How ICT applications are redefining development

Published on Monday, 01 October 2018

Published by Bruno Carrasco and Çiğdem Akın on Monday, 01 October 2018

Online payment has raised the Maldives’ tax compliance to the highest in South Asia.
Online payment has raised the Maldives’ tax compliance to the highest in South Asia.

New technology is often described as a solution in search of a problem. This is not an uncommon qualifier across many ICT applications that seek to get ahead of the curve. 

For end users, behavioral change is largely adaptive and hence gradual. Similarly, for an ecosystem to develop and support a viable business model, building blocks must come together, at times with no easy fit and turning into a long-drawn process. Legacy systems and inter-operability problems only begin to scratch the surface.

Drawing from history, it’s like when the potter’s wheel was invented in 3200 BC, approximately 300 years before the wheel was turned on its side and fitted on to an axle, providing the undercarriage to propel the first wheeled vehicle.

For development practitioners, adding ICT applications to a toolkit opens a world of possibilities to achieve sustainable, low-cost, high-savings solutions. With careful tailoring, these applications can be adapted and potentially transform how countries develop.

Rather than searching for a problem to solve, however, ICT applications can address clear and present development problems. These challenges have already generated great demand for ICT solutions, which are starting to change the way development organizations define success in their work.

This transformation has made our work at ADB somewhat easier, and certainly more rewarding in pursuing our poverty alleviation mandate. It is also raising the bar in the world of development assistance. For instance, the elusive and often long-term nature of developmental impact indicators may become less relevant due to ICT applications. Projects may have to be delivered over a much shorter time frame.

  ICT applications deliver sustainable, low-cost, high-savings solutions

It will no longer be acceptable to seek additional time before the results are achieved. In the end, we should get even better at delivering high-impact development solutions over a shorter horizon, in a win-win situation for all.

ADB recently hosted the 2018 Digital Development Forum to discuss how e-government can transform traditional economies. Below are a couple of simple, yet transformative ICT solutions supported by ADB operations.

In 2011, ADB helped the Maldives Inland Revenue Authority (MIRA) introduce MIRAconnect, an electronic tax administration platform to operationalize the country’s Revenue Administration Management Information System. This ICT investment provided an online portal to file tax returns and payments, and exchange tax-related data between government agencies previously operating on manual and disintegrated systems.

MIRAconnect, which also enables risk-based audits to monitor taxpayer compliance, was transformative in overcoming geographical barriers in government service delivery in the Maldives. This is no mean feat in a remote and vast archipelago of 1,190 islands that spread over 90,000 square kilometers.

Propelled by effective public awareness and taxpayer education campaigns about MIRAconnect, the country’s tax revenue collection tripled from 8.1% of GDP in 2010 to 24.7% in 2014. Meanwhile, MIRA has risen to account for over 70% of the government’s revenue collection, and tax collection costs have declined from Rf0.80 spent per Rf100 collected in 2011 to Rf.0.51 in 2014.

The effective use of online services raised total tax compliance in the Maldives to 83% in 2017 and overall revenue-to-GDP ratio to 29%, the highest in South Asia. ICT applications clearly not only transformed revenue collection, but also provided the government with the real resources it needs to meet the Sustainable Development Goals and improve livelihoods across the country.

  ADB-supported electronic platform tripled tax collection in Maldives

Similarly, ADB and other development partners helped Nepal fully digitize the country’s public procurement with the nationwide rollout of the e-government procurement (e-GP) system. Over 1,300 public entities, including municipalities and 20 ministries, have been registered since 2017.

This system requires that any public procurement project tendering above $60,000 is registered, processed, and awarded through the electronic platform operated by the Public Procurement Monitoring Office. It also directly interfaces with banks for the speedy settlement of payments and allows procurement performance analysis.

Electronic procurement was an important institutional milestone in a country where public procurement accounts for 80% of national capital expenditure ($1.1 billion in fiscal year 2018). The full utilization of e-GP led to cost savings of up to 20% annually compared to the manual system.

Notable improvements were observed, including increased competition, reduced processing time from bid invitation to contract award with automated workflow, higher compliance and effective auditing, increased transparency, and minimization of collusion. Reflecting its strong impact on public financial management, e-GP received in November 2016 the South Asia Procurement Innovation Awards jointly given by ADB, the World Bank, the South Asia Regional Public Procurement Network, and Procurement iNEt.

According to a 2017 report by Huawei Technologies and Oxford Economics, the digital economy—or network of economic activities enabled by ICT applications—is expected to grow from 15.5% of global GDP in 2016 to approximately 24.3% by 2025, or $23 trillion.

This represents enormous opportunities across the board for developing countries to transform their economies, accelerate their transition to developed country status, and ultimately improve livelihoods for all. ADB looks forward to deepening its involvement in this partnership.