Digital Money: The Rise of the Entrepreneurial State

Citi Public Digital Money | The Rise of the Entrepreneurial State | March 2022 9 Citi Public Digital Money | The Rise of the Entrepreneurial State | March 2022 8 Holistic Digital Policy — What is it? A holistic digital policy rests on four pillars, namely: digital infrastructure; digital adoption; service innovation; and digital trust, driven by a clear vision and supported by robust regulations and governance. As a first step, governments must establish a digital vision that aligns with their larger goals, such as promoting growth, improving service delivery, and increasing public involvement, among others. Governments should establish rules to put things in motion after approving the vision and eventually have a solid governance and oversight structure in place. Governments should build a governance framework with a “Digital Tsar” or “Digital Transformation Owner” to ensure coordination and track progress. Regardless of a country's digital maturity, Digital Policy should then focus on these four pillars and governments should collaborate with the private sector and academia to achieve these goals. • Ensure that everyone has access to the “infrastructure” that supports the digital economy, such as telecommunications, banking, and payments, as well as shared IT platforms. • As the infrastructure gets built, it is equally important to establish “consumer and business trust” to bring them on board and raise their level of comfort with technology. Digital identification, cyber security, and data protection solutions are all essential to build this trust. • Governments must ensure that innovative solutions are made available after developing confidence, and hence must focus on creating a conducive environment for innovation while leading their internal capability development. Sandboxes, government service digitization, smart cities, and other initiatives are relevant to drive service innovation. • Finally, governments should focus on the development of digital skills and offer incentives as appropriate to induce cultural change to maximize consumer “adoption” of technology. Figure 2: Holistic Digital Policy Framework While it is a must to have a holistic digital policy to take advantage of these emerging trends, policymakers that played an active role beyond enacting policies have made even more considerable progress in driving digital adoption compared to their peers. These entrepreneurial Going beyond policy formulation — entrepreneurial states have done exceedingly well in driving readiness markets have had a bold vision, enacted favourable policies, and made investments to drive the vision. A close observation of some such emerging markets indicates a superior performance on par with that of developed economies and well ahead of their peer emerging markets. Figure 3: Digital Adoption across select markets Select Emerging Markets Developed Developing Malaysia UAE Estonia Uruguay Internet Penetration 90% 57% 88% 93% 91% 77% Bank Account Penetration 94% * 63% * 92% 88% * 99% 63% Government Service Digitization 82% *** 41% 78% 86% 95% 85% Digital Skills 6.2 *** 3.3 ** 7.2 7.5 7.0 5.0 * Data for 2017 ** Average of low and low to middle income economies *** Data for high-income economies Source: Center for financial inclusion, Statista, Wiley, World Bank Source: Citi Digital policy, Strategy, and advisory Digital Infrastructure • Connectivity • Data Registers • Payments Digital Trust • Digital Identity • Cyber Security • Data Protection Digital Adoption • Digital Skills • Incentives Service Innovation • E-governance • Smart Cities • Sandboxes Public-Private Partnerships Regulation Digital Vision Policy Digital Tsar and Governance