Although governments in the region are currently allocating resources away from e-government programs – due to a numberof other pressing social needs – they must find ways to make these initiatives fiscally self-sustainable so as to ensure the creation of value and benefits for all
Dubai, UAE, 30June 2013: In the past decade,some MENAgovernments have developed pioneering e-government programs driven by ambitious national economic agendas of modernization and diversification, and to serve the ever growing number of digitally savvy young people, commonly known as the Arab Digital Generation. In effect, e-government assets have clear potential to create both economic and social value for all demographic segments. Today, however, the region's leading e-government programs face growing social and financial challenges, forcing them to find new funding mechanisms. Amidst recent economic and social uncertainties, governmentshave shifted their spending priorities to other areas such as housing, social welfare, and employment. In this new environment, e-government initiatives can no longer solely rely on central government budgets. According tomanagement consulting firmBooz & Company, they must learn tobecome self-sufficient and self-sustain¬able.
A ROAD MAP TO FINANCIAL INDEPENDENCEIn recent years, governments in the MENA region have developed e-government programs aimed at streamlining the delivery of public services and helping leaders better engage with their constituents – businesses, citizens, or visitors. In effect, Bahrain, Saudi Arabia, and the United Arab Emirates (UAE) have all launched noteworthy e-government programs and continuously implement strategic updates to take into consideration emerging constituents' needs.
Now, however, a number of governments in the MENA region are allocating resources away from these programs due to budget constraints. And, the truth is, even though the resources required to maintain e-government programs have, in many cases, diminished, public expectations for these programs remain high.
Governments must thereforefind ways to sustain, or regain, their momentum toward e-government realization. “This can only be achieved if these schemes become self-sufficient,” said Dr. Raymond Khoury, a Partner with Booz & Company. “Thisrequires evolving beyond the traditional model – in which govern¬ments pay all costs – to one in which governments share the benefits of such programs with strategic partners, gen¬erating revenue, and delivering better services to constituents.”
“Although fiscal self-sufficiency may initially seem like an undue burden, the right approach–implemented in conjunction with the private sector– can actually help governments achieve some of their core goals, which include sustainable growth, development, and enhanced efficiency” said Fady Kassatly, a principal with Booz & Company.
“If structured correctly, self-funding schemes can create actual economic and social value, improving the delivery of government services, increasing digital literacy, and fostering greater job creation in the public and private sectors,” explained Ramez T. Shehadi, a Partner with Booz & Company. “The result is an improved business climate and an enhanced quality of life for constituents.”
Four Approaches to Self-Sustainability
There are four possible ways to make e-government programs financially self-sustaining: Public-Private Partnerships (PPPs), open-data platforms, advertising on e-government channels, and leveraging government platforms for commercial purposes.
“The four ways to make e-government initiatives fiscally self-supporting are not mutually exclusive,” added Dr. Khoury. “Some are already operating successfully. Such initiatives generate revenue for governments, improve operating efficiency, create jobs, foster new businesses, and encourage digitization – the mass adoption of connected digital technologies.”
These four means are:
1. PPPs for Service Delivery
In a PPP model, the government agency develops a strategic arrangement with a private vendor that deploys its capabilities and funds to design, build, maintain, enhance, and market e-government services. PPPs are a very promising option for designing and implementing innovative e-government services at minimal cost to the government.
Moreover, well-designed PPPs benefit both parties. The private-sector partner generates profits by charging fees for the services provided. The government entity obtains high-quality services that meet its constituents' needs at significant cost savings and without incurring major up-front investments.
Another attractive feature of the PPP model is that it takes advantage of the private sector's more advanced capabilities, capital, and technical knowledge.
Strategic pricing is also central to the success of PPP arrangements; after all, prices that are too high would deter usage and com¬promise the PPP's success. In addition, governments have many options regarding the degree of col-laboration, which they can customize to best achieve their goals regarding the creation of social and economic value.
The PPPs for service delivery scheme has been successfully deployed in the US, where state and federal governments have partnered with NIC, a private company that specializes in providing governments with online solutions, and have decreased costs, simplified processes, and now provide better service to constituents. In the MENA region, the Kingdom of Bahrain government has initiated work on such a scheme.
2. Open Data Platforms for Service Delivery
Open data platforms make rich sets of government data available so that businesses can use them to create groundbreaking new services and applications. They host a wide array of content – transactional government information, geospatial data, maps, and statistics – with strict mechanisms in place to protect the privacy of citi¬zens and companies.
While open data platforms may require some level of government investment – as they rely on IT infrastructure and interfaces to aggregate information and share it with the public– it would represent a fraction of what it would cost to develop all e-services internally.
As such, open data platforms are cost-effective solutions to pro¬vidingvalue-added e-government ser¬vices that are tailored to constituents' needs.
In order for a government to fully realize the benefits of open data platforms, it must address several key success factors. First, the gov¬ernment should sanitize the informa¬tion it shares with the public to omit any personal identifiers. Legislation must also be revised to offer assurances on data protec¬tion and privacy. Furthermore, the government needs to take steps to ensure collaboration among government entities, and support entrepreneurs in building the right ecosystem around the use of public data.
Lastly, as with PPPs, pricing is also a major consideration.
Regionally, the Kingdoms of Saudi Arabia and Bahrain as well as the United Arab Emirates federal governments have launched open data platforms for service delivery schemes. A number data sets have been already put online for businesses and/or entrepreneurs to use in creating new services and apps.
3. Advertising on E-government Channels
Commercial advertising has yet to emerge on a widespread scale on government websites and portals, in part due to a fear that such displays would carry an implicit state endorsement of the products and services being advertised. This argument is pervasive yet inconsistent with government practice. Around the world, governments have long generated revenue from many public-sector physical assets.
In some cases, governments have overcome this hesitation by placing constraints on advertising, thereby allowing agencies to generate revenue while still maintaining a positive image and a high level of constituent trust.Egypt, for example, has pioneered online government advertising in the MENA region by selling space on universities' e-registration pages. The space is exclusivelyreserved for telecom providers and generated at one point $3 million a year.
While this figure is not yet enough to make the program self-sustaining, these measures are certainlycontributing towards that goal.
Three key lessons can be drawn:
• Government portals can generate the volume of traffic needed to attract potential advertisers.
• Fit-for-purpose advertising opportunitiesincrease the appeal of government portals for potential advertisers.
• Governments can control the content of their online advertisements by imposing strict guidelines to preserve their image as reliable, citizen-cen¬tric organizations.
4. Leveraging Government Platforms for Commercial Purposes
Governments should allow the private sector to use public-sector platforms to offer commercial services. “Governments that provide a large number of e-services tend to receive considerable user traffic through their platforms. As in the case of online advertising, they should capitalize on this traffic by offering value-added services to commercial providers” added Kassatly.
Governments can also generate value by charging private companies to use official systems. In reality, the advantage of these programs is that they use preexisting infrastructure, which means that the associated capital costs are relatively low.
Regionally, the Kingdom of Bahrain's e-government portal serves as a platform for national mobile operators Zain and Viva to provide payment and credit recharge services to their customers. Given the substantial volume of usage traffic through the portal, the government has negotiated with these telecom operators for a percentage of the payment and recharge services transaction fees.
KEY SUCCESS FACTORSExperience around the world shows that successful e-government tie-ups with the private sector are underpinned by four factors:
• Upgrading the legal environment:Legislative remedies would include a legal framework for PPPs; new regulations designed to allow private-sector partners to provide services on behalf of the government; acknowledgement of electronic transactions as legally binding; allowing government data to be accessed and processed by private parties; and providing accredited encryption methods to transmit sensitive, private, or classified data over public networks.
• Sufficient infrastructure:E-government programs require adequate infrastructure to interact with the private sector, includinga robustgovernment enterprise architecture, a government interoperability framework, a unified government data structure, and reliable and affordable Internet access for citizens.
• Change management:“Change management and communication programs for government officials can help assuage concerns about involving the private sector in the affairs of government,” said Shehadi. “Educating key stakeholders on the merits of these approaches and their limited risks can lead to a more rational business case for each of them.”
• Suitable partners:E-government programs will need to tap into a healthy and dependable pool of qualified service providers on the national level. This, in turn, will facilitate fair competition in the selection process for the strategic partner(s) of choice for government in implementing these schemes.
With these factors in place, governments should strive to implement their self-sustainable e-government agendas through a coordinated, multifaceted marketing program that seeks to increase participation by potential partners and government agencies.
E-government leaders can also support the next generation of open data application developers by sponsoring annual open data competitions, held on a national and regional level, from which winners will be granted funds and/or in-kind contributions to further develop and commercialize their innovative solutions. Governments could also sponsor a national “Code for Country” program, as has been done in the US, in which leading individual open data developers are offered a two-year employment contract to work on pioneering value-added service applications using open data platforms.
To conclude, regional governments have an opportunity to use these four self-sustainable schemes to not only create substantial economic and social value, but to boost digitization efforts and create much needed knowledge and technology-based jobs. By following a self-sustainable scheme to e-government, MENA authorities can foster a friendlier business climate, an enhanced quality of life for constituents, and advance different approaches to value creation and partnership that open new opportunities in the digital arena.