Digital Payment vs Digital Economy

I wonder, in the new Sri Lankan Dictionary, does Digital Economy mean Digital Payment? When I listen to the Ministry of Digital Economy, or officials of the Information Communication Technology Agency (ICTA), what I hear mostly is about Digital Payment.

I believe – and I may be wrong – that Digital Payment is the final icing on the cake for a successful digital economy. Digital Payment is within the purview of the Central Bank. It established LankaPay as far back as 2013, with the view of making digital payment popular and eliminating the 2 –  3% commission charged by international credit card companies for small value transactions, especially that of retailers. The aim was to enable even small traders to make use of digital payments, without losing on commissions.

LankaPay vs UPI

What they have done in 12 years? It is very difficult to find retail outlets with a QR code, even in Colombo city, to make payment using LankaPay. When we use an international credit card in retail outlets, the credit card companies and the banks are ‘robbing’ from the retailer who accept those cards for the convenience of customers.

Unified Payments Interface (UPI) was launched in India in 2016. Today, it is used even by corner shops and by street vendors in remote areas, if I am not mistaken.  It is available in Sri Lanka and the Maldives too. In today’s world, payment delivery technology is a trivial matter. But the real issue is popularizing it in the marketplace.

The question to ask is how India, starting late by three years, is several folds ahead of us. What is the Central Bank focusing on, especially with their recently obtained ‘independence’? Increasing their salaries while the whole country is suffering, wrist-twisting the public Provident Fund, for which they are custodians, into submission with the support of the neo liberal government and continuing it under the worker’s oriented new government, reducing the fund income by almost 50%, while ensuring their separate fund is guaranteed 25% income, the shortfall being paid by the Central Bank itself.

I wonder when the NPP government will have courage to clean up the Central Bank. There is no effort on their part to encourage digital payment and make the payments system in par with current technological trends on the ground.

Today, LankaPay technically and organizationally cooperates with UPI for Indians to make payment using UPI when they visit Sri Lanka. But has LankaPay done any marketing, to be fair by their partners other than signing the agreement?

UPI is aggressively seeking support from private individuals and companies to popularize UPI in the retail sector in the North/East where Indian tourists come by air and sea to visit mainly Hindu religious places. UPI is willing to pay fees to these marketing efforts.

Paying Traffic Fines Digitally is Not Digital Economy

The Ministry of Digital Economy is talking about GovPay which should have been done by the Central Bank and its subsidiary LankaPay long ago. ICTA is talking about paying traffic fines by GovPay for the convenience of the public.

Given the cost of living and the economic struggles of policeman and the offender-drivers, the majority of traffic offenders have a very convenient way of paying the fine at negative cost, to the policeman. Negative cost, because what they pay the policeman is less than the fine itself.

Whether corruption is the cause of the economic downturn, or the economic downturn is the cause of corruption, is a moot point. But GovPay is not going to eliminate the current way of ‘paying’ traffic fines in any significant manner, without  improvement in the economy of the country.

Digital Economy Total Process Digitalization

A digital economy should make total citizen/enterprise interaction with the government digital, not just payment only. Here are a few examples.

Revenue License Service

The only service I can think of at the moment, is renewing annual vehicle licenses. Once you have done the vehicle emission test and paid the insurance, you could get the license online from anywhere. Vehicle details and ownership can be validated online and so can the mission certificate and insurance as well. That is what you call Digital Economy. You can do everything other than the emission test from anywhere.

It is possible because all the vehicle records are available electronically online, as the ownership transfers takes place. In fact, change of ownership is done electronically first, and the system produces the ownership documents subsequently of course, within minutes. It is not just digital payment only.

After going to the RMV and submitting manual forms, if the Ministry of Digital Economy and ICTA were do this now, they would make the payment, only digitally using GovPay/Lanka Pay and will claim a major step towards the digital economy.

But even here, the fee is well within the LankaPay limit, but one has to bear the credit card commission split three ways by the credit card company and the merchant and issuing banks and additional convenience fee.

History of DMT Digitalization

The process of obtaining a vehicle revenue license from home was started 40 years ago, when a contract was put out by the Department of Motor Traffic (DMT) to convert all manual records of vehicle registration into electronic format to enable computerization of the operations of DMT.

At that time, DMS where I worked for 25 years from 1978 as Head of Software, got the contract in 1985 to create records, estimated to be one million, at the rate LKR 3.75 for every vehicle record created in the electronic format.

The tender was only to create records, but the company after winning the tender, entered into a contract to provide hardware at the DMT premises and application software to capture the data by DMT staff paying them LKR 0.50 for each record created, out of the LKR 3.75 paid to the company.

It was an incentive with complete transparency approved by the Treasury and the Ministry of Public Administration waiving 10% payable to the Government on income earned for extra services provided by the government servant, not a bribe.

Now, Customs officials are paid extra for doing their normal work of detecting custom duty violations. The Commissioner himself was getting .02 cents per record. Within a year, new vehicle registration was done in the system and so were the transfers. By 1992, all one million records were available electronically and the system was available to handle operations.

Thus, the data capture tender was converted into a fully operational system, thanks to the benevolent and visionary Managing Director of DMS, Ruvan Ratnatunge. Alas, he was rewarded by purchase of a new hardware from another company during the time of Gamini Senerath’s commissionership, I believe.

We managed this project to a success, in record time, despite the notoriety of corruption that was associated with DMT and with a technology that existed 40 years ago. I do not think another Government system has achieved this level of success  even with today’s advancement of technology, except a less complex passport issuance system in late 90’s.

People, Process Product

The principle of People, Process Product was followed instead of Technology First as it is followed today. The whole project was led by two successive Commissioners of Motor Vehicles. Initially by Mr. Jayasuriya later by Mrs. Kotahadeniya. They chaired the Project Co-ordination meetings. Only two or three IT personnel from DMS, myself as leader, were involved in the Project, to develop the software, provide consultancy to the department to put the right processes in place, and train the personnel. There were no IT personnel from DMT and there was no CINTEC or ICTA at that time.

People

Mr. Jayasuriya was responsible for making all the decisions in terms of the people and process and software product functionality. When Mrs. Kotahadeniya took over after the demise of Mr. Jayasuriya, she led the project herself. She understood that IT was the only way of managing the organization effectively. If any complaints were received, she knew when the application was received and knew how long it had been withheld, wanting palms to be oiled, and confronted the officers directly.

The Operational Manager of the DMT IT System was an officer named Mr. Easwaraligam,  who is no more. He was not an IT expert but  knew the DMT processes inside out. It was very easy to train him in IT basics and during his time at the DMT, he was in charge of the system. There was another officer, Mr. Fonseka, who was trained on IT.

I found in my 47 years’ experience that it is easier to teach IT basics sufficient enough to manage the system to Management people, rather teaching Management Principles to IT techies. All the staff were trained to handle the system.

Process

The Software project team lead by me, changed several processes under the guidance and leadership of Mr. Jayasuriya, a person with wider horizons, a product of the Ceylon Civil Service, I believe.

Very notable was the printing of the Registration certificate. Until then Registration was performed using a bound book that was updated every time the ownership changed. Had an IT expert been involved, he would have wanted a registration book printer, a costly equipment and low speed process which would have caused a maintenance headache.

We changed the Registration book to a Registration Certificate, and a new Registration certificate was printed every time ownership changed with the last five owners included in the registration certificate. All the owners’ details however were available in the system. With no proportional spaced printers available at that time, the sheet was 14-inch wide and 12-inch high, which could be folded in pre-specified places so that it could be carried in the shirt pocket.

We changed the renewal annual revenue licenses from the first of each calendar year to the date of first registration to ease the rush at the beginning of the year and more evenly distributed the process load and revenue collection of the government. In the revenue license display, we added the valid year and month.

When iron lady Mrs. Kotahadeniya took over after the demise of Mr. Jayasuriya, she led the operations processes, requiring fast and firm decisions. One day, she called me and said there were 30,000 applications, mostly for motorcycles, that were not captured because the work load was too high.

All of a sudden, around 5,000 motorcycles per week came for registration. I went and observed that the workload was not high, but the flow of documents between the receiving and entering points was not proper. I rearranged the tables in the receiving room such that the movement of documents to the capturing terminals was quicker. Again, they were able to print certificates in three days after the receipt of the application for new registration. The 30,000 back log was cleared by another team in one month, thanks to the efficient people management of Mrs. Kotahadeniya.

Product

All new creations and changes carried the ID of the current owner and person authorized so that in a court of law, computer records can be accepted. Even the Security Administration of the system was not by a super user but dual controlled.  

Even today, in almost all the system, a super user could change things alone and computer system evidence can be made invalid in the court of Law. At that time, the Computer Evidence Act was not enacted. However, the principles that need to be followed to make computer evidence, hearsay evidence, to be admissible in court of law for both civil and criminal cases, were available in an article presented by authority on Law of Evidence, Mr. E.R.S.R. Coomaraswamy.

Just two weeks before the elimination of ‘Sri’ from vehicles, Mrs. Kotahadeniya called me and told me that President Ranasinghe Premadasa wanted to remove the Sinhala Sri from vehicles in two weeks, i.e. from first of January. She asked me about the implication of that in the system. I said there was no issue, that the system will handle it, as we have designed with possible changes of these nature in mind.

Improvements

Except for two projects, DMT and the Passport issuance system, which were done in the last century, I have not seen any serious Government Services being really computerized, or to use current terminology, digitized.

Even in the case of the DMT system and Passport system, it could have been improved further. At least in the DMT system, digitization has progressed such that you can get your revenue license from home.

However, it could have been improved so that all the documents can be submitted electronically from anywhere for on line registration and transfers without having go to the DMT, except in the case of new registrations to verify Engine Number and Chassis Number, but not to make applications.

Online Passport Application System

There is an online passport system to make online applications, so that no one need to go to the Passport office except to get their fingerprint scanned. It works despite some hiccups. The President goes to Jaffna and promises a passport office to be set up in Jaffna so that Jaffna residents need not come to Colombo for a passport. What a hypocrisy.

I doubt that ICTA, the Presidential Advisor, or the deputy Minister of Digital Economy knows of the existence of such a system. If the system is put in place properly, the studios that take the photograph, which are equipped with computers and the right skillset, can be made to help their customers apply online for a small fee when they go to take photographs, for those who cannot make an application online by themselves.

Applicants need not go to the Passport office to make an application. What a saving on the transport system, saving of time and effort of applicants – no necessity for a passport office in Jaffna.

It would have reduced the work of the Immigration department officers in receiving the application, scanning the application and supporting documents. This would have been done by the applicant himself/herself.

Of course, it will reduce the GDP component of the transport sector and employment, if the Government is incapable to generate alternate productive opportunities for the saved resources deployment elsewhere in the economy.

How do you expect a Telecommunication/Digital Payment expert who spent several hundred million rupees not only to buy, but also to implement as a CEO, simple financial systems, understand this Enterprise Software system?

In fact, I used the system to apply for a passport in early 2024, before this government came to power. I paid LKR 15,000 for 3-day service for my passport and LKR 10,000 for one month service for my wife’s passport, and I paid digitally using my credit card with added convenience fee, not LankaPay, to contribute to the digital economy.   

The System has a facility for the applicant to monitor the progress of the application. I did not see any progress for more than a month. Finally, I had to get hold of some known people, who knew somebody in turn, who knew somebody in the department for it to be processed. Two months after applying, in one hour, it was processed and passports delivered. Thanks to the non performing system, at least, I did not wait in the queue or break the queue.

Technology is not the problem, the Product has some hiccups but can be fixed. What needs major fixing is people and processes. Department staff was not using the system.

Visa System

Still in the Department of Immigration and Emigration, the Public Service Commission transferred a senior officer from the department as he was serving the department for more than 12 years.

He filed a case in the Supreme Court and the Attorney General said when Tiran Ales’ VFS system for visa issuance was suspended by the Supreme Court and the system developed by  Mobitel was put back in use again, the System could not be operated without a particular officer, and wanted him back at the Department.

The AG requested the court to cancel the transfer order by the Public Service Commission. An IT system does not depend solely on one person. This is the state of digitization that is making even the judicial process a mockery.

Series of Failure

I have seen so many projects under previous governments in which failure was written on the wall and yet nobody bothered to see it. In a few projects, I took it up with the ICTA and they would not hear it even until it failed and was abandoned completely. One of them was computerization of Local Government Bodies.

There are other projects that are implemented without real digitalization. Downloading a scanned copy of a birth certificate is digitalization of birth certificates for us, and we are boasting, including the Minster, that we have digitized the birth certificate issuance.

With proper digitization, there is no necessity for two institutions – Registrar General and Dept of Registration of Persons. Assigning of NIC number at birth itself is possible.

A Citizen Registry maintained by a single institution can be used to issue passports as well, only a request letter is required. All information required is in the Citizen Registry. In fact, it can be the Electoral Register too. Imagine the productivity and cost reduction of the Government machinery. No polygamy, no polyandry, no dead person voting, no annual requirement of proof of existence for paying pension by bank transfer, no proof of billing address etc.

I was in a Technical committee appointed by CINTEC in 1995 to study this. But the whole process was abandoned because the Chairman of CINTEC got a death threat from powerful people who were keen on getting the tender for issuing plastic national IDs. After 30 years we are only now issuing plastic cards and the Government is boasting. We do not need Indians to design our system, we could have done better.

What mess we have with the Taxpayer Identification Number (TIN ) for individuals when there is already a unique identification number for individuals in the form of the NIC number.

We employed at a cost of billions of rupees, a system which we have to fit in at an enormous cost, instead of system that will put least burden on us. For more than 15 years we could not implement the system.

We will award projects to Singaporean/Indian/Western companies at enormous cost without really evaluating their capability. I know how the mess up of the IT system of Singapore Telecom owned Call Link made the company close down operations in Sri Lanka. I think what the Government lost in failed IT projects is severalfold more than what is alleged to have been lost in the Bond Scam.

Reasons for Failure

Financial corruption at political level was insignificant, though there were some, in these failures. There were more financial corruptions at the professional level. However, the main reason for failure was the projects were led by IT Techies who had no understanding of the importance of People, Process and Product in a successful IT project. They were constantly obsessed with technology and screen presentations. They did not have the ability or training required to understand the fact that successful Enterprise Systems require proper People, Process and Product that matches the requirement.

What Needs to be Done for Successful Digitization?

The major issue of computerization, whether it is in the government sector or private sector is that you cannot just implement a manual process in a computerized system. The strength of a manual system is its flexibility, which is a weakness in the computerized system. Its processes have to be redesigned so that rigidity of the system is no hindrance to the smooth functioning. The new process should be able to make use of the power of computing to make processes efficient and fast.

People do not realize that computerization is a Process Management Project and is not an IT project. IT experts do not have the training and skillset to lead it, but they are asked to. On the other hand, the bureaucrats leading the organization do not have the training required to manage IT projects.

In my 47 years’ of experience, I have found that it’s easier to teach bureaucrats and mangers the basic of IT required to manage and get best out the IT system, rather to train IT people to understand the importance of People, Process and Product evaluation to meet requirements. I have seen this being done well in multinational organizations in which Business Mangers take responsibility for the IT systems, while the IT experts act as consultants.

Furthermore, the IT training provided, including in Universities are not for Software Engineers but for IT tradesman, at best for Technicians. ‘Experts’, unlike in other fields of Engineering, are more misguided by the manufacturers’ jargons, rather than being guided by basics.

The simple fact is that technical committees dominated by IT Techies or more aptly IT tradesman ‘basun aiyas’ has no skills to evaluate the functional requirement of the organization and match it with that of the product or the skillset to evaluate a new company’s ability to develop a system from scratch.

These inefficient technical committees are the reason for the failure of the Government IT systems, costing the government millions of rupees. In addition, awarding government projects to companies despite repeated failure is another reason. Technical evaluation committees should be made accountable for their procurement decisions.

Unless  bureaucrats/managers are trained to lead IT projects,  Enterprise Software can never be implemented successfully within Government, and the digital economy will be a distant dream as it has been all this while.

Conclusion

When I listen to the Ministry of Digital Economy, ICTA, Presidential Advisors, I hear the same thing I have heard for the last 45 years.  In one forum, I talked about strategies based on Technology First, which have been followed up to now and will change nothing.

To make things happen, they should change the strategy to People first, Process second, Products next and Technology last.  While many in the audience understood, I don’t think people in the podium who are responsible for government strategies understood it.