Date: 25 Feb 2011 Comments: 0

Nobody suggests that creating efficient databases of all citizens is easy, at least if they are to avoid misuse for fraud and loss of privacy rights for the individual and/ or business. However, there are some basic factors that can be used to create much of what we want – and, indeed, what we absolutely must have to try to resolve the massive unemployment of the young in the developing world.

Two things work in our favor. Firstly, the spread of mobile phones and the internet has given us the extra dimension for communication, particularly with the young. and, with 5 billion phones (rising to 8 billion in the next five year) versus 2 billion bank accounts, we know we have the way to organize a payment structure for the future.

These phones do offer the facility to create that ‘identity card’ environment, in a friendly, popular manner i.e. without attempting to enforce data collection. The creation of incentives for phone use is simple, modern and known to work.

Secondly, the creation of a transaction network using electronic payments (such as debit cards and, in particular, mobile phone-based accounts, allows us to collect taxes in a fraud-free manner at the time of payment. Clearly that has two major benefits; an increase in revenue (which can be used to fund benefits programs) and a database from which to assess where benefits need to be given to individuals (for food allowances etc.) and for small businesses so they can afford to take on more staff.

This is a big subject – and far too big to go over here. But please feel free to contact me with comments and suggestions as we prepare a pilot for Nigeria and an overall report for next month’s World Bank conference on payments.