How Estonia set a global benchmark for e-government

Andrus Kaarelson, the country's director of state information systems, explains how the public and private sectors have worked together to create e-Estonia

Estonia has earned a reputation as the world's most advanced digital society, with over 99 percent of its public services now available online.

The former Soviet republic's public services are powered by an extensive IT infrastructure, but Andrus Kaarelson, the government’s director of state information systems, says his country’s rapid digital development is not solely due to its technology.

"Technology is just an enabler," Kaarelson explained at the 2019 Digital Government Conference in London. "There has to be the political will to make the change happen."

Kaarelson, whose team is responsible for developing and operating e-Estonia’s central services and for coordinating its cyber security, gives much of the credit to a supportive government that has mandated a range of digital initiatives.

These include a national ID card that provides digital access to all of Estonia’s e-services, and X-Road, a secure data exchange that digitally signs and encrypts all outgoing data and authenticates and logs all incoming data. The system has since been exported to countries from Iceland to Ecuador, and Estonia has also established a federated X-Road ecosystem with Finland that enables the countries to securely publish and consume across their borders.

“This solution is extremely resilient towards cyber attacks and technical problems, because there are no central components: no hubs, no central databases," said Kaarelson. "For example, in 2007 when we suffered from heavy cyber attacks coming from our big neighbour, Russia, we learned that only 1 percent of services were stopped out of 1000."

Digital democracy

A key milestone in the development of e-Estonia was the introduction of online voting for the country's 1.3 million citizens.

"In the past, the weather affected participation rates in the elections, and this was the reason why we introduced in 2005 internet elections in Estonia," said Kaarelson. 

The project made Estonia the first nation to hold legally binding general elections over the internet.

In the 2015 Parliamentary Elections, 30.5 percent of votes were made online. Kaarelson expects this will rise to half the electorate in this week’s European Parliament elections.

He credits the rapid uptake to the ease-of-use and 24/7 remote access to the services, which follow a "once-only" principle, which means the state cannot ask citizens for the same information twice.

These include an electronic tax filing system that the government claims is now used for around 98 percent of all tax declarations, which citizens can file in three minutes.

People love to declare taxes in Estonia," claimed Kaarelson. “Because they still have some hope that they will get some money back.”

Startup ecosystem 

Estonia's digital development has created a thriving tech sector that helped the country climb into the top 20 in the World Bank’s Ease of Doing Business rankings. IT companies are currently responsible for 7 percent of Estonia’s GDP and employ 4 percent of the country’s workforce.

This environment has produced four unicorns in last ten years: telecoms app Skype, gaming company Playtech, the founders of money transfer firm Transferwise, and ride-hailing app Taxify. 

Data from and the State of European Tech Report 2018 suggests that Estonia has more startups per capita and per GDP unit than any other country in Europe. Collectively, they have earned the somewhat dubious nickname of the Estonian Mafia. 

Estonia’s digital support for companies includes as an e-Business Register for rapid registration of new businesses. Kaarelson says he tested it himself by establishing a company in around 20 minutes and submitting his annual income tax declaration in two minutes.

The registration can be completed by using an Estonian e-Residency card, which is also available to foreigners who would like to set up a business in the country.

“Fingers crossed you remain in the EU, but if it really happens and Brexit takes place, this is a brilliant day for you to become an e-resident," he quipped, "establish a company in Estonia and enter the EU market again.”

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