Yes, it was possible to observe, and many people did. In fact, it drew a lot of interest and there were usually many observers per ballot... in big population centers.

But it is also incredibly hard to make sure every counted vote gets observed in a country of 150 million voters and where the polling location are as different as a boat in a minor river in the Amazon serving a semi-isolated tribe that barely speak the country's official language and a consulate in Ramallah. Ballots have to be transported, counted and recounted over a period of days.

If somewhere along the third day of counting someone exchanges 50 votes from a ballot and you saw it, what do you do? Your word against his? What if he threatens you with violence? Etc.

Electronic elections, even though they are a bit of a black box, solved all those very real, very practical problems.