The Case For and Against Digital ID

At this year’s Davos summit in Switzerland, the topic of digital ID made headlines. According to a new research study presented at the World Economic Forum in Davos, developing economies that adopt digital ID systems (rather than paper-based ID systems) have the potential to grow their annual GDP by up to 13 percent by the year 2030. The big caveat, however, is that any form of new digital ID system is going to raise questions about personal privacy.

The case for digital ID

When it comes to the economic growth argument, the clear poster child for digital ID is the tiny European nation of Estonia. At the World Economic Forum this year, Estonia was held up as a shining example of how digital ID could help to unlock efficiency, productivity and economic growth. In Estonia, digital ID cards are used for just about everything official – including voting, signing documents and submitting tax claims. In fact, digital ID has helped to streamline the business system so much that Estonian government officials now claim that the average individual saves 5 business days each year, simply due to productivity gains. In terms of economic growth, that’s good for an additional two percentage points of GDP growth each year.

If a tiny, developed nation like Estonia can see such positive economic growth from instituting a system of digital ID, then just imagine what a much larger economy could accomplish. The report on digital ID specifically mentioned the appeal of paperless identity for Brazil, China, India, and the United States – arguably, four of the most important economies in the world. The report also mentioned Ethiopia and Nigeria as nations that would potentially benefit the most from digital ID.

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And that’s where things get really interesting, because until this year’s World Economic Forum, the focus had always been on the humanitarian aspects of digital ID. In other words, the arguments for digital ID centered more on nations like Ethiopia and Nigeria than on the UK and the U.S. Most of the world’s refugees, for example, have no way of proving their identity. In fact, according to the World Bank, over 1 billion people in the world have absolutely no way to prove their identity. Imagine trying to open up a bank account without a birth certificate or some proof that you are who you say you are. Imagine trying to get healthcare treatment if you can’t prove your identity.

Thus, the argument for digital ID has typically rested on the notion that digital ID was the only way to help out these 1 billion people. The UN officially listed “providing legal identity for everyone” as one of its Sustainable Development Goals for 2030.

And, indeed, if you look at the early backers of the digital ID concept, they include names like the UN, the World Bank, Mercy Corps and Kiva. In response, organizations like the ID2020 Alliance have been pushing for the creation of a trusted, certified form of digital ID that would be portable, universally acceptable, and safe from hackers. At the end of 2018, CARE USA signed up as another partner for the ID2020 Alliance, and again, it was primarily on the basis of humanitarian considerations.

 


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