Brazil's Digital Transformation: Paving the Way for Inclusive Prosperity

Last December, India passed the baton of the G20 presidency to Brazil after reaching the first-ever multilateral consensus on digital public infrastructures (DPIs). The Brazilian presidency this year offers a unique opportunity for Brazil to share its world-renowned experiences on the matter with the world.

This is blog post of a op-ed written by Maria Luciano - Fellow at Connected by Data and Research Associate at IEA-USP; Carolina Rossini - Co-founder and Director for Policy & Research at Datasphere Initiative; and CV Madhukar - CEO at Co-develop Fund. It was published by Estadao on 30 April 2024. A pdf version in Brazilian Portuguese is available here.

If, in the physical world, transportation networks, electrical grids, and telecommunications systems create infrastructures that enable public and private goods, digital public infrastructures (DPIs) play a similar role in the digital economy. Digital infrastructures that ensure, at the very least, digital identity verification, secure money transfers, and safe data sharing are necessary for us to make online purchases and access public services, and for businesses to operate.

Brasil is celebrating the three-year milestone of its revolutionary instant payment system, Pix. The government’s commitment to setting up efficient digital payment rails has profoundly impacted the lives of its citizens. Since its launch, Pix has greatly exceeded usage expectations and fostered financial inclusion, with 143 million citizens (over 70% of the country’s adult population) and 13 million companies (79% of the country’s total) registered so far.

For retailers, Pix offers low-cost transfers across a multiplicity of use cases – for credit transfers, bill payments, e-commerce, scheduled and recurring payments, and more – across many sectors. To help automate and reconcile payments, the Brazilian Central Bank has standardized application programming interfaces (APIs) to incentivize a more competitive ecosystem and better services. The user-centric and standardization approach ensured that PIX catalyzed a significant surge in modernization and competition within the financial sector in Brazil, especially for banking products and services offered by Fintechs in support of local e-commerce.

Another Brazilian example of digital public infrastructure is the Gov.br platform, which covers all the information and digital public services offered by the federal government. With over 146 million citizens registered, it provides identity verification and digital signature services, allowing citizens to access most of their social, economic, and political rights.

Developing the digital capabilities involved in citizen-to-government interfaces has also proven particularly vital in times of crises, as we have witnessed with Conecte SUS and Auxilio Emergencial during the COVID-19 pandemic.

Nevertheless, these same examples also shed light on the possible shortcomings of DPIs. Despite fostering financial inclusion, the lack of trust and understanding from citizens about how Pix works has been linked to the increasing number of fraud cases and harms associated with it. Auxilio Emergencial’s dissemination is hindered by the digital divide of a country where 36 million people do not have access to the internet - and, therefore, have limited access to public services and financial aid. Technical Cooperation Agreements signed by the Ministry of Economy in 2021 gave financial institutions temporary access to Gov.br’s database for “experimental sampling,” with no transparency about the arrangement. And Conecte SUS, where citizens can access information about vaccination and all services provided by the Unified Health System, has experienced many technical issues, from cyber attacks, data breaches and reported instability to information becoming outdated and ill-intentioned people modifying data without authorization.

The potential of DPIs for inclusion, development, and innovation has guided a global effort to think about their design and ongoing governance. Despite the geopolitical nature of the digital economy agendas, last September the twenty jurisdictions composing the Group of Twenty (G20) reached a consensus on the principles that should guide the creation and employment of DPIs: safe, secure, trusted, accountable, inclusive, and interoperable.

Effective safeguards at every stage of DPIs lifecycle are essential to ensure safety and security. Without them, DPIs can be misused, exposing citizens to risks such as privacy violations, data-driven behavioral manipulation, identity theft and fraud, and exclusion from essential public services.

In Kenya, the national identification system with biometric registration has been used to discriminate against minority groups like the Nubians and Somali Kenyans, with cases of applications for public services being lost or having additional bureaucratic steps to discourage applicants. Its implementation has also been criticized for stirring funds away from issues considered more of a priority by the nationals, and for not being preceded by impact assessments.

Governance mechanisms that are collective, inclusive, transparent, and accountable can increase trust among stakeholders, helping to incorporate communities’ values and priorities into DPIs. These mechanisms can have different designs, such as impact assessments, public procurement, oversight boards, and public consultations.

In Mexico, the idea of a centralized database with biometric data of all mobile phone users was challenged by civil society, resulting in a Supreme Court decision declaring the project unconstitutional as the high risks associated with the use of biometric data were considered disproportionate within the system design. The collective effort behind this decision illustrates how the lack of participation and societal consultation throughout the creation and employment could lead to failures in adopting the above-mentioned safeguards.

Open standards allow the interoperability necessary for anyone to use DPIs, leveling the playing field for all private players to innovate, preventing data monopolies, contributing to countries’ digital sovereignty, and fostering cross-border cooperation.

India, for example, has been sharing its open-source Unified Payments Interface with other countries, helping the country project diplomatic influence.

This unprecedented collective effort to mobilize language and unify actions for defining DPIs presents an opportunity to create practical solutions for DPIs to drive innovation, empower people, and hamper misuse simultaneously.

As a series of developing nations are holding the G20 presidency for the first time - India in 2023, Brasil in 2024, and South Africa in 2025 - we now have the chance to move away from techno-solutionism and avoid uncritical import of technology.

We can design digital capabilities that are context-specific and truly serve all.