e-Governance: the Estonian Case

Estonia is one of two countries worldwide to offer an e-Residency, a government-issued status and identity granting access to the EU’s digital business environment. Even Barack Obama is an Estonian e-Resident. Which challenges do e-Residency and e-Governance in general pose for the public sector, and how does scientific research evaluate the digital transformation?

Welcome to e-Estonia, the world’s first digital nation!” proclaims a video about this EU country. The video introduces a unique signature programme: the possibility to obtain a “government-issued digital identity and residency. People from over 165 countries are officially Estonian e-Residents, meaning that they have a verified identity for digital services and operations. Even Barack Obama is one of them. Estonia aims to reach 150.000 e-Residents by 2021. But what exactly is the e-Residence and could it become more popular  in other EU countries?

e-Estonia: Being a digital resident in a digital nation

The Estonian e-Residency programme specifically targets freelancers, start-up companies, digital entrepreneurs and so-called “Digital Nomads” who manage their paperless companies while they travel. Estonian e-Residents can set up and manage their companies online without a local representation, which enables non-EU citizens to establish a business in the EU’s Digital Single Market. An online application and a 100 Euro state fee are required in the registration process to obtain a digital Identity Card (consisting of a physical card, which is only valid online). The next step to start a business is to choose a virtual office provider and register the company on-line, paying a state fee of 190 Euro. This will allow e-Residents to open a bank account and benefit from electronic payment services. In this way, they can then run their business remotely. However, the Estonian e-Residency scheme does not grant citizenship rights nor tax residency, residence or the right to enter Estonia or the European Union. It is not a visa or a residence permit.

98% Estonians have digital ID-card

The Estonian MEP Marina Kaljurand (S&D, EE), STOA Member and Member of the European Parliament Committee on Civil Liberties and Home Affairs points out the value of the digital administration ecosystem as part of the e-Estonia programme:

“Estonia made the decision to re-build its public governance with the help of digital technology more than twenty years ago. By today we know from experience that simple, citizen oriented solutions and technology can help to create an effective Government. If used properly, digital solutions can be essential drivers for economic growth and equity. Estonian digital ecosystem contributes to 4-7% of the country’s GDP each year. We are able to deliver better value for less money by relying on digital means.”

99% services are online in Estonia

In fact, a financial analysis concluded that the e-Residency programme is profitable for Estonia with an estimated net income of  1.4 million Euro in three years. According to the analysis, the programme may contribute up to 13 million Euro of net indirect socio-economic benefits because most e-Residents set up their businesses in Estonia. Azerbaijan introduced a similar e-Residency programme last year as part of its Digital Trade Hub and is the second country worldwide to issue digital identities for business purposes.

Public Administration goes digital

Next to the economic benefits, Estonia’s move towards a digital administration facilitates workflows in administration processes at large. In fact, the country introduced e-Governance already in 1997. Today, 99% of public services have been made available to citizens as e-services – excluding marriages, divorces and real-estate transactions. The UN has ranked Estonia in the elite group of countries with the highest E-Government Develop Index(pdf). More generally, the European Parliamentary Research Service found that information and communications technology tools such as e-Voting can be a valuable asset to increase the EU’s democratic quality as well as its entire political system.

46.7% Estonians use internet voting

Ott Velsberg, Chief Data Officer at the Estonian Ministry of Economic Affairs and Communications, sees the digitalisation process as a strategic choice for Estonia to improve its competitiveness and increase the well-being of its people. For him, the e-Government programme delivers truly seamless public administration: improved quality of services, less bureaucracy and the ability to directly interact with the public administration. As such, filing an annual personal tax return declaration typically takes three to five minutes, while setting up a company takes a few hours.

Ott Velsberg ESMH ScientistOtt Velsberg,  Chief Data Officer for the Estonian government: “[…] Our next goal, which we are already working towards, is to make the government seamless, proactive and personalised. A citizen would receive services without asking the government for them. So the next time a child is born, the government will automatically pay child benefits, register them in the kindergarten waiting list, assign their personal ID-number, ask you to name your child and so forth. […] But here, we have a dilemma – how proactive, seamless, and personalised should the government be.”

When it comes to technological acceptance, Ott Velsberg assumes that the proactiveness for using digital administration services does depend on the service. It seems that few citizens might object to automatic extension of car licenses. But in areas like re-education programmes and automatised career planning, the Estonian Data office is aware that citizens could be less open-minded towards digital solutions.

The Estonian MEP Yana Toom (Renew Europe, EE), STOA Member and Member of the European Parliament Committee on Employment and Social Affairs, also reconsiders the advantages of the e-Government programme regarding possible societal divide:

“[…] When we speak about innovation, there is always a catch. There are people who cannot cope with the use of new technologies, who do not trust them or simply do not have the appropriate digital skills. Looking at election results of the two biggest political parties, we can identify this group easily: while the e-votes go to one particular party, the paper votes go to the other. Elderly persons, Russian speakers (e-Estonia is not that convenient for those who do not speak Estonian) and people from the rural areas are still those who need to be integrated into the digital society. And this is a challenge, especially taking the ageing population into account. Therefore, upskilling and reskilling becomes more and more relevant as we move towards digitalisation.”

A different understanding of ‘citizenship’ in the digital society?

The Estonian Data Office will soon undertake scientific research with Tartu University on the effects of the implementation of the e-Estonia programme, considering the changing attitudes of citizens towards digital administration services. The Weizenbaum Institute additionally plans to research the digital, networked society, and adaptation processes in the digital age more generally. One of its research groups on ‘Digital Citizenship’ aims to establish how people perceive and shape their identity in democracies, particularly with regard to online communication. The research does not directly focus on e-Residencies, but  more generally aims to improve the relationship between government and citizens by means of ICT.

Martin Emmer ESMH ScientistProf. Martin Emmer, Founding Director and Principal Investigator at the Weizenbaum Institute, sketches the research goals : “Our understanding of citizenship is not based on a definition that refers to formal membership of a person to a nation or political entity but more generally on the self-perception of individuals in relation to any nation or entity they may belong to. […] Our research questions are looking at psychological and sociological phenomena like new attitudes, values and social norms citizens may have developed […] in the digital world. Are citizens, who are living in a highly digitalised environment, more attached to individualistic values than others? Do they feel responsible for maintaining a civil culture of discussion by feeling compelled to contribute and intervene when observing uncivil behaviour online? To what degree do they want to be part of the political decision-making process? Is just voting and petitioning enough for them?”

Citizens should not be at the ‘front end’ of digital services

A relevant component of the European Digital Single Market is the transformation of the public sector itself. MEP Pierre Karleskind (Renew Europe, FR), STOA Member and Vice-Chair of the Committee on the Internal Market and Consumer Protection underlines the importance of the e-governance model in this context:

“E-governance is the often-forgotten second side of the Digital Single Market. Digitalisation of public services must go hand-to-hand with the digitalisation of the private sector. We, as policy-makers, have to support e-governance schemes and their implementation, to ensure that the public sector does not lag behind the rest of the economy. It is a prerequisite to the well-functioning of a fully-digital society.”

Along the same lines, Martin Emmer assesses the processual development towards a ‘digital society’ as a key objective of public administrations, especially in their role to offer specific education and training for citizens.

Martin Emmer : “[…] It is not just about how to optimise online services by the administration, but how to integrate citizens in social and political processes from the very beginning, not just at the ‘front end’. I would highly recommend a broad approach that takes citizens more seriously, accepting them not just as customers or objects of governance on a certain e-government website but as ‘citizens’ who have the right to be integrated in all relevant processes of a society. To achieve this, the task of actively empowering a society for the digital world should be placed at the top of political agendas (which some European countries have done, others not yet) and to be interconnected with the other grand challenges we are currently facing.”

In this regard, Estonia is some steps ahead and could act as an experimental model for political digitalisation strategies for other EU countries. Indeed, Martin Emmer optimistically looks at the potential of Estonia’s e-Residency programme as part of building a “digital society” for Europe. He recommends supporting these projects, as long as data abuse by illegitimate interests are prevented. In that respect, a boost for a “Digital Europe” shaping the Digital Single Market is already on the agenda of policymakers – with Estonia at the forefront of e-Government services.

Useful links :
Digital society by Estonia government
The Digital Economy and Society Index (DESI)


Related Content

EU project : SCOOP4C
Martin Emmer ESMH scientists opinion e-governance
Ott Velsberg ESMH scientists opinion e-governance
EU project : Erasmus Mundus Master of Science
EU project : Interreg Europe CYBER
EU project : Joinup

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