Is Covid-19 proving the business case for GovTech?

This article was originally published on Apolitical

For governments around the world, the human confinement and economic halt caused by Covid-19 are accelerating two important trends in public policy. These are the smart use of big data, digital and other disruptive technologies, and support for high value added small and medium enterprises (SMEs).

From one side, governments have faced the need to use technology as a tool to respond to the crisis as well as to maintain daily operations. For crisis response, data is being used to track infected patients and prevent contagion, while at the same time, videoconferencing technologies and cloud-enabled tools have become the new normal for non-essential workers across government, as well as other sectors.

From the other side, as we keep responding to the immediate emergency, we know that a global economic slowdown caused by interrupted supply chains and a drop in demand will impact hard in all sectors. SMEs that comprise close to 90% of all businesses in the world, and those working in them, will likely be impacted the most.

For this reason, many governments are implementing diverse initiatives to mitigate this impact, ranging from classical monetary and fiscal policies to stimulate aggregate demand, to more innovative approaches such as making some SMEs a key partner for supplying solutions for the provision of public goods and services in a more efficient way. This could be even more relevant for the present Covid-19 scenario.

When talking about recovery, it is paramount for policymakers to acknowledge that there is no cookie-cutter solution that can singlehandedly solve everything. Real change will only come from a myriad initiatives working together. In this context, governments can take advantage of the need for rapid response to explore new alternatives that can help them tackle the challenges and take advantage of the opportunities posed by technology and SMEs. An alternative that merges these two areas, and that is emerging as a winner from the emergency, is GovTech.

GovTech refers to the collaboration of governments with start-ups, scale-ups and SMEs that use data-driven tech-intensive innovations to help deliver policies of all sorts. As I have argued previously on Apolitical, it has the power to usher in a real transformative change in the way government works.

The context of the Covid emergency is making the value of these GovTech start-ups ever more evident:

• At a global scale, Starchema, a Hungarian data company, is helping organisations fight Covid-19 with a range of publicly available data resources, and in case you haven't noticed, data is the fuel of all Covid tracking maps.
• Within regions, OS City in Latin America is using BlockChain to certify health, social and delivery service providers, and Nortic Co-Operation has identified close to 100 different tech-related initiatives related to the emergency.
• At a national level, Gove in Brazil is helping local governments to simulate the economic impacts of the crisis, and Isinnova in Italy is using 3D printing to enable a rapid turnover of valves for respirators for patients in intensive care units.

Change-makers within governments can and should use the crisis and the new normal that emerges from the crisis to accelerate the pace of technological transformation in the public sector while supporting the economy. The promotion of the GovTech space can help them achieve this goal and, through the same effort, drive a new economic sector with an estimated market cap of 400 billion dollars. This is especially true in an environment where start-ups, SMEs and venture investors are being hit by the crisis.

So, what can policymakers do next to advance this agenda? Here we propose three top ideas regarding policy, funding and procurement — the GovTech PFP Framework — to kickstart the process:

1. Policy: Support the creation of GovTech teams at the centre of government, with specific powers to co-ordinate and align innovative tech-related responses to the needs of government during the crisis, and its mid-term social and economic consequences.
2. Funding: Unlock new resources or align existing ones towards high value-added activities. This can be done in tandem with development banks, big tech and the venture investment sector, as well as through post-crisis recovery packages to support SMEs, as in the case of Europe and France.
3. Procurement: Use the need for emergency procurement in the crisis to reform contracting regulations and practices to simplify entry for start-ups and SMEs. These could include specific percentages allocated for these types of businesses, as well as innovative procurement frameworks.

As Richard Haas has argued, the great global pandemic of Covid-19 and its consequences ‘will not so much change the basic direction of world history as accelerate it’. The two trends addressed here — technology and SMEs — combined as the GovTech space will be key for the future wellbeing of humanity. Governments taking the trend will position themselves at the forefront of the new normal.