The anti-corruption and economic effect of e-services in Ukraine

Victor Liakh,
East Europe Foundation,

Public service provision in Ukraine has long been associated with corruption, bureaucracy and a lot of time spent. That inconvenience was an advantage for the numerous intermediary service providers who used to make money on the collection, filling and submission of the documents.

The Government of Ukraine has set itself the ambitious goal of making all administrative services available to citizens and businesses via a single web-portal Diia by 2024. Having defined the priorities, the Ministry of Digital Transformation and various stakeholders have merged to reduce bureaucracy and improve the quality of services, in terms of time spent and availability. Different electronic services were introduced in Ukraine in recent years.

Business registration became one of the first services on this web-portal. Now, entrepreneurs in Ukraine are able to register a sole proprietor enterprise, make changes or close it online. The Ministry of Digital Transformation and its partners including the E-Governance for Accountability and Participation (EGAP) program, implemented by East Europe Foundation with the support of Switzerland, are continuously making efforts to simplify e-services for entrepreneurs.

With that in mind, the number of lines to fill in to open the enterprise has reduced from 58 to 12. Currently, 15 minutes is the average time of form completion on the Diia Portal, and Ukraine has one of the fastest business registration procedures in the world. In 2020, due to the pandemia and the convenience of new e-services, the percentage of entrepreneurs who opened an enterprise online was 49%, meanwhile, in 2019, it was just 5%.

Another great example is the revolutionary service eMalyatko for the parents of newborn children which allows them to receive 9 different services based on the life event of the baby birth by filling in just one application form online. Service development was inspired by the relevant experience of Canada, Serbia and Australia, however, the results are even better than expected because now eMalyatko is the most comprehensive service (9in1) for the parents of newborns in the world. According to the latest surveys, 95% of users are satisfied with the service quality.

But what about the economic and anti-corruption effect of e-services in Ukraine?

Better Regulation Delivery Office (BRDO) has prepared the report on anti-corruption and economic potential of e-services, upon the request of the Ministry of Digital Transformation and East Europe Foundation within the USAID- and UK aid-funded TAPAS project as well as Swiss-funded EGAP Program.

To evaluate the economic effect, researchers calculated the difference between the costs of old (paper) and new (electronic) service procedures. When it comes to the anti-corruption effect, the research used measurements with the involvement of more than 1,000 direct users. Open-source data on the amounts of bribes were also included in the statistics received in the survey.

The study demonstrated that the introduction of administrative services in the online format had a considerable economic effect. If all users had received the analyzed services online, their costs would have been reduced by UAH 495 million, or by 63% compared to offline format costs (from UAH 790 million to 295 million). In absolute terms, the annual savings are approximately 514 man-years because over half (58%) of costs for administrative services are related to the user’s time.

The anti-corruption effect is also impressive. The annual potential savings on bribes is UAH 841 million, which is even more than the economic effect, and the real, annual savings amount to UAH 32 million. Two-thirds of reported cases of possible corruption are related to the customary (offline) provision of administrative services. In addition, the vast majority of users (78% of those who answered) believe that corruption is lower, including 52% who believe corruption is significantly lower. In general, the proportion of users responding negatively is less than 1%.

This survey confirms that e-services in Ukraine make a positive economic influence and play an important role in defeating corruption.

Soon, Ukraine will digitalize residence registration which is especially essential because currently, one-third of Ukrainians don’t live in the places where they are registered and about 1 million citizens don’t have residence registration at all.

Also, In 2021 Ukraine has begun to implement a «paperless regime», which means starting from September public authorities will no longer require citizens to provide paper certificates or other documents to receive public services. Hopefully, these changes will help root out corruption and digitalization will contribute to powerful economic development in Ukraine.

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