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E-Estonia - How Estonia became a digital society with global ambitions

For a view into what digital societies look like we should all turn towards this small European country for a sneak peak

largest digital society

Estonia has no major natural resources and has a rapidly declining population, but despite these weaknesses, this small Baltic country of only 1.3 million people has revolutionized and positioned itself to be a major investment hub through technology and IT.

When Estonia gained independence from the soviet union in 1991, it was left with an archaic soviet bureaucratic structure, as well as a crumbling infrastructure. 

The country had to quickly figure out how to overcome the problem of a small workforce, and a poor physical infrastructure, while modernizing the economy. 

It was at this point the political leaders made a revolutionary decision to “computerize” the society in every possible way, so as to seal all the inefficiencies while driving innovations wherever possible.

This would not have been possible without massive investment in IT infrastructure which as we will see, makes the country the most extensively digitized nations on Earth. 

The digital paradigm shift towards modernization was not only necessary for joining the European Union, but in many respects, the country wanted to choose a unique economic niche with which to rebuild the country’s economy after the economic collapse of the USSR, which had greatly stifled economic development.

Henceforth, the country was to position itself as a powerhouse in Internet technologies so that by 2002, all the urban areas had WiFi coverage, as well as one of the fastest internet speeds in the world.

Today, Internet access is considered a constitutional right – the only country in the world to have such a constitutional provision. In addition, if you go to the capital city Tallinn and other cities, you will find numerous free WiFi terminals.  

As the most digitized society in the world, Estonia governs and organizes itself differently

Since the whole country benefits from a 100% digital infrastructure, it follows that government services are digital as well. 

The Estonians pride themselves on the fact that they are environmentally conscious because of digitization, with estimated yearly savings on paperwork thought to measure the size of the Eiffel tower.

 Indeed, 95% of Estonians now have a ” mandatory digital identity card” which pundits have rightly classified as the most developed national ID card system in the world. 

Thanks to this card, you not only have digital access to all the government’s secure e-services but other electronic services.

Here is a list of things an Estonian digital identity card allows you to do.

  • It can act as your national health insurance card.
  • Sign a contract online – indeed digital signatures carry the same legal weight as handwritten ones. 
  • Create a company. 
  • Apply for a building permit.
  • Use it as public transport pass.
  • Driver’s license and Auto insurance details.
  • Travelling within the European Union
  • Pay taxes
  • Register the name of a newborn
  •  E-Prescriptions
  • Voting online – Estonia was the first country in the world to implement an online voting system.

Such is the digital paradigm shift that from an early age, preschoolers are already deeply conversant with different programmable devices. 

As a matter of fact, the school curriculum in Estonia teaches students to code starting at age seven. 

It is not surprising therefore that the Estonian education system has been ranked among the best in the world. 

It provides for retraining long after graduating from University, which is why through evening classes, older generations can stay abreast with recent technological innovations which explains the seamless manner in which the digitization process has been integrated into daily life.

Why Estonia suits many solo entrepreneurs

Estonia also has one of the most stable political and economic environments in the world which not only increases investor confidence, but as an investor, you get access to one of the most liberal and favourable tax regimes in the world.

What you get from Estonia is not only the chance to operate and incorporate your business in the European Union, but entrepreneurs from all over the world can create their subsidiaries in Estonia while accruing benefits from one of the most favourable tax regimes in Europe.

Through the E-residency service, Estonia entices citizens from other countries to come and do business through an innovative product called the e-resident card. 

In essence, it is a biometric card that allows you to incorporate your company in Estonia and so far 2,700 Estonian companies are now owned by e-residents from more than 100 countries. 

It is a good strategy since as we have noted, Estonia’s population is rapidly declining and with it, it is expected that the economy will decline as well. 

The E-residency program in this respect is a great strategy in that it lessens the effects of the expected economic decline. 

What we are seeing is that now, a lot of digital nomads are choosing to declare their small companies in Estonia which is bringing a lot of revenue for the country.

The e-Estonia digital project has international ambitions through the E – residency card for foreigners

After paying the mandatory 100 euros fee, and filing your personal details with the Estonian police guard, you have to wait for a period of 3-4 weeks.

This period allows them to do a thorough background check to ensure that you do not have a criminal record,  nor are involved in such activities as terrorism or money laundering.

After which, you have to go and pick up the card at a designated pick up point, usually in the Estonian embassy – you do not have to go to Estonia to pick up the card. 

Once you are in the embassy, you will be required to give your fingerprints.

From there, you can then go ahead and start using the card since the card has a USB plug-in function as well as pre-installed software. 

This card has your digital information, but it is important to reaffirm that it does not guarantee entry into the EU, nor does it give you residency status or any other civil right like voting. 

Through the LeapIN program, digital nomads can run their companies remotely and securely

LeapIN was intended to simplify administrative procedures in order to start a business, take advantage of infrastructure, open a bank account and facilitate the paperwork. 

So efficient is the incorporation process that the country has officially set the world record of only 20 minutes, to register a company.

This service in essence simplifies the process of creating and managing your company through accounting and managing taxes.

For 59 euros per month, the LeapIn service gives you a business address in the StartUp district of Tallinn and If you are interested in opening a bank account in Estonia, LeapIn can help you do that too.

What is the future of digital societies and can it be adopted elsewhere?

This digital transformation has not been easy and there have been valid fears about the security loopholes of a 100% digital society seeing that Estonia has had their physical infrastructure attacked severally. 

To avoid a repeat of such events, the government is at the forefront of cybersecurity initiatives, and citizens have been sensitized about cybersecurity and that’s why if one chooses to, they can encrypt their own digital information.

This is why pundits estimate that not many countries would be able to replicate a one-stop-shop digital society as Estonia has done. 

Indeed, it would be impossible if the British, American, German or French governments tried to implement such a policy given that their population is neither homogeneous nor small.

 


Written by Briana Anabtawi, Head of Service & Operations, LEXIGO: As Head of Service and Operations, Briana is responsible for quality, client satisfaction and efficiency in service delivery for LEXIGO Strategic Clients and Partners. Briana's professional background in the travel and tourism industry has provided her with a unique insight into culture, language and project management.