Improving Productivity with Digital Public Infrastructure: Benefits & Challenges
A summary of discussions by HATLAB Studio Specialists on Digital Public Infrastructure
Micro-SMEs (MSMEs) are rapidly growing worldwide, with many fresh graduates shifting from employment to entrepreneurship by starting their own small businesses. This was highlighted by speakers during HATLAB Studio’s Coffee Session on Digital Public Infrastructure (DPI) held on 28 October 2024.
MSMEs represent 90-99% of global businesses today. In some countries, the labour force in self-employment is now the same or higher in percentage than those in corporate employment, prompting concerns about productivity. This is because, unlike large corporations that benefit from economies of scale, micro-SMEs have to manage all operational aspects independently of one another, resulting in more time spent on non-productive work. At the national level, this could result in a productivity crisis.
One speaker highlighted 3 approaches for DPI development to improve productivity:
(1) improving MSMEs’ productivity through digital tools,
(2) supporting MSMEs with a platform for data, identity and financial services, and
(3) providing (1) and (2) as “extra-territorial” digital services (services outside of geographical home country) supported by some form of a digital tax. These approaches signal the growing importance of DPI, extending beyond a country’s physical borders.
Another participant elaborated on how global institutions like the World Bank and the Gates Foundation are investing in DPI, especially following its integration into official discourse through events like India’s G20 presidency in 2023. DPI was described as a society-wide approach to digital transformation that extended beyond e-government, emphasizing simplicity, data privacy, and open-source software to build scalable, reusable infrastructure. For developing countries, DPI’s modular, open-source approach could address high demand for digital infrastructure at manageable costs.
Three core DPI capabilities were identified:
Inclusive Payment Systems – designed for equitable access to financial services.
Identification Systems – covering digital ID for individuals and entities, with potential expansion to objects and devices for governance and commerce.
Data Exchange – a flexible framework that enabled interoperable, public-good data sharing.
New areas, such as decentralized e-commerce and online dispute resolution, were also discussed. For instance, India’s Beckn Protocol aims to empower micro-SMEs to enter the digital economy independently of major platforms, opening up new digital opportunities. Leading DPI initiatives in countries like India, Brazil, Estonia, and Singapore are supported by international organizations, though questions remain around governance, especially for cross-border applications like digital identity verification to facilitate trade.
The role of DPI in promoting competition against tech monopolies has been noted, as geopolitics and national competition policies shape DPI’s goals. In some regions, DPI serves as a regulatory tool to counter the dominance of large tech platforms, akin to managing public utilities. An example is Kenya’s M-Pesa, whose private ownership and market dominance have raised concerns about fair access despite its broad inclusion.
One participant raised the question of society’s readiness for DPI, noting the difficulty in shifting from vertical, siloed systems to horizontal, interconnected frameworks. Current governance, economic structures, and knowledge systems are deeply rooted in vertical models, creating challenges for implementing cross-entity data-sharing frameworks effectively. Terms like “network governance” are often used, but their practical application remains unclear.
The influence of tech giants, with major players offering solutions like "DPI in a box", also risks reinforcing existing hierarchical power structures, creating "bloated verticals" rather than true horizontal systems that enable inclusivity and decentralization.
Further contributions during the discussion drew comparisons between digital and scientific infrastructure, noting concerns about concentrated power in private hands, exemplified by entities like Starlink. Differences in public trust in government regulation has also impacted DPI’s potential; for example, a universal health card initiative in Australia failed due to mistrust, whereas countries like Singapore experience higher government trust.
The discussion also explored political barriers to DPI, as regulatory challenges often stalled progress. Political feasibility, therefore, remains uncertain, with one participant reflecting that governments that embraced a “learn by doing” approach were better positioned to advance DPI despite political obstacles.