How Estonia became a global model for e-government

Les rencontres RSLN / Flickr

A tiny country has turned into a civic tech giant.

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Earlier this year, Japan launched a digital identification program called MyNumber, which helps residents access and manage a range of government services online, from social security to income taxes. In crafting the system, Japan turned not to the United States, or Singapore, or any other place in the world that might pop into mind as a civic-tech governance model. Instead it looked to … Estonia.

Turns out the small country of 1.3 million has emerged as a global leader in e-government operations. Its electronic ID push has created a more connected society, made public and private services more personalized and convenient, and established the capital city of Tallinn as an innovation hotspot — all while protecting individual privacy. Peter Herlihy of the U.K.’s Government Digital Service summed it up best in 2013:

Estonia has probably the most joined up digital government in the world. Its citizens can complete just about every municipal or state service online and in minutes.

So how’d tiny little Estonia become such a tech giant? And why haven’t others done the same?

Building X-Road

When Estonia launched its electronic ID program, in 2002, the country “was, effectively, a disconnected society,” according to a recent World Bank report. It overcame that digital divide with strong public-private partnerships — particularly the Look@World project. Backed by telecom and banking interests, the initiative raised digital awareness and built hundreds of internet access points across the country.

Closing the divide wasn’t enough for e-IDs to thrive. Officials also needed a strong digital information infrastructure. So Estonia created the X-Road: a secure data exchange for residents, public institutions, and private companies. X-Road parties share information to produce services that people can access with their e-ID. The system helps card-holding residents do everything from file taxes to review medical records to sell cars.

A schematic of Estonia’s X-Road data exchange. (World Bank)

Another huge key to adoption was a strong transparency policy, which led to heightened trust among e-ID users. By logging into the State Portal, residents can easily see which X-Road participants hold their information, which can access it, and which have accessed it. A Data Protection Inspectorate enforces proper usage, and residents can also take action themselves if they suspect a violation. In short, individuals retain strong oversight of their own data.

Today the vast majority of Estonia’s population have e-IDs. That fact alone isn’t notable, since the program is compulsory. What’s really impressive is that the cards were used more than 80 million times in 2014, with annual usage on the rise. The system’s total number of services have also soared from 40 in 2003 to 1,600 in 2015. Public or private, supply or demand — everyone in Estonia has bought into e-government.

How it works

Estonia’s e-ID card is embedded with an electronic chip and requires two pin codes. The first authenticates a user’s identity. The second serves as a digital signature.

Take online voting as a simple example. When it’s time to vote, you go online and enter the first pin from your e-ID to authenticate your identity. A voting register then accesses your age information from a population register, via the X-Road, to confirm that you’re eligible to vote. The voting system also now knows your residence, so it provides personalized information about the candidates in your district.

When you’re ready to punch that digital ballot, you enter the second e-ID pin to sign off on the transaction. Then you can continue searching cat gifs or whatever else you were doing with your day (we know it was cat gifs).

Estonia’s capital of Tallinn (above, Town Hall Square in 2013) has become a hub for tech start-ups. (Jonathan / Flickr)

Meanwhile, the integrity of the vote is protected through several security mechanisms. To prevent coercion, for instance, Estonian residents can change their vote either online or at the physical ballot box up to election day, with the most recent vote taking precedence. And to prevent malware interference, “vote verification” software checks a person’s identity via a smartphone camera.

The process is so reliable and user-friendly that one in three Estonians cast a vote online in the last two elections. That number is likely to rise, as 85 percent of e-voters stuck with the method in a subsequent election, versus only 69 percent of paper voters. Once people go digital, they don’t go back.

The benefits

The voting example points to the primary attraction of Estonia’s e-government: convenience. Residents who use the system save time and money. Agencies and companies get similar benefits, since they don’t have to collect information or create an exchange platform from scratch.

The result, as Herlihy mentioned, is a system that measures service in minutes. Starting a company in Estonia apparently takes 18 minutes. Filing taxes takes five. With refunds issued within weeks, rather than the standard three-to-six months, it’s no surprise that 95 percent of income taxes are filed online. Public transit users can show an e-ID to fare inspectors instead of a pass, and drivers can do the same in lieu of a license or registration. A single traffic cop can retrieve that information in seconds, whereas before several officers needed 20 minutes to process a stop.

The World Bank quantified the savings more precisely in its June 2015 report. For that background paper, Kristjan Vassil of the University of Tartu assumed that one in three X-Road inquiries reflects a resident-government interaction that otherwise would have been made in person, and that each inquiry saved (a very conservative) 15 minutes. With those assumptions in place, the estimated time savings come to an astonishing 2.8 million total hours for 2014, or 3,225 years.

Put another way, the productivity value of X-Road is equivalent to 3,225 people working 24–7 for a whole year.

Estonia’s e-government saves residents an enormous amount of time. Depending on the per-query threshold, the time savings for 2014 alone ranged from about 1,000 to 12,000 years. (World Bank)

Adjusting the threshold to a still-reasonable 30 minutes per transaction — honestly, think about how long it takes you to do anything at the DMV — and the time savings topped 6,000 years in 2014. For the cost of a little data sharing, that’s a treasure chest of freedom.

Broader impact

Estonia doesn’t just see e-government as a great tool for citizens and service providers. It sees digital-first governance as a springboard to innovation. In a 2015 interview with Communications of the ACM, Prime Minister Taavi Rõivas explained the vision (my emphasis):

We made a very conscious choice to build shared platforms, like joint digital identity and the whole-of-government data exchange layer X-Road, rather than allow diverse development. The idea was also to put in place the right conditions so that digital innovation can flourish in all parts of the public sector and society — bottom-up.

The strategy seems to be working. Skype is the biggest name to emerge, but there are many others. The Wall Street Journal reported in 2012 that Estonia produced more per capita start-ups than any other European country. The Economist wrote in 2013 that Tallinn “is now mentioned in the same breath as Berlin, London and even Silicon Valley.” Venture capital titan Marc Andreessen tweeted in 2015 that “Few factors get us as excited as Estonian founders!” — exclamation point and all.

In 2014, Estonia even opened up its e-government to outsiders, offering an “e-residency” that enables entrepreneurs to start a business in the country while living elsewhere.

Just why other countries haven’t followed Estonia’s tech-savvy lead is a curious question. The short list of digital protégés includes Azerbaijan, Namibia, and Finland, according to a recent piece in Bloomberg View, with Japan now among this crowd as well. Estonian President Toomas Hendrik Ilves described the problem to Bloomberg not as one of technology or scalability, but one of political will. “The political will here existed,” he said.

There’s always more to it than that, and the unique challenges of individual countries and cities mean that no two e-ID systems can be exactly alike. But recognizing that technology can help government improve the lives of residents and set the stage for new business while still protecting privacy is a great place to start.

This post was originally published on Medium.

April 20, 2016