Strengthened national data systems will help countries realize the full potential of the data revolution to help transform the lives of the poor, a World Bank report said.
The “World Development Report 2021: Data for Better Lives” released on Wednesday said data can inform policies and spur economic activity, serving as a powerful weapon in the fight against poverty.
The report added that while more data is available today, its value is largely untapped.
“Data offers tremendous potential to create value by improving programs and policies, driving economies, and empowering citizens. The perspective of poor people has largely been absent from the global debate on data governance and urgently needs to be heard,” said World Bank Group President David Malpass.
“Lower-income countries are too often disadvantaged due to a lack of institutions, decision-making autonomy, and financial resources, all of which hold back their effective implementation and effectiveness of data systems and governance frameworks. International cooperation is needed to harmonize regulations and coordinate policies so that the value of data is harnessed to benefit all, and to inform efforts toward a green, resilient and inclusive recovery,” Malpass added.
According to the report, private intent data can fuel growth and boost development.
“Innovations in the use and application of data by businesses are creating tremendous economic value by enhancing data-driven decision-making and reducing transaction costs,” it said.
“Although data are in many ways an input to the production process of firms, much of the recent explosion of new data has come about as a by-product of economic activity, such as digitization of firm operations, mobile phone usage by individuals, digital transactions, and social media interactions. These data are collected at high frequency and can provide detailed information on individuals, businesses, economic outcomes, and phenomena,” it added.
The World Bank cited for instance financial services providers which increasingly adopt alternative credit scoring techniques to solve the issue of lack of data on potential borrowers in banking.
“These techniques take advantage of users’ digital footprints to assess creditworthiness for those who otherwise lack documentation. Two prominent examples of this approach are Lenddo, which operates in the Philippines, and Cignifi, which operates in Africa, Asia, and Latin America,” it said.
The report however warned that the more data is used, the greater the potential for misuse.
“Careful design of regulations to strengthen cybersecurity and protect personal data is essential to engender trust,” said the World Bank.