Financial Inclusion: Harmonising National Identity

In our financial inclusion research, one of the market-enabling policies we identified is the need for a global identity system for Nigerians. The plethora of identity systems viz-a-viz the lack of proper verification led to the bank verification number (BVN) system for the financial services industry. Notwithstanding the successful deployment of BVNs, the number of unique bank account holders (31.4 million as of December 2017) still falls short of financial inclusion targets.

The inability of citizens to establish identity is a major inhibitor to accessing financial services. Opening a bank account in Nigeria requires the prospective account owner be subjected to Know Your Customer (KYC) checks defined in CBN regulatory guidelines. Among other things, KYC requires proof of identity and address. The inability of a significant segment of the citizenry to offer proof of identity despite being cash-rich is one of the causes of high exclusion numbers and also the slow growth of mobile money adoption. In spite of the provision of tier-1 accounts which do not need any form of identity, the transaction limits imposed are constraining.

More than 60 percent of Nigerians lack a single form of identification whatsoever. This was unveiled at the “Strategic Roadmap for Developing Digital Identification in Nigeria” workshop hosted by the National Identity Management Commission (NIMC) last month.

A proper national identity framework is integral to effective delivery of all government’s responsibilities to its citizens. From security, to privacy to social welfare programs, the lack of a cohesive framework capturing the details of every citizen means that many people are going to be excluded. Ergo, our reality when we consider financial exclusion figures — establishing identity is central to onboarding excluded populations into the formal financial services ecosystem.

The issues surrounding identification in Nigeria are numerous, some of which include the lack of a truly inclusive national identity system and fragmentation of identity records and databases. For instance, according to NIMC, the identification ecosystem comprises of more than 13 Federal agencies and 3 State agencies offering ID services. In spite of this overlap, only 38 percent of Nigerians have a form of official ID.

Multiplicity of identity databases and a need for harmony

The personal information captured across the databases in the federal and state agencies includes unique biometric datasets that make capture, storage and management all the more expensive. This fiscal cost is raised when the lack of integration of the various data services is added to the mix! The Nigerian government manages more than 13 unique sets of identity systems that do not talk to each other. In addition to the costs, this anomaly creates significant amounts of data replication and raises questions on data protection and privacy.

With the duplication of identity systems, the ensuing vision of one wholesome identity database requires harmonization across various dimensions. In January 2015, the Federal Government convened a Harmonization Committee, led by NIMC, with the responsibility of integrating the multiple ID systems in Nigeria and also speed up the rollout of official IDs.

Supported by the World Bank, the harmonization exercise defined in the Strategic Roadmap will have a significant impact on the role of NIMC and identity management. Notwithstanding, the objective remains to have a centralised identity store (NIMC’s national ID database) with the aim to speed up the issuance of a national identity number (NIN) to people.

While the harmonization scope is multi-dimensional, there are currently two proposed approaches — centralized vs. federated. The table below explains the differences by dimension:

Creating and managing a wholesome identity database and infrastructure is a public good that is within the purview of government responsibility. Through a strategic roadmap, the government hopes to create a clear path for scaling access to an inclusive identity infrastructure at minimal cost. The plan is that, within a timeframe of 3 to 5 years, Nigerians will have access to unique digital IDs. The roadmap seeks to consolidate identity management under the national identity number (NIN), but is cognizant of the legal and technical implications given the statutory obligations assigned to other government agencies.

Foundational and Functional IDs

As of September 2017, NIMC is reported to have enrolled about 21 million Nigerians. Obviously, there’s still some ways to go but the capture approach is also under review.

The strategic roadmap seeks to reduce the amount of data collected by NIMC to establish identity. Currently, the NIMC identity system captures everything and the kitchen sink about every Nigerian! But, does NIMC really need over 70 data attributes to establish identity save for the basics — demographic data (name, gender, date and place of birth, address) as well as biometric data (10 x fingerprints, iris scan and facial photo)? This basic information is known as foundational identity. Where citizens may require additional government services like passports (immigration), drivers license (road safety) and the like, it is the intention that these agencies acquire the requisite functional information.

Basically, the proposal seeks to build an identity stack. At the lowest level, foundational identity is established with minimal data. Thereafter, functional identity can be acquired based on the need of government services.

This sounds more logical and easier to scale and manage. It also makes the harmonization effort more worthwhile. At the moment, the immigration office is requiring NIN for all new passport applications and renewals while new NIN enrollments are also requesting for BVN! The identity thread is getting thicker and stronger thereby ensuring that the complementary data cleanup exercise to ensure all data fields are accurate will be gargantuan.


The transformational benefits of identification cannot be overstated. Just look at India’s Aadhaar for inspiration!

For increased adoption of the NIN, government must prioritize important use-cases, such as making it a prerequisite for social safety net programs and financial inclusion.

Establishing identity for citizens provides a bedrock upon which several other innovations and initiatives which would further improve lives can be launched. With the implementation of the Strategic Roadmap and harmonizing the national identity database, we would have resolved a major inhibitor to financial inclusion plaguing the ecosystem at the moment.



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Sustainable and Inclusive DFS

Sustainable and Inclusive DFS

We work with government, financial services regulators, donors and the private sector to drive financial inclusion in Nigeria through #research #advocacy