Why Estonia’s E-Government Matters? Tech Advisor’s Perspective
Posted on 02-29-2020.
Recently, we were looking into Estonia’s digitization case and the borderless ecosystem they’ve managed to build. Now there’s more to follow up.
We’ve picked the interesting bits about Estonia and other e-Government efforts from the talk by Trent McConaghy, Ph.D., an AI and blockchain researcher, founder of Ocean Protocol, and advisor for governments of Estonia and Germany on blockchain and AI strategies.
Digital-Native Case Study: Estonia
In 2001, Estonia introduced a data platform for government use called X-Road. On top of that, there were digital identities and signatures. In the most recent years, they’ve kicked off e-Residency. In 2017, they even floated an idea of creating Estcoin, getting a huge amount of press around that.
Actually, right on the heels of that, they introduced laws to be really token-friendly. So, things like making it easy to start a foundation, clarity between a security token and a utility token. With these things within six months, Estonia became number two in the world by doing ICOs, right after Singapore.
They actually frame themselves as a Country-as-a-Service. They have APIs for authentication, digital signing, tax returns, incorporation of companies, company profiles, and personal profiles. In fact, since Estonia introduced the X-Road platform in 2001, on its foundation they’ve built an identity and a whole lot of applications on top, including digital signing, e-Business Register, e-Cabinet. So, how a government decision happens is that somebody floats a bill digitally that gets simultaneously spread to other branches of government and the Prime Minister, and then over the next 24 hours or so they all can asynchronously sign that document.
Estonia also has an electronic land register and electronic voting. They've had this for a long time actually. They have location services and e-Law, which is public access to every piece of draft laws that are submitted since February 2003. Then there’s e-Police, e-Prescriptions, mobile identity and mobile payments, a population register, an e-tax so you can file your tax online, and so on. It's been like this for a long time. Electronic health records are also a big one. It's an integration with all the different hospitals in Estonia and personal data and electronic identity cards. Every citizen has their own ID-card and e-Residents have their own identity cards. So these are basically government applications that are sitting on top of Estonia's platform.
All these applications can actually be split into three layers:
- The bottom layer is the data platform itself where they have digital signatures built-in and they have data management with something called X Road.
- The middleware is identity, where they have an electronic identity card and payments. That sits on top of the digital signatures and data management. Estonia also has a stablecoin, basically, and it’s called euro. They have payment infrastructure on top of that.
- On the very top, there are government applications and third-party applications.
So, the foundation is data, on top of that is identity and payments, and on top of that are the applications.
Estonia has actually got quite a few rewards for being digitally-native: a lot less money spent on administering the government (I've seen stats that it's 5.5x–10x cheaper compared to non-digital-native countries); more comprehensive, faster, and simpler government services for citizens; more opportunities for citizens, and so on.
e-Residency: Start-Up Within Government
With e-Residency, in particular, they actually went through three phases.
The first phase was validation. They started by just putting out something. The overall budget for this phase was just 40,000 euros. They’ve put up a landing page that basically asked people for their name, country of residence, and email if they’re interested.
From this, they did a study to see why would you use this for business, are you a fan, etc. They had their very first e-resident signing up through this. It was just a very basic shoestring way of doing the thing. The person was a famous British journalist. Once they got learnings from that, they could put together a team, a board, and a budget to do the next phase. They did this over the span of 69 months.
The next phase was just building that MVP from the learnings of the first phase. Overall, they had to put together some processes like online application, working with the embassies, due diligence, as they had to do KYC for each person, legal and handling that, handling bank accounts, visa centers services, API's for signing for cooperating and so on, and, finally, partners for things like business support, fintech, and customer support, but probably the most
crucial partners there are their banking partners. So this is what they’ve built in their MVP. Once again, it was done really cheap.
They like to think of e-Residency as a startup within the government and they really approached it like this. The initial team was quite small. In the early days of 2016, there were still only 8 or 10 people.
The third phase, the go-to-market, is from September 2016 and onwards. The developers put together materials, added more services on top, decided which target market is to go for, they did community building, and they put together an advisory board as well. It was my honor to be part of that advisory board of about 15 people from around the world. This was basically their go-to-market and they've been growing ever since. I think they've had about 40,000 to 50,000 residents since.
International Trend Towards e-Government
In 2014, there was something called the D5, the Digital Five, including Estonia and Canada. A couple of years later it became the D7. Then they’ve added a couple more and now it's D9.
There are nine nations that have committed to being digital if you will. They already have a lot of digital aspects and the core digital principles, including open-source software, open data, open standards, etc. That's a trend and it's clearly growing, which I find quite exciting. But that's a broad macro level thing. There’s another angle to it.
In my own conversations with governments around the world, and I probably talked to about 8 or 9 in the last six months, I see there are a couple of interrelated challenges they're having concerning data. Some countries have strong provinces or states, like Canada. Canada is, basically, a federation of provinces.
Imagine the federal government wants provinces to share healthcare data, but each province has its specific regulation to observe. If you were to follow them all, you wouldn’t get any data whatsoever. That’s one of the problems. Another problem is to figure out how to get the benefits of collecting lots of data, yet at the same time reconcile privacy and control over the data.
See the full version of the interview on the ForkLog LIVE YouTube channel.
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