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Developing countries which embrace digital ID could add economic value equivalent to an average of six per cent of GDP by 2030 according to a report by the McKinsey Global Institute.

The report entitled Digital Identification: a key to inclusive growth examines seven countries in detail: Brazil, China, Ethiopia, India, Nigeria, the United Kingdom, and the United States. It suggests that Brazil could benefit most by a remarkable 13% by 2030 and that even developed countries could add around three per cent by the end of the decade.

Digital ID – haves and have nots

The report estimates that the planet’s 7.6 billion people divide into 3.2 billion people who have some form of ID with a digital trail, 3.4 billion with ID but with no digital trail and one billion with no ID whatsoever.

It also finds that many national digital ID programs have achieved low coverage levels with most enabling only a small fraction of the nearly 100 uses MGI has identified for digital ID.

Slow progress for existing systems

Several existing programs with low adoption rates have been affected by limited functionality, poor user experience, and difficulties coordinating across stakeholders.

The adoption of the eID in Nigeria stalled in 2017 amid issues with public-private partnerships used to launch the system and the integration of 13 separate identification systems run by separate government agencies.

In the UK, Verify has experienced slower than expected adoption – and currently covers less than 10 percent of the population—and has so far been limited to a relatively small set of government-related uses.

The report notes that overall, most existing digital ID programs do not yet capture all potential value, and additional opportunity exists for greater value creation.

The report also acknowledges that digital ID is a duel-use technology which can be used for the benefit of society but also for undesirable purposes by countries, companies and individuals although this report focuses mostly on the benefits.

Unlocking value

It suggests well designed systems can unlock value for individuals potentially in six roles as consumers, workers, microenterprises, taxpayers and beneficiaries, civically engaged individuals, and asset owners.

Among other benefits, it suggests digital ID could contribute to providing access to financial services for the 1.7 billion-plus individuals who, the World Banks says, are currently financially excluded. It also suggests it could help save about 110 billion hours through streamlined e-government services, including social protection and direct benefit transfers.

It says over half of the potential economic value of digital ID could accrue to individuals, making it a powerful key to inclusive growth, while the rest flows to private sector and government institutions.

The report adds: “Capturing the value of good digital ID is by no means certain or automatic. Careful system design and well-considered government policies are needed to promote uptake, mitigate risks like those associated with largescale capture of personal data or systematic exclusion, and guard against the challenges of digital ID as a potential dual use technology.”

Good digital ID – the attributes

The report also identifies what it describes as the key attributes of digital ID.

Verified and authenticated to a high degree of assurance – High-assurance digital ID meets both government and private-sector institutions’ standards for initial registration and subsequent acceptance for a multitude of important civic and economic uses, such as gaining access to education, opening a bank account, and establishing credentials for a job. High-assurance authentication maintains these same standards each time the digital ID is authenticated.

Unique – with a unique digital ID, an individual has only one identity within a system, and every system identity corresponds to only one individual. This is not characteristic of most social media identities today.

Established with individual consent – Consent means that individuals knowingly register for and use the digital ID with knowledge of what personal data will be captured and how they will be used.

Protects user privacy and ensures control over personal data – Built-in safeguards to ensure privacy and security while also giving users access to their personal data, decision rights over who has access to that data, with transparency into who has accessed it.

Employment benefits

Among specific benefits the report suggests it could bring improved access to employment through better digital talent matching with contracting platforms enabled by digital ID programs which allow job seekers to authenticate themselves online.

It adds that such platforms could streamline access to labour markets for inactive and unemployed workers. The combination of identification coverage and high-assurance digital platforms could also boost labour productivity. It estimates a 1.8 percent boost in productivity for existing workers in Nigeria from increased access to formal labour markets.

Agricultural productivity

It also suggests that there could be greater agricultural productivity from formalized landownership.

It adds: “By enabling formal land titling, digital ID could help improve incentives to make larger and longer-term investments in farming. This could increase farm yields by roughly 10 percent. In Nigeria, agriculture represents approximately 21 percent of GDP, but nearly 90 percent of land titles are not formally registered.”

The report’s authors, Olivia White, Anu Madgavkar, James Manyika, Deepa Mahajan, Jacques Bughin, Michael McCarthy and Owen Sperling are based in McKinsey offices across the world.

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