Biometrics and financial inclusion: A roadmap for implementing biometric identity systems in sub-Saharan Africa

Biometrics and financial inclusion: A roadmap for implementing biometric identity systems in sub-Saharan Africa

29 March, 2018    

The World Bank (2017) estimates that 1.1 billion people live without proof of identity. Nearly 50% of these people live in sub-Saharan Africa, where 454 million individuals are excluded from formal identify systems. In Nigeria,  78% of the population or 149 million individuals cannot prove their identity.

Lack of identity documentation varies in its severity as a barrier to exclusion depending on the country, but overall indicates a significant problem for financial services. For example, in Angola, 41% of financially excluded adults cited a lack of documents as the reason for being financially excluded, while in South Africa and Nigeria this figure was 14% and 12% respectively.

But why is proof of identity such a barrier to financial inclusion? The problem is that financial service providers (FSPs) require a multitude of documents to comply with their Consumer Due Diligence (CDD) requirements that many poor people lack access to. This includes basic identity documents with Proof of Address (PoA) tending to be the most problematic.

While consumers are often willing to go to these lengths to get access to a bank account, other solutions are emerging. For example, biometrics. Biometrics is an alternative way to identify individuals based on physical or behavioural traits.

Although a number of studies have explored the potential of biometrics in addressing identity challenges, the adoption and use of biometrics in Africa have been slow and uncoordinated at best. This is confirmed by the gap between the various approaches and the current practices on identity and biometrics.

This note seeks to understand the “biometrics journey” of countries and financial service providers (FSPs) and to help them select and adopt biometric approaches that have a lasting impact on financial inclusion, financial integrity and broader national development objectives.

It discusses the concept of identity and the link between robust identity systems and financial inclusion, highlighting the role that lack of identity plays in facilitating financial exclusion in SSA. It defines biometrics, unpacking the role of biometrics in the identity space and how biometrics can be a strong identifier. It looks at the use cases for biometrics as well as the barriers to the successful implementation of biometric identity schemes in SSA. Lastly, it presents a roadmap for implementing biometric identity in Africa to guide regulators, industry players and donors on how to best go about the process.

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This work forms part of the Risk, Remittances and Integrity programme, a partnership between FSD Africa and Cenfri.

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