Digital transaction holds the key to ensure transparency in disbursing allowance

We have come across news in media about the misappropriation of relief rice, corrugated iron sheets, other relief items and government financial support for the poor. There are many tricks to embezzle cash support and one of them is using ghost beneficiaries when they are distributed manually. As a result, these incidents are less visible. There has not been much media coverage about the misappropriation in the distribution of cash support.

A revolutionary change has taken place in the distribution of cash assistance given by Prime Minister Sheikh Hasina to fifty lakh families whose breadwinners lost jobs due to the Covid-19 crisis. According to media reports out of fifty lakh targeted beneficiaries, Tk 2,500 cash support to 14.32 lakh families, which is about 29 per cent of the total, could not be disbursed.

But it can be looked at differently. How will it look if I say that a massive misappropriation attempt was thwarted because of the digitalisation of the financial sector?

When the government sought the list from field-level public representatives, many of them thought that this would provide a great opportunity to digitalise theft. The motive led some representatives to include ghost beneficiaries in the list to get money into their accounts.

They were knocked out initially. Our state-of-the-art technology stopped them. When it comes to technologies, mobile financial service operators and Nagad in particular, are on the top.

Nagad is the first company in the financial sector that has adopted digital KYC. So, a questionable transaction can't pass through our network under any circumstance. All of our customers are verified through the NID database of the Election Commission. Due to all this technological advancement, we were given the responsibility to disburse the gift of prime minister to 17 lakh families. We feel proud that we have successfully retained the government's trust in us.

Out of the 17 lakh beneficiaries, we were able to distribute the allowance among more than 76 percent. Our success rate is higher than all three other mobile financial service players that also got the task.

No matter how big or small a theft is, if there is a touch of technology to the process, there will always be a trail to uncover it. If a twist is made in technology there will always be trace. It can't be changed unless somebody from the inside is part of the process.

To stop stealing of public funds, we need to embrace digital technologies, strategic planning and effective efforts. The synergy of the three was seen while disbursing the cash support of prime minister Sheikh Hasina. That's why we found more than 14 lakh names whose identities could not be confirmed or those who wanted to receive this benefit through false information.

In the very beginning, we noticed many inconsistencies in the list we got while sending money to the beneficiaries. There were discrepancies in information between SIM registration and the NID database of the Election Commission. So, filtering was done at the beginning as a first step to ensure transparency. We informed the government about this immediately. Through this process, three MFS operators identified irregularities regarding 14 lakh targeted beneficiaries. As the MFS channel was used, the country was able to save more than Tk 356 crore from embezzlement.

The poor people did not have to visit the houses of the chairmen or councillors or supplicate them to get the funds. They did not crowd at banks as well, thus helping limit the spread of coronavirus. These things have to be taken into consideration. The process saved time and labour and reduced risks.

Technologies like Artificial Intelligence (AI) or Big Data have to be used to make the list of beneficiaries further cleaner. At Nagad, we have started using these kinds of technology and our network is huge. In the coming days, we might be able to say how many of the people in the list are truly eligible for the allowance. To avail technological support from us, government offices need to be mentally prepared.

If the draft list of potential beneficiaries is given to us for verification, we can easily say whether any financially solvent person is included. By looking at customers' transaction type and numbers in our database, we can extend support to the government to prepare a list of the people who need the assistance most. From our database, it is possible to find out a person's occupation, income, nature of transactions and sources of funds. In the coming days, we may be able to say whether the customer has any investment. By verifying this information, we can help the government make the list flawless.

A user generates a huge volume of information unknowingly while securing MFS services and this could be the main tool to make the list transparent. Mobile phone operators have become partners of Nagad. There is no such partnership of mobile operators with any other MFS or DFS in Bangladesh. We will be able to cleanse the list further through the partnership and select the real poor. If we can do that, taxpayers' money will be used more efficiently.

The authorities can easily audit the entire process. Through a random sampling procedure, the government can talk to the beneficiaries to find out the success rate of the disbursement.

The government spends about Tk 35,000 crore to provide cash support to the poor. If MFS is used everywhere, the entire amount would come under a transparent system.

The Social Welfare Department has decided to distribute some allowance through MFS and piloting for that has started. The Education Ministry has adopted this technology for most of its disbursement.

If the process is applied to all disbursements, it will guarantee transparency. Ministries, divisions and departments can use technology-based financial services companies like Nagad as an anti-corruption tool.

The author is the Managing Director of Nagad, a digital financial service of the Postal Department.