• Opinion
  • February 26, 2019
  • 11 minutes
  • 1

Integrity tech: Three ways governments can use technology to disrupt corruption

Opinion: The digital revolution is gradually changing the rules of the corruption game

bureaucratic

This piece was written by Carlos Santiso, Director for Digital Innovation in Government at the Development Bank of Latin America. For more like this, see our digital government newsfeed.


In bureaucracies, paper is power. As part of their digital transformation, governments are seeking to improve both efficiency and transparency through the expansion of digital services and online platforms. The ambition of digital government is to transform the analogue, paper-based, legacy systems traditionally used to interact with citizens and to make public services work better, faster, smarter and centred on citizens’ needs.

In January 2019, for example, Argentina became a paperless government, with the digitalisation of administrative procedures, the introduction of digital identity and the expansion of digital services. This is no small achievement considering the deep roots of paper culture in the Argentine bureaucracy. In Chile, the new government of Sebastián Piñera pledged to become paperless by the end of this year.

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By going paperless, progressive governments can also tackle corruption and eliminate red tape. New technologies and big data now allow government reformers and corruption busters to reveal, prevent and even predict corrupt practices that in the past could be hidden behind a veil of paper-enabled opacity. But it’s politically difficult because it involves getting the governance of data right and figuring out who owns, controls, shares and secures public-sector data.

The digital revolution is gradually changing the rules of the corruption game in three main ways.

Making data work for accountability

First, reformers in government can use new technologies to open up government and foster accountability with actionable data. Governments are opening up their data, which is of increasingly better quality and more timely, and feeding it back into policy. In turn, civic activists and oversight institutions are using it to hold them accountable. Cities such as Mexico, Sao Paulo and Buenos Aires often lead the way.

More challenging, however, has been to open those databases most critical to curb corruption, such as property registries, procurement data and company registries, according to the Open Data Charter.

Mexico City has become the first city to disclose its contracts in open format

Mexico has expanded the breadth and depth of open budget data through its state-of-the-art fiscal transparency portal, which includes public contracts, infrastructure investments and transfers to subnational governments. Mexico City has become the first city to disclose its contracts in open format. Savvy civic tech practitioners are using this information to scrutinise government and raise red flags to uncover once-hidden practices and patterns.

Several countries are also resorting to geo-referencing and data visualisation technologies, such as to monitor corruption-prone infrastructure investments in Mexico, Colombia and Paraguay. The Brazilian development bank is using them to track progress with the projects financed by the Amazon fund. Audit agencies are resorting to them to oversee public works in Chile and Peru. Cities, such as Buenos Aires through its public works portal, open critical data on local finances.

By going digital, governments generate a huge amount of new data about the machinery of bureaucracies that can be mined to generate new insights, sometimes simply by cross-referencing databases. For example, the observatory of public spending of the Brazilian transparency ministry has detected irregular practices in credit card usage by public officials and social benefits programs by cross-referencing government databases, generating important savings and policy changes.

Artificial intelligence and predictive analytics are also potent tools for tax authorities

Artificial intelligence and predictive analytics are also potent tools for tax authorities and customs agencies to detect and deter tax evasion. In the UK, through its Connect system, the tax administration uses social network analysis and data mining that cross-references businesses’ and people’s tax records to uncover fraudulent or undisclosed activity. Its predictive algorithm identifies people most at risk of committing tax fraud and helps devise pre-emptive actions through nudges.

Cutting red tape and reducing discretionality

Second, reformers in government can leverage new technologies to reduce the discretion that unscrupulous bureaucrats abuse to extract bribes, for instance in the processing of permits and licenses. The automation of bureaucratic processes reduces vulnerabilities to human fiddling.

Indeed, beyond the grand corruption scandals, bureaucratic petty corruption remains prevalent in many countries, with bloated bureaucracies and byzantine regulations. According to Transparency International, in 2016, one in every three Latin Americans paid a bribe to access a service.

Mexico, Peru, Brazil and Argentina are expanding their digital services through integrated whole-of-government portals. Much remains to be done, however, to digitise public services end-to-end, as noted by a recent report. The introduction of digital services is often resisted by vested interests fearing losing jobs and perks.

Digitalising byzantine bureaucratic procedures is not enough

But digitalising byzantine bureaucratic procedures is not enough; governments must simplify and rethink them to serve citizens better. Civil servants are often the first victims of the bureaucratic maze. Several countries are trying to streamline their bureaucracies to make government leaner and smarter. This is no small challenge, as it requires a shift in mindsets for bureaucracies to serve citizens, rather than the other way around.

In Portugal, the Simplex program is redesigning bureaucratic procedures in collaboration with civil society and public servants, with encouraging results. Interestingly, these innovations draw on behavioural insights to nudge gradual changes in the mindset of public servants to place citizens at the centre of government.

It is no wonder that regulatory reform and administrative simplification are back on the political agenda of many newly elected governments seeking to reduce the regulatory burden and improve competitiveness. These efforts include, in 2018 alone, Brazil’s Simplifique!, Colombia’s Estado Simple, and Argentina’s Productive Simplification initiative.

Cutting red tape is an arduous task in a region addicted to new rules and regulations as the solution to their problems. Colombia, by its own account, issued an average of 15 regulations a day between 2010 and 2016! South America remains the most difficult region in which to pay taxes, according to PwC. In the pact, the main driver of administrative simplification and digital services was to reduce operating costs and fiscal deficits. Now, it is to improve public services and restore trust in government.

In this context, blockchain is generating much hype and hope as an anticorruption antidote. It possesses important features that can help anchor integrity in bureaucracies, by securing identity, tracking funds, registering assets and procuring contracts. Proof of concepts are mushrooming in a wide range of areas, as documented by NYU’s GovLab, from the restitution of land in Colombia, smart contracts in Chile, and subsidy transfers in Argentina.

While the scalability of those solutions remains challenging, blockchain has emerged as the most promising disruptive technology in the fight against corruption.

Transforming government and accelerating innovation

Third, tech-based and data-driven govtech start-ups are also helping to transform government and, in some case, challenging the state’s monopoly over the delivery of services.

Technology has become transparency’s greatest ally

The emergence of govtech start-ups is allowing new forms of co-creation of public services, especially at the city level. These smaller, more agile companies are starting to make an impact, advancing new solutions to old ways of doing things. For example, they provide a cost-effective solution to data-analytics-as-a-service to governments that are struggling to recruit data science teams.

Last November, Paris hosted the first-ever global govtech summit, which reflected the dynamism of public entrepreneurs and government start-ups in tech-advanced countries such as Britain, France, Canada and Israel. Govtech startups are not only a new way of providing new technology services to government. These tech-based, data-driven start-ups are gradually shifting the prevailing paradigm of policymaking and service delivery.

Technology has become transparency’s greatest ally to anchor integrity in the public sector. Coupled with political resolve, the digital revolution can disrupt corruption in ways we never imagined possible. — Carlos Santiso

(Picture credit: Unsplash)

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