Abstract
The rapid adoption of Artificial Intelligence (AI) and digital governance technologies has reshaped public sector service delivery and decision-making across developing nations. Governments increasingly deploy AI-enabled tools for welfare targeting, digital identity management, tax administration, predictive policing, and disaster response. While these technologies promise efficiency gains, transparency, and economic modernization, they also raise complex ethical dilemmas and governance challenges, particularly in contexts marked by institutional fragility, socio-economic inequality, and regulatory gaps. This study critically evaluates the ethical and governance implications of AI and public sector digitization in developing countries, drawing on interdisciplinary scholarship, comparative case studies from India, Kenya, Brazil, Nigeria, and Bangladesh, and recent developments in AI governance research and policy frameworks. Key ethical concerns include algorithmic bias, privacy erosion, surveillance expansion, digital exclusion, opacity, and accountability deficits. Governance challenges include weak regulatory infrastructures, capacity constraints, political instrumentalization, and corruption risks. By integrating technology governance theory, digital divide theory, and political economy perspectives, this study argues that ethical risks are magnified where governance systems lack safeguards, public oversight, and inclusive design. The study concludes with policy recommendations emphasizing rights-based governance, institutional capacity building, participatory oversight, and international cooperation to ensure responsible and inclusive AI deployment in the Global South.