Digital infrastructure, and in particular digital IDs were critical to the global governmental response to the COVID-19 economic slowdown.

In response to the devastating impact of COVID-19  governments around the world spent an estimated $US11.7 trillion in what the McKinsey Global Institute calls a “high-stakes, real-life stress test for the financial infrastructure.”

The comments are made in a new paper by Olivia White, Anu Madgavkar, Tawanda Sibanda, Zac Townsend, and María Jesús Ramírez called COVID-19: Making the case for robust digital financial infrastructure.

The authors say the last 12 months have revealed critical gaps while also highlighting ways to improve efficiency and resilience for the future.

The study is based on a review of 12 government economic disbursement programs for both individuals and small and medium-sized enterprises (SMEs) in Brazil, India, Nigeria, Singapore, Togo, the United Kingdom, and the United States.

Three critical pieces of financial infrastructure were identified;

  • Digital payment channels, 
  • The presence of a basic digital identification system with broad population coverage, 
  • Simple data on individuals and businesses that are tethered to the ID.

“When these features were present in country-level financial infrastructure, these programs could be optimally designed and delivered quickly.”

However, if one or more of these features were missing,  countries were forced to make trade-offs between the scope, scale, and specificity of beneficiaries targeted, and delivery success.

A solid digital infrastructure also improved the beneficial financial impact, say the authors.

“We estimate that the potential economic gain from building robust digital financial infrastructure is about 20 percent greater now than it was before the pandemic. Before the COVID-19 crisis, we estimated the potential economic gain by 2030 from applying basic and advanced digital ID to a wide range of interactions between individuals and government and non-governmental institutions to be in the range of 3 to 13 percent of GDP. “

The study also found that “emerging economies have more to gain than mature economies in economic value for every percent of GDP spent in incremental disbursements.”

 Mature economies also benefited, but with less potential upside, with the authors speculating that this was due to the fact that they started with more digital financial infrastructure, to begin with.


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