This document offers insights into the opportunities and risks of digitalizing social protection, particularly as accelerated by the COVID-19 pandemic. It is targeted towards policymakers, practitioners, and researchers involved in social protection and digital development. It provides practical lessons for leveraging technology to improve social protection while mitigating potential harms.
Key Insights
Improved Recipient Experience
Well-designed technology can improve recipients’ experience by saving time and offering more flexibility. In Bangladesh, 79% of mothers in a mobile-based payments trial preferred it because it reduced travel and expanded withdrawal options (Gelb et al., 2019). Digital approaches can improve safety by reducing theft when traveling to distribution points.
Improved Recipient Outcomes
Effective digital social protection may improve certain recipient outcomes. In Niger, mobile money transfers to women resulted in better household food security because women could reallocate time spent collecting transfers to more productive activities (Aker et al., 2016).
Reduced Leakage and Inclusion Errors
Digitalization can improve accuracy and accountability. Biometric audits in Nigeria removed 37,000 ‘ghost’ pensions (Gelb and Decker, 2012). End-to-end computerization of transactions in India’s Public Distribution System (PDS) helped reduced leakage of food grains (Alderman et al., 2018).
Entrenched Exclusion of the Most Vulnerable Populations
Without mitigation measures, digital approaches may entrench existing exclusion. In India, biometric authentication and electronic payments have compounded exclusion risks (Gupta, 2021). Requirements for ID registration have barred many from social protection in Uganda (Unwanted Witness, 2019).
Data Misuse Violating the Privacy and Protection of Vulnerable Populations
Growing unease exists about data protection and privacy risks. In Uganda, 25% of men and 13% of women were uncomfortable sharing personal information required to get a national ID card, regarding some of the details as an infringement of their privacy (Unwanted Witness, 2019).
Mixed Evidence on Cost-Effectiveness
Evidence on the cost-effectiveness of digital approaches is mixed. In Argentina, using unique ID numbers led to savings of $143 million (World Bank, 2019). Mobile money payments in Niger saw a higher upfront cost, but per-transfer costs were around 20% lower than physical distribution (Aker et al., 2016).
Lesson 1: Ensure Primary Goal is Broader Access
Where digital innovation is pursued, ensure the primary goal is broader access and better provision for service users. If digital approaches are expected to save costs, this should be viewed as a means to subsidise the ongoing provision of more resource-intensive support, rather than as a means to cut provision overall.
Lesson 4: Put Human Rights Considerations Front and Center
Put human rights considerations and protections front and center in any digital approach. The digitalisation of social protection can pose serious risks for already vulnerable groups. Proactive measures must be taken to ensure that citizens’ and residents’ rights are fully protected.
Key Statistics & Data
- In Bangladesh, 79% of mothers participating in a mobile-based payments trial in the PESP scheme preferred the new approach (Gelb et al., 2019).
- One US study associated digitalisation of welfare payments with a 10% decrease in the overall crime rate (Wright et al., 2014).
- Biometric audits in Nigeria helped remove 37,000 ‘ghost’ pensions from the government pension payroll (Gelb and Decker, 2012).
- Using applicants’ ID numbers to cross-check eligibility removed 660,000 ineligible applicants from social programme registration lists in Thailand (World Bank, 2019).
- End-to-end computerisation of transactions in India’s Public Distribution System (PDS) helped reduced leakage of food grains from 93% in 2004–2005 to 29% seven years later (Alderman et al., 2018).
- The shift to bank transfers for social grant delivery in South Africa was associated with a 62% reduction in delivery costs (Bankable Frontier Associates, 2006, in Pickens et al., 2009).
Methodology
This paper utilizes a review of existing literature and case studies to examine the opportunities and challenges associated with the digitalization of social protection. It draws on evidence from low-, middle-, and high-income countries, focusing on trends pre-Covid and since the onset of the pandemic.
Implications and Conclusions
The digitalisation of social protection presents both opportunities and risks. It is crucial to carefully consider the specific context and implement appropriate mitigating measures to ensure equitable access and protect vulnerable populations. The eight lessons outlined in this paper provide a framework for policymakers and practitioners to leverage technology’s potential in a risk-sensitive manner. This includes ensuring broader access, mitigating inequalities, and protecting human rights.
Key Points
- COVID-19 accelerated the digitalization of social protection delivery, including digital registration and electronic payments.
- Digitalization can improve recipient experience by saving time, increasing flexibility, and improving safety.
- Digital approaches can reduce leakage and inclusion errors through biometric audits and cross-checking eligibility.
- Challenges include the exclusion of vulnerable populations due to lack of access to technology and digital literacy.
- Data misuse and privacy violations are significant risks associated with digital social protection.
- Cost-effectiveness of digital approaches is mixed, with potential for both savings and increased costs to recipients.
- Eight key lessons for policymakers include ensuring broader access, mitigating inequalities, and protecting human rights.