Digital governments have higher economic growth

The future of government management is rooted in technology. The digital transformation of the state is moving from an ideal to a reality. The private sector, as a developer of GovTech platforms, will be in charge of partnering with governments to implement digital solutions that respond to each country's specific challenges. 

In Colombia and Latin America, the term GovTech is relatively new, however, it is gaining more and more followers. We spoke with Enrique Zapata, expert in GovTech issues and chief executive of CAF's Directorate of Digital Innovation of the State. He was also the first Head of the National Digital Platform of the National Anticorruption System in Mexico and General Director of Open Data of the Presidency of this country. 

Pandemic as an accelerator for government digital transformation

According to the expert, the world's governments face the challenge of keeping pace with the private sector in technological matters. However, this is a complex task due to bureaucratic baggage, ways of working, regulatory and legislative frameworks. Despite these barriers, Enrique Zapata assures that the pandemic accelerated the digital transformation of the states in three main areas: 

1. Use of public-facing tools, such as citizen portals and digitalization of procedures and services. This, which was already a trend, accelerated due to the pressing need posed by the economic situation. 
2. Governments are improving their technological structures and data infrastructure. Data, as Zapata explains, is the brick from which all the digital technologies we have today are built. 
3. The digital culture of the countries has changed. Due to this situation, both public servants and citizens were forced to use different technological tools. 

GovTech has a positive impact on the economic development of countries.

The acceleration in the application of these new technologies is positive news in terms of development. According to Enrique Zapata, 98% of productive units in Latin America are MSMEs, which generate an added value of between 7% and 9%, while in Europe this figure reaches 40%. Precisely, GovTech companies have a very high added value, which is why, by promoting them, they can contribute to the economic growth of countries. 

On the other hand, GovTech is an investment for the government. CAF has conducted studies to determine how much money a country stops spending with the application of different technological solutions, that is, the return on investment. In the local case, the Mi Colombia Digital platform has shown returns of 150%, says Enrique Zapata. In Guadalajara, for example, a GovTech platform for a cadastre helped to increase tax collection by 21%. 

Three actions that can be implemented by governments and companies to boost the GovTech ecosystem, according to Enrique Zapata

1. Approximately 20% of the region's technology companies could be classified as GovTech, but they do not consider themselves to be part of this niche. This causes a coordination problem, so it is proposed to create industrial chambers, alliances or associations that allow for greater impact and information on how this sector develops. 
2. Governments have the opportunity to create a GovTech policy to put the pieces of the puzzle together to drive the ecosystem forward. 
3. Finally, there is a latent need to create public GovTech funds that boost these types of companies. 

Two challenges for startups to develop GovTech platforms that offer real solutions for government management

The GovTech expert explained that private companies in the region have two major challenges to offer useful platforms that present real solutions to governance problems. The first is to understand the government as a different client. It is necessary to understand its particularities, bureaucratic culture, regulations, among others. Latin American startups are very good in technology and innovation, however, they have shortcomings in legal, contractual and business aspects. Second, they have the challenge of understanding and studying the problems of each government in order to design solutions that truly respond to their needs.