This article is written by Conrad Kraft, Apolitical Insider Fellow, full-time student and former Deputy Director for Municipal Finance at the KwaZulu Natal Provincial Treasury, South Africa. The article has been edited by Fida Slayman, a government communications adviser based in Dubai and Australia and Apolitical Insider Fellow

The light-hearted classic, “Who moved my cheese?”, tells of four fictional characters and their adaptation to life’s constant — change. In the story, all characters live in a maze, love cheese, and they find it abundantly right in their section of the maze. One day, they awake to find that the cheese has disappeared. Upon this discovery, two of the characters, Scurry and Sniff, quickly adapt and venture out to find new cheese.

The other two characters, Hem and Haw, complain and stick around hoping the cheese will reappear and that life would go back to normal. The story is about change, fear, and comfort zones, and uses cheese as a metaphor for one’s needs. This allegory offers useful lessons for governments, especially during times of unexpected change.

Covid-19 is moving the “cheese” of many across the globe, and governments are no exception. Already strained government budgets have been hard-hit by the economic effects of lockdowns. Many economists forecast that the coronavirus recession will result in the highest unemployment levels seen since the great depression, and a global economic contraction far worse than the 2008 recession.

Amid the disruption and economic slowdown, how can governments use emerging technologies to enhance public value and thereby boost their revenues?

“Smell the cheese often so you know when it is getting old”

The ways governments create public value and generate revenue (business models) have remained relatively unchanged for decades. Government’s primary revenue sources include:

  • Service charges (waste management, electricity etc)
  • Fines (penalising behaviour that conflicts with the public good)
  • Taxes (charges on income, sales, carbon emission, and others)
  • Investments (leveraging assets such as land for rental and generating income from monies invested)

However, new business models are on the horizon. Accelerated by convergent exponential technologies (artificial intelligence, blockchain and the internet) and the increased adoption of digital tools necessitated by the Covid-19 pandemic, these new business models are reshaping how organisations create and deliver value.

The pre-Covid-19 world that many of us are waiting to return to, no longer exists

Examples of these nascent business models include the Smartness Economy, Decentralised Autonomous Organisations and Multiple World models. They are optimised for agility and resilience in the face of the uncertainty and volatility that’s bound to characterise the coming years.

Are government business models impervious to shifts in technology and society or should governments look to update their offerings?

“Things are changing around here, Hem. Maybe we need to change and do things differently.”

Anticipating and embracing change is vital for success in any endeavour. This is particularly pertinent for today’s governments, which are architects of public benefit during a time of great uncertainty and rapid change.

An example of a government that has successfully anticipated and embraced change by the innovative public services is Estonia. Two projects which highlight Estonia’s agility is their e-Residency program, and the more recently proposed KrattAI.

e-Residency

Launched in 2014, Estonia was the first country to offer e-Residency across the globe.
E-residency allows non-Estonians to register a company, sign documents, bank, and perform tax declarations all digitally. To date, the program has attracted approximately 62,000 e-residents from across the world and has established over 13,000 companies. More significantly, the e-residency program has generated direct revenues of roughly €41 million ($44 million) and has delivered considerable indirect value via tourism and investment — a handsome reward for the country’s foresight and change predilection.

Kratt AI

KrattAI is an AI-based virtual assistant that will allow citizens to access an array of public and private services on a single platform using natural language. The project aims to deliver a proactive and personalised bouquet of services to citizens based on permissioned, de-siloed data. For instance, KrattAI would alert citizens of an expiring passport or car license and enable citizens to renew their passports or licenses within minutes on their smartphone with real-time, natural language guidance. This use of artificial intelligence in public services will reduce the friction of accessing government services and add considerable public value to its citizens.

The two initiatives, e-Residency and KrattAI, both leverage new technologies but enhance government revenues in different ways. e-Residency boosts revenues by creating a new offering and revenue source. KrattAI will boost revenues by improving collections and compliance while reducing administration costs.

There is no single path to enhancing a governments’ revenues. Every country has a unique set of circumstances that need to be considered and that will inform which strategies are most viable for their jurisdictions. What is clear, however, is that the use of exponential technologies will benefit any strategy chosen and help futureproof revenue streams.

“Sometimes, Hem, things change and they are never the same again. This looks like one of those times. That's life! Life moves on. And so should we”

The pre-Covid-19 world that many of us are waiting to return to, no longer exists. Just like the characters in the maze, governments have two options, anticipate and embrace change; or hope that things will go back to normal. To remain agile, the allegory offers the following guidance

  • Never become complacent;
  • Constantly monitor your environment (global, local and technological); and
  • Prepare for and embrace radical change.

Move with the cheese, and face the future with anticipation, not trepidation. — Conrad Kraft

(Picture credit: Unsplash)