Governments can fight corruption by joining the digital payment revolution

Anticorruption Summit Vienna 2016

A sculpture representing efforts in tackling corruption was unveiled on the grounds of the UN Office at Vienna (UNOV). Seventh Session of the Conference of the States Parties to the United Nations Convention against Corruption (UNCAC). (UNIS, 2017)

This article is brought to you based on the strategic cooperation of The European Sting with the World Economic Forum.

Author: Tidhar Wald, Head of Government Relations and Public Policy, Better than Cash Alliance, United Nations.

Tackling corruption is high on government agendas. Such a pervasive problem demands new solutions, especially in light of the latest Corruption Perceptions Index, which shows that the majority of countries have made little or no progress in the fight against corruption since 2012. The ranking, which uses a scale of zero to 100, where zero is highly corrupt, found that more than two-thirds of countries score below 50, with an average score of 43.

A significant impediment to progress is the problem of cash. Every year, hundreds of billions of dollars of government payments and transfers are made in physical cash. These include government salaries, health payments, pensions and financial support for families in need. Such payments are often difficult to trace, insecure and inefficient. The anonymity of cash makes it vulnerable to skimming off the top, and to “ghost” recipients who don’t exist. This is not a minor issue. It causes more than $110 billion in losses every year in emerging economies.

Thankfully, increasing connectivity and technological innovation allow governments to deliver payments through secure, transparent and convenient digital channels. The money either reaches the intended recipient in full, or goes back to state coffers. The following governments are all leveraging digital financial technologies, illustrating the power of this shift.

India: The government saved almost $9 billion in less than four years, in social protection payments through electronic Direct Benefits Transfers.

Tanzania: The digitization of entrance fee payments to the country’s National Parks reduced leakages by 40%, resulting in more income for the government.

Rwanda: The digitization of bus fares led to a 140% increase in revenue due to reduction in leakages.

Argentina: The government decreased payment leakages following its shift to electronic payment cards. Those admitting to paying bribes to local officials fell from 3.6% to 0.3%.

France: As part of efforts to curb tax fraud, the country recently adopted an order to authorize the use of tax revenue data, alongside other information, to perform advanced analytics on a trial basis.

Governments aren’t the only ones benefiting from digitized payments. When the shift to digital is managed responsibly and responsively, it can make citizens’ lives better. Access to a bank account or other digital finance portal can unlock unprecedented economic opportunities, particularly for women who are twice as likely to be excluded from the formal financial system. Having an account can make saving more convenient and secure. It can also lower the costs of accessing services that are critical to financial security and growth, such as insurance and credit products.

The digitization of payments is a necessary stepping stone in hauling anti-corruption systems into the 21st century. By leveraging payment data and advanced analytics, governments could save up to $1 trillion worldwide. Smart use of payment data is the new frontier of auditing. It helps identify suspicious patterns, fraud and non-compliance in revenue collection and payment disbursement, which can allow governments to cut leakages.

Digital payments are not a panacea. But as economies and governments look for new ways to modernize and tackle corruption, leaders must look beyond cash. The citizens they serve are increasingly adopting digital financial tools in their everyday lives. Governments cannot afford to continue to pay the cost of cash. By shifting their payments from cash to digital, they can save trillions of dollars, resulting in better government for all.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Is Eurozone heading for disinflation?

Energy Transition: Commission announces three Energy Compacts at UN High-Level Dialogue in New York

IQ scores have been falling for decades, new study finds

3 things to know about our Sustainable Development Impact Summit

FROM THE FIELD: West Africa’s wishful gold diggers

Japanese banks to move their European HQ from London to Frankfurt after Brexit

Wednesday’s Daily brief: Day 3 of anti-hatred summit, UNFPA turns 50, Ben Stiller #WithRefugees, updates on Abyei

What are the real debates surrounding immigration in an increasingly globalized world?

Why a multi-stakeholder approach is essential to our risk resiliency

New European Bauhaus: new actions and funding to link sustainability to style and inclusion

Violent disorder is on the rise. Is inequality to blame?

Why cities hold the key to safe, orderly migration

This electric plane has flown successfully for 30 minutes – is this the future of flying?

Traffic congestion cost the US economy nearly $87 billion in 2018

How studying genetics and lifestyle can shape a healthier MENA region

First full satellite survey of devastated ancient Aleppo raises recovery hopes

MEPs approve boost to workers’ rights in the gig economy

New seat projections for the next European Parliament EU28

What living abroad does to your self-awareness

‘They’re not able to govern without 50% of the population.’ Former mayor speaks out for women in Afghanistan

COVID-19: latest on evaluation and authorisation of vaccines

Trade Committee advocates lower tariffs in Western Sahara

Repression, use of force risk worsening Bolivia crisis: UN human rights chief

Parliament adopts new rules for short-stay visas

Supply chains have been upended. Here’s how to make them more resilient

EU27 leaders unite on Brexit Guidelines ahead of “tough negotiations” with Theresa May

Guterres in Davos: ‘Dysfunctional’ response to common problems, shows need for effective multilateralism

EU Citizenship: New survey shows EU citizens are more aware of their rights

Missile strike kills at least 12 civilians, including children, in Syria’s Idlib: UN humanitarians

Somalia: UN mission head condemns deadly terrorist attacks in Mogadishu, Galkayo

Electronic cigarettes – The alternative we’ve been looking for?

Service and Sacrifice: Malaysian peacekeepers in Lebanon proud to serve their homeland and the United Nations

MEPs clear another hurdle for the COVID-19 recovery plan

“One Belt One Road”: Its relevance to the European Companies

Female directors reached record highs in 2019 Hollywood

More international support needed to curb deadly measles outbreak in DR Congo

How fungi could save the world

Rare earths are the new battlefront in the US-China trade war. But what are they?

How cultural understanding can help in the cultural shock

Why age inclusive workforces play a crucial role in building back a better society post-COVID

Wolves are back in Switzerland – but not everyone is happy about it

New study shows close link between GVCs participation and economic development

The future of global trade – in 7 charts

G7 summit: Trump Vs. G6 leaders on trade and climate change

EU to increase spending and improve delivery of education in emergencies and protracted crises

UN agency helps stranded Ethiopians return home, ending ‘harrowing migration ordeal’

Human health – litmus paper for the climate change?

Nuclear test ban treaty critical to global collective security – UN chief

The EU Parliament unanimously rejects Commission’s ideas about ‘seeds’

Here’s how to make ‘value-based healthcare’ a reality

As the year closes out, UN political chief talks the art of diplomacy – and crises to watch in 2019.

It’s not kids’ screen time you should worry about – it’s yours

Guterres hails historic Convention banning violence and harassment at work

3 charts that show the economics of European football

Statement by President von der Leyen on recent developments related to Iran and Iraq

Resisting EU budget cuts

The pandemic has damaged youth employment: Here’s how we can help

EU Parliament: The surplus countries must support growth

8 amazing facts to help you understand China today

MEPs back first EU management plan for fish stocks in the Western Mediterranean

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: