From open data to development impact – the crucial role of the private sector

Can open data lead to reduced energy consumption (and therefore slow down climate change)? Can open data help improve maternal health services (and thus improve facets of public delivery of services)? Can open data help farmers and crop insurers make better crop predictions (and thus lead to smarter investment decisions in agriculture)? Can open data empower citizens to fight back against police corruption (and thus help promote the rule of law)?

Is there more to open data than transparency and accountability?

The answer to all the questions above is a resounding YES – at least far as the developed economies go. The private sector is constantly building new businesses and services that use public data to provide services that are not only commercially viable but also create positive development impact. Companies such as Opower (over 3 billion kilowatt hours or about $320 million in utility bills saved), Dimagi (creating cell phone based data to help deliver maternal health services), Climate Corporation (better crop yield predictions), and many others are just some examples of a fast growing ‘new asset class’ built substantially on publicly available data (that the Economist recently likened to ‘a new goldmine’) that is likely to have a transformative impact not only economically but also in terms of development outcomes. And it’s a space that the World Bank and other development agencies have only nibbled at so far.

The question at the table is what can development organizations do to catalyze this market and hasten the associated development outcomes, especially in developing countries? How can governments and private sector companies in developing countries work together to take advantage of commercial and development opportunities in what McKinsey estimates is a $3 trillion+ open data market? How do we make sure that the growing amount of open data is truly used in new and interesting ways that early open data pioneers had hoped for?

What is the market gap?

While there is growing consensus about both the market opportunity and the potential for transformational development impact of data developing countries, there has been only limited business activity in the data sector in developing countries. We believe that a series of interconnected factors are holding the market back –

• The amount of reusable or open data is perhaps the key barrier. If data is to be the primary raw material for industry, it is logical that firms will flourish only if copious amounts of data are available.  The deficiencies are largely because  –
  • There is relatively little ‘high-value’ open data in the public domain (much of the first wave of open data tends to be too high-level)
  • There is still no clear value-proposition for governments to open data, beyond transparency
  • It can sometimes be expensive to open data – both upfront and from the management/maintenance perspective
  • Governments may be unfamiliar with platforms to open data, or appropriate platforms may not exist
  • There isn’t yet a clearly accepted ‘minimum viable’ open data ‘standard’ that governments can work towards
• The policy/regulation environment around open data in developing countries is patchy –
  • Few governments yet have clear laws/regulations about what data can or cannot be made open and why
  • Very few governments have established clear legal and economic guidelines that maximize the potential use of open data while addressing legitimate privacy and intellectual property considerations
• There are human capital gaps in the sector –
  • There is a shortage of trained data scientists especially in developing countries
  • The situation is exacerbated by the absence of an entrepreneurial ecosystem in most parts of the world that can foster, sustain, and benefit from data driven initiatives
• Access to finance for emerging smart data firms is one of the frontline issues –
  • There is still concern among investors about a ‘shortage of quality investment opportunities’ in the area
  • The size of investments has also been a concern. Early stage companies often require very small investments or are better suited for grants

Looking ahead

So while the number of countries with open data programs has grown rapidly over the last two years, the commercial value of open data remains untapped, especially in developing countries. This represents a lost opportunity to reduce poverty and increase shared prosperity. It is also a deterrent to developing country governments to continuing opening more government data.

There is a clear opportunity for development organizations that have strong partnerships with governments and the private sector, and that see the transformative potential of open data to expand the open data conversation beyond transparency and accountability and into development impact, data usage/utilization, and economic outcomes. The good news is that there are plenty of strong initiatives in place already working on different aspects of the challenges described above but this isn’t a problem that a single magic bullet can solve – there’s a financing gap, but financing alone isn’t the answer. Similarly, there are challenges around opening data, human capital, and the policy and regulatory environment but addressing any of them in isolation isn’t going to be very efficacious. What will help is a coordinated approach that creates positive feedback loops across the entire cycle. Something that ties a string of open data services together with a clear eye towards commercial impact.

Who will step up to meet the challenge? Watch this space for a few ideas we propose but this is looking forward to hearing from you about the work you are doing in this area.
 

World Bank Group Finances is the online access point for IBRD, IDA, and IFC open financial data. The website features datasets that cover loans, contracts, trust funds, investments, and financial statements. A related mobile app, which allows you to “talk” to us more easily about operational and financial data in nine languages, is available for download for Android and iOS smartphone and tablet users at the Google Store and the iTunes Store, respectively. Follow us on Twitter to join and remain engaged in the conversation about the Bank’s open financial data.