## Digital Infrastructure

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**Canonical URL:** [Digital Infrastructure](https://www.imf.org/-/media/files/publications/fandd/article/2026/03/coyle.pdf)

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### Economic case for treating DPI as infrastructure
- DPI connects institutions and multiplies potential value, analogous to roads connecting places.
- Core DPI components include digital IDs, payments, data exchange platforms, credentials, and other shared services used across government and the economy.
- DPI delivers direct efficiency savings (for example, reducing fraud and benefit claims) and its value grows with increased use (service targeting, secure access to education and health care).
- DPI can reshape or grow markets by lowering compliance costs and expanding access to services (example: India’s Aadhaar lowered know-your-customer costs and fueled increased cell phone adoption).
- DPI’s largest effects come from enabling broad economic activities over time, not just immediate project-level gains (example: Malawi’s biometric identification improved credit markets by enabling more accurate borrower verification, reducing default risk, and expanding credit access for marginalized groups).

### State capacity and government-wide effects
- Siloed digital development fragments systems, raises costs, increases complexity, and reduces the state’s capacity to integrate data and respond effectively.
- Citizens’ expectations for speedy, effective, and frictionless services require underlying capabilities to connect and leverage datasets.
- Without a broad strategic view of DPI, government credibility, resources, and adaptability decline, straining the economy and government efficiency amid geopolitical, economic, and environmental instability.
- Finance ministries observe DPI’s potential to reduce duplication, cut administrative costs, improve tax collection, and strengthen oversight, but emphasize that value for money must be visible quickly.
- Traditional appraisal methods (such as cost-benefit analysis) often understate DPI’s total value by oversimplifying system links, prioritizing short-term results, overlooking spillovers, and missing distributional aspects.

### Identified coordination, financing, and appraisal challenges
- Coordination:
  - Finance ministries often play a reactive role (assessing proposals) rather than shaping digital strategies from the outset.
  - Digital ministries may lack budget control, cross-ministry authority, or institutional leverage to enforce shared standards.
- Financing:
  - DPI requires long-term investment for building, maintaining, and upgrading systems, but political and budgetary pressures favor quick wins.
  - Donor-driven projects can be launched without clear plans for long-term funding.
  - Dispersion of DPI spending across many budget lines complicates coherent planning and management.
- Appraisal:
  - Cost-benefit analysis tools struggle to capture long-term, cross-sector spillovers and returns from shared platforms.
  - Officials stressed the need for clear applications and early successes to build momentum, even when broader benefits may take years to materialize.
  - Recommendation: embed DPI considerations in public investment management frameworks and multiyear budgeting plans.

### Emerging roles for finance ministries
- Three nonexclusive roles observed globally:
  - Evaluators: assess digital proposals for infrastructural potential (example: UK’s GOV.UK Notify as a benchmark for appraising shared digital systems; emerging services include GOV.UK Pay and GOV.UK One Login).
  - Coordinators and enforcers: use budget processes to align departmental investments, veto duplication, and promote shared use (example: Uganda’s programmatic budgeting model requiring agencies to submit IT needs collectively; procurement clearance from national IT regulator).
  - Implementers/stewards: in rare cases finance ministries undertake full implementation of core DPI components (example: CamDX in Cambodia evolved from business registration to broader functions).
- Core insight: finance ministries need not build DPI but must shape the logic, incentives, and conditions for its success through strategic stewardship, beyond simple fiscal oversight.

### Governance, trust, and risks
- Shared digital platforms must avoid reinforcing surveillance or increasing administrative burdens, or they risk public rejection.
- As governments adopt AI and digital services, costs of maintaining fragmented systems (data storage, computing power) will rise sharply; shared DPI offers scalable, integrated platforms that generate lasting public value.
- Without finance ministry leadership, DPI risks becoming a graveyard of fragmented pilots too expensive to sustain.
- Transition required: from funding isolated projects to launching shared infrastructure; from short-term savings to long-term public value; from fragmented ownership to institutional stewardship.

### Evidence and notable figures
- Global DPI mapping (University College London): over 64 national digital identity programs, 97 digital payment systems, and 103 data exchange platforms with infrastructure-like potential.
- Only about half of national ID systems are used by more than two public services.
- South Africa has eight national data exchange platforms operating in isolation.
- Workshops held with treasury and finance officials from over 50 countries highlighted rapid visibility of value as a key concern.
- Pandemic example: the US allocated $800 billion to its Paycheck Protection Program; at best, only between a quarter and a third of those resources reached the workers most in need, while the rest went to wealthier households (analysis by David Autor and colleagues).

*_Source: Diane Coyle, David Eaves, and Beatriz Vasconcellos; F&D, March 2026._*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2026/03/coyle.pdf_