Nigeria is seen generating $13 billion in additional tax revenue if she could digitalise her identification programmes. This is according to a new McKinsey Global Institute report, which claims that high adoption of digital ID with the right principles can help unlock 3 percent economic value equivalent of GDP in advanced economies and as much as 6 percent in emerging economies on average. The report, which offers a framework to understand the potential economic impact of “good” use of digital ID, analyzed nearly 100 ways in which digital ID can be used, with deep dives into seven diverse economies: Nigeria, Ethiopia, Brazil, China, India, the United Kingdom, and the United States.
“We estimate that Nigeria could use digital ID to expand the tax base to include informal income and reduce fraud and errors in tax filing to generate more than $13 billion in additional tax revenue. Nigerians could save 1.8 billion hours annually from efficient services that reduce the need for travel to and from government offices and filing of physical paperwork,” said Fiyinfolu Oladiran, a McKinsey partner. Eyitope Kola-Oyeneyin, Nigerian-based Partner at McKinsey equally said the Digital ID potential for Nigeria is significant and that based on MGI estimates, Nigeria could capture economic value equivalent to 5 to 7 percent of GDP by 2030 from greater formalization, fraud reduction, increased tax revenue, and financial inclusion. “Scaling Digital ID in Nigeria has to be a top priority for enabling inclusive growth,” he said. Around the world, governments and businesses are implementing digital identification programmes with mixed results and adoption levels. Yet when carefully designed, “good” use of digital ID programs can help people participate more fully in their economy and society, which can create enormous economic value and inclusive growth, the report said. “We find that three-quarters of the potential economic value of digital ID could accrue to individuals in Nigeria, making it a powerful key to inclusive growth, while the rest flows to private-sector and government institutions,” said Rogerio Mascarenhas, managing partner of McKinsey’s Nigeria office. He added that the largely informal and self-employed workforce skews the overall benefits of digital ID toward individuals, who could receive 74 percent of the total overall value. He started that Nigeria’s unmet financial needs are significant. 60 percent of the adult population, or about 64.5 million individuals, do not have a bank account and therefore may be cut off from access to credit or the ability to deposit income. “The World Bank found that 18 percent of the unbanked population in Nigeria cited a lack of identification documentation as the primary reason for not opening an account. We estimate that increased lending to individuals and businesses resulting from an expanded deposit base could generate up to $21 billion in additional investment by 2030,” says Amuche Okeke-Agba, a McKinsey partner.
Source: Independent
