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Regulation & Innovation – The Challenge for Governments

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An M-Pesa shop in Masii, Kenya.

An M-Pesa shop in Masii, Kenya.

During the Internet Governance Forum conference held in Nairobi last September, Kenya’s head for e-Government Dr. Catherine Getao made an observation that probably holds very true in many places worldwide. Private sector innovations can happen in the absence of government policy but in many instances government can’t implement innovation in service delivery until legislation and policy is in place. This was in response to a comment I had made on the disparity between the rate of innovation adoption by government when compared to the private sector and the citizens.

Mobile money in Kenya provides a fairly good example of this. M-Pesa is not directly regulated under a full banking license but operates under a special dispensation from industry regulators. At public roll-out,  the MPesa service allowed urban Kenyans, for instance, to send money easily and more safely to their rural folk. Service providers then implemented utility payments via mobile money and integration of mobile money with conventional banking services. Within 3 years, firms like PesaPal and iPay had emerged  providing a bridge between mobile money and e-commerce.  Services  in this space are continuing to evolve every year.

Although I can send money, pay utility bills, buy goods and check my bank balance through my mobile phone, I still can’t pay government fees, taxes or levies on it. I still have to go to a bank like I did 5 years ago. Hence Dr Gitau’s comment alluding to the delay caused by the (usually long) wait for development of legislation to guide government adoption of new technology for service delivery.

So whereas mobile money was launched and has continued to evolve in an environment where regulation and policy was yet to be fully developed, the government was unable to leverage this technological gains for its own good. Mobile money in Kenya is a good example of how innovation preceding regulation can be good for the country. Although governments can create an environment for phenomenal progress (like Kenya’s has done), their inability to keep up with the momentum triggered by the private sector for service delivery (due to bureaucracy) is an example of how innovation preceding regulation can slow progress in eGovernance.

This is where the challenge lies for those designing the next generation of eGov services as well as the agencies/departments seeking to improve service delivery through ICT. A highly collaborative multi-stakeholder approach is, in my opinion, necessary to not only accelerate the rate of innovation but the speed at which governance frameworks evolve to cater for the emerging ‘new normal’.

 

Related posts:

  1. The Digital Divide and the Road to e-Government
  2. The Open Innovation Africa Summit 2010
  3. Improving Adoption of Innovation in Emerging Markets.

Written by Muchiri Nyaggah

December 27th, 2011 at 10:31 am

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