Estonia wants to become a ‘country as a service’ and already has 10,000 virtual residents
Estonia is one of the most digitally advanced nations in the world, with digital public services, online voting, blockchain-based healthcare records, and paperless cabinet meetings in government since 2000.
But its most radical project is e-residency — letting people from around the world become digital residents of Estonia online.
“The question is how can we increase the customer base in Estonia because if you want to be a richer country you need more customers and we don’t get those customers,” Taavi Kotka, Estonia’s chief information officer, tells Business Insider.
He adds: “Immigration is basically nothing here. It’s so far north people don’t want to be here physically. The only way to increase the population was the add them as digital ones.”
Estonia’s 1.3 million people each have an identity card with a unique identifier that allows them to access over 1,000 public services, like healthcare and paying taxes online, and private sector digital services that use the same system.
Key identifying data such as signatures are stored in the system alongside the unique number, giving you a unique online identifier you can use to sign documents online and basically verify you are who you say you are online.
“It’s called CaaS,” Kotka says. “There’s SaaS [software as a service ]. We’re country as a service. That’s the ambition. It started about a year ago and we’re at about 10,000 users at the moment. So in startup terms, that’s quite significant.”
Kotka comes from the world of startups. The entrepreneur and software developer came to government in 2013 after 6 years as CEO of Nortal, one of the largest software development companies in the Baltics.
While people may sign up for e-residency to get access to the public services, the idea is they then might go on to set up an Estonian company online. Estonia then gets the tax.
“You can still work from Bali or wherever as long as you have internet,” Kotka says. He highlights Estonian company Leapin.eu, which helps you set up a micro company online.
“You go to the webpage, you put the name in, you put your bank details and you press create company and you are up and running. You log in with your digital ID. Because that’s the thing, we always have to know who’s behind the computer.”
For now, e-residency is in its infancy.
Kotka says: “We haven’t advertised it a lot because we are still missing some elements. For example, currently, it’s illegal to open a bank account in Estonia long distance, from a money laundering point of view. Now they are changing that. It’s still as difficult to get a bank account, you have to talk to the bank on the phone and prove you have means, but you don’t have to travel to Estonia anymore. When this is done, there will be a campaign about it.”
‘It’s impossible to properly govern because they don’t have proper data’
It’s also just one of Kotka’s many projects. Kotka is in charge of making sure all the digital services offered by the government are joined up and coming up with new ways to use technology in government.
“I think the most interesting thing I’m doing at the moment is future prediction modeling,” Kotka says. “For governments, it’s basically impossible to properly govern the country because they don’t have proper data. They have some marker level statistics — unemployment, GDP, trade. But it’s behind, you get last year’s report.
“But in Estonia, we started to ask companies to give us more data. The reason is we wanted to get rid of fraud. Currently, all the companies in Estonia are declaring their B2B deals. If I’m a company and you’re a company and I buy something off you and it’s more than €1,000, we both have to declare it.
“In this way, the government has a huge database. We actually know how the economy is doing. For example, there’s an 8% probability that if we don’t do anything we could lose 5,000 jobs in Eastern Estonia in the Chemical industry in the next 6 months. Or we can start giving risk profiles to local government and say you are in zone red right now, if you want to get into zone yellow you need to attract 600 businesses or something.
“I can tell which businesses are going down and give them advice. Of course it’s probability, it’s not 100%, but it’s way better than what we have at the moment.”
Estonia and the UK are both part of the D5 alliance, a group of digitally-advanced countries that share knowledge about government adoption of technology. Estonia is far more advanced that Britain — how can we catch up?
“Your government has officially said it will never start issuing numbers to people — social security numbers or whatever,” he says. “When I hear this I think, OK, then digital society [will] never happen in the UK.”
When I hear this I think, OK, then digital society never happens in the UK.
A 2006 act in the UK introduced national identity in Britain but the act was repealed in 2010 after opposition from privacy campaigners.
“It’s an engineering thing, it’s not a question about privacy or anything else. If you don’t put unique identifiers on people you can’t collect data.”
Kotka, who also advises the European Commission on its digital society initiative, is unencumbered by such political issues in Estonia. He says: “In Estonia and all of Scandinavia, people have seen and felt the benefits of IT. It gives them more trust in the solutions.”
He adds: “I have been like a kid in a candy store. I have lots of investment money and full political support.”
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