TOTM Technologies : Are Public-Private Partnerships viable options for national digital identity infrastructure

PPPs have long played a role in supporting large scale physical infrastructure projects, and their application to national digital identity infrastructure could be the key to unlocking the next wave of digital transformation.

A growing number of national development roadmaps in Africa and Southeast Asia highlight digital transformation as one of the highest governmental priorities, confirming its importance in achieving national social and economic objectives.

And with a bevy of emerging technologies available for adoption - from LLMs and distributed ledger technology to verifiable identifiers and verifiable credentials - it's an exciting time to be mapping out a digital transformation roadmap. In fact, many countries are in a position to leapfrog legacy technologies, and turn towards next-generation digital capabilities to prepare for the next quarter century of national development.

Yet while the vision is grand, the practicalities of implementation are dependent in large part on a government's ability to deliver the digital infrastructure necessary to support that vision.

That is: initial, foundational, large-scale investment must be made - which means funding and financing challenges need to be addressed before anything else.

These funding needs come at a time when government budgets are already stretched to the limit trying to eliminate extreme poverty and meet their SDG and climate change obligations.

And it is clear that public finance alone will not suffice to fund significant digital infrastructure.

Exploring Public-Private Partnerships for National Digital Infrastructure

So what are the financing options for national digital infrastructure?

Governments will typically explore a variety of financing options, ultimately ending up with some combination of grants and subsidies from development banks or international organisations, and even venture capital and private investment to supplement government budget allocation.

And increasingly, governments are looking to the Public-Private Partnership (PPP) model for inspiration.

With PPPs, private companies invest in and manage certain aspects of digital infrastructure projects, and the government retains control over regulations and policy. These partnerships combine the resources, expertise, and financing capabilities of both sectors to address various societal needs.

Proven success of Public-Private Partnerships in physical infrastructure

Many countries already have some experience in collaborating with private partners to address physical infrastructure priorities such as transport, waste, water, and utilities. And according to the World Bank Group, "a growing number of governments are interested in partnering with the private sector to provide public infrastructure assets and services."

PPPs can point to success stories and proven results in these physical infrastructure projects. For example, Australia's Road Traffic Authority conducted a Pacific Highway Upgrade via PPP and finished the project seven months ahead of schedule and $100 million less than the estimate in the original concept design. In Bangladesh, the Meghnaghat Power Project was constructed about $5 million below budget and in a shorter implementation period. And in the US the Gateway Arch facelift revived declining tourism numbers through the largest PPP in National Park Service history which resulted in a 30% increase in attendance for the monument.

According to the International Transport Forum, "Where traditional PPPs have almost universally succeeded - provided they built needed infrastructure, and resulted in project completion - is in overcoming existing public capital constraints, political financial paranoia, or taxpayer reluctance to accrue higher taxes and/or greater public debt."

So we do have some evidence that well-planned and well-managed PPP's can work for greater societal benefit while providing necessary physical infrastructure.

But what about our original question: Are Public-Private Partnerships viable options for national digital identity infrastructure?

Embracing Public-Private Partnerships for digital transformation

Certain countries in Africa sure seem to think the PPP model can help. The West African Development Bank, serving eight African countries, recognises the transformative power of digitalisation for socio-economic growth and is promoting public-private-social partnerships for inclusive digital development.

And a summary of feedback from Estonia's e-Governance Conference in 2023 concluded that "Africa's digital transformation has become increasingly central to the region's sustainable development goals", and that "strategic partnerships will be critical in accelerating digital development."

Nigeria's "Strategic Roadmap for Developing Digital Identification" believes the use of public-private partnerships could be explored to work closely with and to invest in not only strengthening the overall capacity of the public and private sector in the country, but also to leverage this for improvements in the public sector, more broadly through the ID initiative.

Ethiopia's Innovation and Technology Minister Belete Molla underscores the importance of government-private sector collaboration in the implementation of the country's digital transformation agenda, top of which is the digital ID rollout.

Challenges in national digital identity infrastructure

And of course, as with physical infrastructure PPPs, we can anticipate challenges in digital infrastructure PPPs too.

The most unique challenges in the case of national digital identity relate to risk transparency and the need for a strong legal and regulatory framework to safeguard public interests. Since PII - personally identifiable information - is involved, governments must be extremely careful in how they structure the model in terms of who handles the sensitive assets of national identity.

PPP: A new economic model for national ID programs

Nevertheless, as more countries make the decision to embrace emerging digital identity technologies to unlock the benefits of and expand the utility of foundational digital ID, there is also an opportunity to explore new economic models for the implementation and operation of national ID programs.

The PPP model helps off-set initial capital expenditure outlay and reduces ongoing operating expenses of national digital identity infrastructure, and in doing so, helps countries prioritise revenue-generating citizen services and other important use cases for national digital ID.