporate leaders speak about the importance of investing in data. We are committed to building support for the allocation of 0.8 percent of donor investment to data systems, investments that are fundamental for all countries to realize the full promise of digital transformation.
We’re looking forward to the development of a Global Digital Compact at the UN over the next two years. This process sits within the broader context of work across the UN System to implement the SG’s Data Strategy and to promote rights-respecting digital systems. The UN Technology Envoy is currently running an open consultation to hear from all stakeholders on their priorities for the Compact. We will be working with partners to ensure the Compact puts data values and data investment at the center, and encourage all stakeholders to share their views.