Innovating Public Services: The Benefits of DPI in Latin America and the Caribbean

The World Bank and IADB report highlights the transformative potential of Digital Public Infrastructure (DPI) in Latin America and the Caribbean, emphasizing its role in enhancing economic growth, public welfare, and service delivery. It outlines the benefits of DPI, such as increased financial inclusion and efficiency, while addressing the challenges and strategies for effective implementation in the region.

The World Bank and the Inter-American Development Bank (IADB) have jointly released a report that delves into the transformative potential of digital public infrastructure in the LAC region, highlighting its importance in driving economic growth, enhancing public welfare, and promoting inclusive development.

The report defines DPI as a set of interoperable digital systems that provide foundational support for the development of digital services on a societal scale. These systems include platforms for digital identification, digital payments, and data sharing. DPI sits between the physical digital infrastructure, like connectivity and storage solutions, and the applications built on top of this layer. One of the key advantages of DPI is its ability to enhance efficiency and reduce costs for governments, businesses, and citizens by providing shared digital capabilities that support various economic and social interactions. This infrastructure is designed to advance public welfare and inclusion, with a focus on achieving public policy objectives such as economic welfare, financial inclusion, and equitable access to services.

Advancements and Challenges in the LAC Region

The LAC region has made significant strides in building DPI, with several countries already implementing systems for digital payments, digital identity, and data sharing. For instance, Brazil's PIX payment system and the federal digital authentication scheme are notable examples of rapid DPI adoption. However, the rollout of effective DPI faces challenges, including limited government capacity, constrained budgets, low citizen trust in digital services, and uneven access to reliable and affordable digital connectivity. The report recommends several strategies for scaling DPI in the LAC region. These include building out the necessary connectivity and data infrastructure, revising government procurement and budgeting rules, leveraging open-source software, engaging in regional and national knowledge sharing, and developing the capacities needed within government agencies to support DPI. Additionally, adopting a modular, reusable approach to digital infrastructure and benchmarking the "DPI-ness" of existing systems are crucial steps. Despite the challenges, there is a strong belief among LAC policymakers and digital government leaders that DPI can bring substantial benefits. The report underscores the need for a concerted effort to overcome barriers and unlock the potential of DPI to drive digital transformation and improve service delivery across the region.

The Tangible Benefits of Digital Public Infrastructure

The report also details the advantages of DPI, such as increased financial inclusion and access to essential services. For instance, digital payment systems can make transactions easier, faster, cheaper, and more convenient, thereby expanding access to financial services. In Niger, households where women received digital social assistance payments had higher diet diversity than those who received cash benefits. In Mozambique, beneficiaries spent less time waiting for mobile money payments compared to cash payments. Similarly, digital authentication allows more people to prove their identity online, enabling access to new public and private services. For example, cash transfers linked to digital identification in Pakistan increased women's control over cash. The government of Turkey expedited social benefits delivery by using a common identifier and interoperable databases, significantly reducing application and delivery times.

A Path Forward: Strategies and Recommendations

DPI brings efficiency benefits at multiple levels. Citizens and firms can access documents through one portal and reduce the need to file the same information multiple times. For example, Estonia's implementation of the "once only" principle has demonstrated significant time and cost savings. In India, the eKYC system reduced compliance costs for financial providers in new account opening. Governments can also reduce operational costs by relying on reusable components. In Singapore, the Singpass consented data-sharing service significantly reduced the time required to complete digital transactions. Sharing infrastructure can support innovation in designing new products and services. In India, private third-party application providers offer services built on top of the Unified Payments Interface (UPI). Similarly, open finance schemes in the UK and Brazil enable new entrants and products in the financial sector. Analysis during the COVID-19 pandemic showed that countries with DPI elements reached more beneficiaries than those without. Greater transparency is another advantage of DPI, as it enables citizens to hold public bodies accountable and reduces the potential for corruption.

Foundational DPI can create benefits within social sectors like education. For instance, robust digital authentication in India helps monitor teacher presence and reduce fraud related to "ghost" teachers. Digital authentication also helps reduce exam fraud for online learning. The ability to store and share secure verifiable credentials from completing training courses benefits both employees and employers during hiring. DPI benefits are likely to show up at the macroeconomic level, especially when a 'whole of DPI' approach is adopted. Increased access to digital identification can unlock significant GDP growth for emerging economies. The report highlights the importance of overcoming barriers and leveraging DPI to drive digital transformation and improve service delivery across the LAC region.