COVID-19 Africa Watch talks to Tunde Fafunwa, Lead Advisor for the UNECA Digital Centre for Excellence, about the importance of digital identity for economic recovery.
The following are a few of the main takeaways from COVID-19 Africa Watch’s conversation with Tunde Fafunwa, Lead Advisor for the UNECA Digital Centre for Excellence:
- The pandemic has accelerated the transition to a cashless society. With the restrictions on movement set in place in response to the pandemic, online digital transactions have quickly become the easiest way to find information, receive services, and perform financial transactions. In many cases, performing online transactions requires digital identification.
- Digital identification can reduce the digital divide and improve access. It is a cornerstone of financial inclusion. Digital identification can make it easier for women, minorities, and populations at risk to access financial tools, payment systems, and government benefits.
- A significant challenge to conducting widespread registration for digital IDs is that less than 30% of new births on the continent are recorded with birth certificates. It is difficult for individuals without birth certificates to procure foundational IDs. Nonetheless, it is possible to conduct widespread registration and creation of digital IDs using other kinds of records, such as election records and population databases.
- The rollout of an identification system in today’s environment involves a higher degree of financial regulation, security overviews, data privacy safeguards, internal administration, and political will than it did ten years ago in India, for example. For digital ID systems to be successful in Africa and to realize their potential, there is a clear need to elaborate these systems with strong political leadership and with inputs from a broad range of stakeholders.
The interview was conducted by Esther Kamwimba Siyanda, an IFC-Milken Institute Capital Market Scholar from the Ministry of Finance of Zambia. A transcript is available below.
Hello, my name is Esther Kamwimba Siyanda. I work at the Ministry of Finance in Zambia, and I am an alumna of the IFC Milken Institute Capital Markets Program. Today, I’m very delighted to welcome to COVID-19 Africa Watch, Tunde Fafunwa, who is the lead advisor at the United Nations Economic Commission for Africa’s Digital Center for Excellence.
Tunde, you have made efforts towards building digital identity systems across Africa. In this regard, you are responsible for initiatives across digital IDs, trade and economy, and also the implementation of a digital transformation strategy for Africa. So, I want to start our discussion by asking you this question: Could you make the case of why now, in the midst of this pandemic, is the right time to pursue the issue of digital identity?
Thanks Esther, nice to be here with you. The case for digital ID is significant, and we’d say overwhelming. Even prior to the pandemic, we know that the research shows that more than 500 million Africans do not have a foundational ID from which they can fully transact business, get benefits from the government, etc. And with the pandemic, we know that while the health effect has been significant, the economic effect, particularly in Africa, has been the key factor, with many governments restricting movement, locking down, etc.
Now, the move towards a cashless society to reduce physical interaction is gaining traction: many locations are closed or restricted in terms of access, so virtual transactions –online digital transactions – become the key way to get information, to get services and to perform financial transactions. And in many cases, the only way to do that is with some kind of digital identification. So a digital ID is even more important now than it was before.
Would you maybe explain to us some of the models for digital ID around the world that UNECA is looking at, and what has worked, what hasn’t worked?
The reference model for foundational IDs is Aadhaar in India, which is now 10 years old, where they put a universal approach to digital ID, with minimal requirements, focused purely on identification. It did not give any rights of citizenship or even residency or anything else. It was purely identification. And that was very successful. A lot has been learnt. Things would be done differently today, but the objective was achieved, and it has served the country very well.
There are other, more comprehensive approaches to IDs, including Estonia that has a completely digital approach across the entire government ecosystem. But in today’s environment, ID has become very complex because of the implications on security, on financial transactions, and the need to ensure that it is covering multiple uses. So, we really think that a new, federated approach to ID is developing, where there can be multiple sources of identification.
You mentioned 500 million Africans do not have IDs, so I’m wondering about the challenges that those parts of the population have been facing. How are they going to be addressed vis-a-vis digital IDs?
Birth certificates are a key part of the mechanism for getting to digital identification. Most countries use that as part of the civil registration and vital statistics. And Africa is no different.
“The challenge in Africa is that less than 30% of new births are recorded with birth certificates. That has led to the large number of people without a foundational ID or basis of getting a foundational ID.”
The challenge in Africa is that less than 30% of new births are recorded with birth certificates. That has led to the large number of people without a foundational ID or basis of getting a foundational ID. But as I mentioned, we need to use, across the continent, whatever records are available. And that means election records, that means population databases, and conduct a widespread registration. It requires organization, but it’s possible. Malawi has done that, where they registered almost 18 million citizens over a period of several months. So it can be done quickly and effectively where there’s a political will to do so.
Now coming to issues of financial inclusion, how would digital ID help improve financial inclusion in Africa? And why is it important for the financial inclusion of women?
The benefit of digital ID is that it provides an opportunity for women, for minorities, and for populations at risk to gain access to financial tools, to payment systems, to the ability to receive benefits. Digital ID can and should be used to reduce the digital divide and improve access, but it has to be designed in. The benefits of doing so are enormous. The research shows that benefits payments to families are twice as likely to be used for the benefit of the family – for health, education, and food security – when given to women rather than when given to men.
From what you have explained, there seems to be both focus and interest in digital ID across the board, both from government and the private sector. However, the actual pace of implementation seems slow. Why is that?
Yes. Great question. When Aadhaar was rolled out in India 10 years ago, or when M-Pesa, which many people know of as the mobile payment system in Kenya, was also rolled out 10 years ago, it took off very quickly. It caught people, government, markets, policymakers in some sense unaware and was deployed and rolled out very quickly. The benefits of that have been clearly documented.
“A rollout of an ID system in today’s environment involves financial regulators, involves security overview, involves internal administration, involves the political decision-making, because identification and counting people and different groups have political implications.”
The challenge is that once the benefits are seen and the impact, some of it also on the negative side, is seen, then there are many more stakeholders that need to be involved. So a rollout of an ID system in today’s environment involves financial regulators, involves security overview, involves internal administration, involves the political decision-making, because identification and counting people and different groups have political implications. It becomes a lot more complicated in today’s environment than it might have in the past. In order to be successful, there’s a very clear need to convene discussions and planning with broad stakeholders.
I know that a number of countries have started ratifying the African Continental Free Trade Agreement, and digital ID becomes really key, especially when you look at cross-border trading. So how is digital ID being treated in this trade agreement?
Well, the Continental Free Trade Area protocols are being pursued as we speak. There are waves of discussions and the discussion on the digital side has just been formalized with the e-commerce protocol. So that will provide the overall umbrella for the digital transactions, digital payments, digital ID, digital trade. While the African Union is the overall body, and the treaty has been ratified across the continent, it still requires these very complex discussions on rules and protocols. The Economic Commission for Africa’s approach to this is, while those are developing and ongoing, to provide the technical work, the use cases, and the pilots that we are currently engaged in. These can act as references to the discussions and provide real test cases as those protocols are being discussed and finalized.
Thank you so much. We’ve come to the end of our discussion. The Milken Institute and I wish to thank you once again for your time, and please keep up the great work. Goodbye and thank you.
Thank you, Esther. It’s been a real pleasure.
COVID-19 Africa Watch tracks major developments and policy announcements from across the continent and also offers a curated selection of analysis on how the pandemic will impact African economies and development efforts. The site is a project of the Milken Institute’s Global Market Development Practice.