Digital IDs Poised to Become Primary Form of Identification in Ethiopia’s Financial Sector

The National Bank of Ethiopia and the National ID Program (NIDP) are planning to onboard all customers in the financial sector onto the National digital ID platform.

The initiative, which aims to establish Digital IDs as the primary form of identification in banks and grant them legal acceptance across all financial institutions, is scheduled for implementation in the upcoming Ethiopian fiscal year.

The registration process for the IDs will occur in selected bank branches as part of the national enrollment drive and will also involve the parallel use of Digital IDs in the financial sector’s eKYC (electronic Know Your Customer) procedures.

In a joint press statement, the parties involved stated that the ID platform, named ‘Fayda’, would offer a “reliable and real-time identity verification system” and can serve as a basis for onboarding new customers and introducing new digital products while mitigating associated financial risks.

In late March 2023, the Ethiopian House of People’s Representatives approved the Digital Identity Proclamation. With support from the World Bank, the government aims to register all eligible adults within its population of 120 million with a biometric digital ID by the end of 2025. The digital biometric ID includes an individual’s name and gender, an iris scan, and fingerprints.

According to the National ID Program, more than 1.4 million people have already registered for the IDs. This year, the National ID Program (NIDP) aims to enroll an additional 6 million people. Currently, there are approximately 155 registration locations spread across Ethiopia.

In 2021, the National Bank, following the passage of a new directive that enhanced Know Your Customer (KYC) guidelines, set a deadline for banks and microfinance institutions to meet the new requirements. This led to financial institutions scrambling to obtain the necessary information from their account holders.