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e-Residency Programme

Innovation image
An innovation provided by

Siim Sikkut
siim.sikkut@rk.ee

Published On: 12 January 2017

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Organisation: Government Office of Estonia

Country: Estonia

Level of government: Central government

Sector: Economic affairs

Type: Digital, Human Resources, Methods, Public Service

Launched in: 2014

The Republic of Estonia is the first country to offer e-Residency— a transnational digital identity available to everyone in the world interested in managing a location-independent business. E-Residency enables secure and convenient digital services that facilitate credibility and trust online. As of 2016, E-Residency makes it possible to:
• Digitally sign documents and contracts
• Verify the authenticity of signed documents
• Encrypt and transmit documents securely
• Establish an Estonian company online and administer it from anywhere in the world
• Conduct e-banking and remote money transfers
• Declare Estonian taxes online
• Take advantage of a marketplace of services specifically for e-residents

E-residents receive a smart IDcard (eID) which enables secure digital authentication and the digital signing of documents. These are legally equal to handwritten signatures and face-to-face identification in Estonia, the EU and between partners upon agreement anywhere in the world.

The programme provides a gateway to another country’s digital infrastructure and regulatory framework, in this case Estonia’s, allowing people to become active players in the global economy by conducting business regarding of their place of residence or nationality.

Estonia has been a pioneer in the provision of digital public services to its own citizens. E-Residency uses the Estonian infrastructure system that took more than 20 years to mature and reach its current state. However, to be implemented, the programme still required amendments to legislation and the ability to find consensus inside the government. Thus, to replicate this there needs to be strong national e-ID, right legal framework and willingness to change in place!

E-Residency is still in its public beta phase, which means that everybody is invited to apply and help the e-Residency by giving feedback. E-residency and its services and processes have been built and iterated based on feedback from the target users.

Why the innovation was developed

  • The Estonian government launched e-Residency to make Estonia bigger: to grow the country’s digital economy and market with new customers, thereby sparking innovation and attracting new investments. e-Residency seeks to improve the efficiency of Estonia’s public and private networks by using the already existing infrastructure while providing a transnational digital identity available to anyone in the world.

Objectives

Improve access, Improve effectiveness, Improve efficiency, Improve service quality, Improve user satisfaction, Support economic growth

Main beneficiaries

Businesses, Civil Society, Other

  • Other: Foreigners

Efficiency

  • Estonia’s standing as a technology thought leader has increased because of the e-Residency programme. Most importantly, however, is Estonia’s ability to promote investment and economic development worldwide. The attention that e-Residency has received in the world media, corporate as well as governmental circles has greatly elevated Estonia's brand and economic opportunities. Because e-Residency provides a gateway to Estonia’s digital infrastructure and regulatory framework, the programme has far-reaching implications for economic growth and for the trade and development challenges faced by economies who lack this infrastructure. Additionally, the e-Residency digital identity allows to substitute paper-based contracts and other paperwork to transition into a purely digital way of doing business.

Effectiveness

  • E-Residency has facilitated business activity for foreigners in Estonia. As of the end of July 2016, the programme has received almost 13,000 applications from 132 countries. More than 840 companies have been created by e-residents and more than 1,780 companies are owned by them.

Service quality

Accessibility:
  • E-Residency has become an alternative for businesses and entrepreneurs living in countries where deficiencies in domestic policy or infrastructure hinders their ability to integrate themselves better into the global market and digital economy. The thirty-nine international e-Residency collection points available internationally in Estonian diplomatic representations allow for easier access to the programme.
Responsiveness:
Reliability:
Other:

User satisfaction

Other improvements

Results not available yet

Design

The e-Residency initiative emerged out of the priorities delineated by the Digital Agenda for Estonia 2020, in which the Estonian Cabinet prioritized the aim of increasing Estonia’s international recognition in digital affairs. The idea of e-Residency was conceived inside the Estonian government (led by government CIO and Prime Minister’s digital adviser together with Ministry of Interior) as a policy document and then submitted as legislation to the Estonian Parliament, where it received unanimous support. In spring 2014, the sketch of a programme for recruiting 10 million e-Estonians was sent to the Estonian Development Fund, which was organising a competition for the “Best Development Idea 2015”. E-Residency received immediate attention and won a twelvemonth development grant, which was directed to the hiring the e-Residency Programme Director. In December 2014, Estonian government decided to launch e-Residency into a multi-year programme led by a team under Enterprise Estonia.

Design time: 9 month(s)

Testing

  • During the first twelve months of the programme, it was implemented as a development grant, funded by the Estonian Development Fund. After launching the website and subscription list, the programme went viral through social media channels, even before the Estonian government began promoting it. By December 1st 2014, the initiative had recruited its first e-resident and launched its public beta. Throughout development, prototyping and piloting of solutions together with actual users is a cornerstone of going forward and a regular, everyday practice.
Testing time: 3 month(s)

Implementation

Tools used:
  • Initially, policy analysis and proposals prepared.
  • Project plan made and small task force built up.
  • Various working groups formed (legal, marketing, risk mgmt, etc).
  • Lots of awareness effort done.
Resources used:
  • The Estonian Development Fund organised the competition that initially promoted and funded the concept of e-Residency and its first objective of reaching 10 million e-Estonians.
  • A seven-member team was assigned to run the project beginning in April 2015. Enterprise Estonia, the investment agency of the country, facilitates the administration of the e-Residency initiative.
  • The inter-ministerial Board of e-Residency supervises the strategy, goals, and budget of the project proposed by the seven- member team.
  • The Cabinet (aka national government) supervises the strategy, goals, and budget of the project proposed by the Board.
Implementation time: 24 month(s)

Challenges and solutions

  • During the first few months after the launch of the program, people needed to travel to Estonia to have one face-to-face meeting and to pick up their e-Residency card. This requirement imposed a cost to the applicant and a challenge to the expansion of the program. Since April of 2015, people are able to collect their e-Residency card and have the face-to-face meeting at one of the thirty-nine Estonian foreign representations or at the Police and Border Guard Board in Estonia. Work is underway to expand the number of collection points to meet global demand. In addition, e-residents were still required to travel to Estonia to open a bank account. This prerequisite represented a challenge for the creation of companies and inhibited on-boarding. A recent change in the law will allow e-residents to establish Estonian bank accounts without being physically present for identification purpose starting from autumn of 2016 (e.g. via secure video channel).

Partnerships

(see below)
Other, Other Public Sector, Private sector

e-Residency is result of an exceptional cross-governmental collaboration between the Ministry of the Interior and its IT and Development Centre, Police and Border Guard Board, Ministry of Justice, Ministry of Foreign Affairs and Estonian embassies and consulates worldwide, Ministry of Finance, Information System Authority, Office of the President of the Republic of Estonia, Government Office of the Republic of Estonia, Ministry of Economic Affairs and Communications, Enterprise Estonia and others.

Private sector, including large public companies like Nasdaq; and startups in FinTech and blockchain industries, like Stampery, Funderbeam, CrowdValley and WageCan to add more services that are available to users. Developers and service providers are encouraged to use eResidency’s public secure authentication API to securely identify their clients. This way they can use eResidency’s secure government-verified e-ID platform to reach new markets and authenticate customers worldwide. Multilateral and International organisations, like the United Nations, the World Bank and the World Trade Organisation, among others to make eResidency available in their organisations and services. In July 2016, eResidency became a founding partner of the “e-Trade for All” initiative of the United Nations Conference on Trade and Development (UNCTAD) vowing to help expand the benefits of e-commerce to developing countries.

Lessons Learned

  • As the first initiative of its kind in the world, e-Residency has required extraordinary efforts from the team and from different ministries and agencies across the Estonian government to develop and improve the program. The main lesson is that all of this takes leadership and political commitment, but also dedicated everyday staff – then changes become everyday practices and disruptions are made. Additionally, the key learning from trying to operate a programme like a startup in government setting is that it can be done – really be agile, user-centric, scaling on the go. The only hardship is that financial resources don’t scale as fast under state budgeting cycles, potentially limiting agility. To counter that, there has to be a possibility to get more resources in throughout the year as times arise – from state budget or externally.

Conditions for success

  • The e-Residency programme has evolved not as an isolated phenomenon, but as a result of a succession of concrete policy decisions that Estonian policymakers took over the last twenty-five years. Moreover, these actors and their decisions were embedded in, shaped, and constrained by a preexisting technical infrastructure and e-government ecosystem without which the e-Residency project would not have been possible. Estonia has been a pioneer in the provision of digital public services to its own citizens. It is one of the most advanced societies in the world — an incredible success story that grew out of a partnership between a forward-thinking government, a proactive ICT sector and a switched-on, tech-savvy population. Estonia’s e-ID system—by far the most highly-developed national ID card system in the world—and the country’s data exchange layer for information systems—X-Road— are the pillars of Estonia’s technological infrastructure.