Africa’s financial landscape is evolving with the advent of data and digitisation. The proliferation of smartphones and internet connectivity has led to a digital revolution across diverse sectors. For people and businesses, the convergence of finance and technology has deepened financial inclusion on the continent. This rise in financial transaction volume underscores the need for digital identification to help businesses conduct know-your-customer (KYC) checks and safeguard against fraud.
Additionally, fraudsters often attempt to use counterfeit or stolen national IDs to gain unauthorized access to regulated financial services. This prompted the widespread adoption of biometrics for robust identity verification as relying solely on document collection for a comprehensive KYC process is no longer sufficient.
Consolidation of national identity databases and identification cards has taken the forefront for governments across the continent as government services become digitised.
According to the Smile Identity H1 KYC report, there has been a noteworthy enhancement in the uptime of national ID databases across Africa this year, compared to the latter half of 2022.
Digital identity has become essential for accessing crucial government services like social welfare programs and tax payments, and they are fundamental prerequisites for obtaining functional IDs such as passports or driver’s licenses.
The significant thing about digital ID Verification in Nigeria is that you can now verify anyone’s identity across the country,” said Esigie Aguele, co-founder and CEO VerifyMe Nigeria at the 8th edition of the Inside Identity Series by QoreID, in partnership with TechCabal, on Friday, September 15. Despite this considerable improvement, it is important to acknowledge that safeguarding individual sovereignty over data and personal identities has become non-negotiable as we for digital transformation and financial inclusion. The narratives of privacy breaches and data misuse underscore the need for stringent regulations, ethical practices, and informed consent mechanisms that prioritise the rights and privacy of every individual.
Countries like Kenya, Nigeria, and South Africa have enacted data protection laws influenced by the EU’s General Data Protection Regulation (GDPR) to protect user data, ensure transparency, and hold businesses accountable for data handling practices. There has also been the consolidation of existing laws by several other countries in Africa to strengthen their data protection legal and regulatory framework.
However, Africa’s fragmented regulatory landscape remains a problem that requires a harmonised approach that respects the sovereignty of each nation while promoting regional collaboration. Striking this balance requires active participation and dialogue among stakeholders: governments, financial institutions, technology providers, and, most importantly, the people whose lives will be impacted by these advancements.
According to Saruni Maina, associate VP of Stablecoins segment at Flutterwave, “When it comes to regulations regarding compliance and data sharing, Africa needs to operate like a country to integrate data protection requirements or laws that are region-wide.”
Striking a harmonious balance involves crafting policies that acknowledge the unique identities and circumstances within Africa while fostering cross-border collaboration to enhance financial inclusivity.
Another critical aspect of this dialogue involves fostering digital literacy and educating individuals about the value and potential risks associated with sharing their data. Informed citizens are empowered citizens, capable of making conscious decisions about their data and its usage.
Additionally, transparency in data practices and easy-to-understand consent mechanisms are essential to build trust between all stakeholders.
Transparency plays a pivotal role in building trust and encouraging active participation from the public. People need to understand the advantages of sharing their data and engaging in robust ID verification processes. Ensuring comprehension, along with easy-to-understand consent procedures, empowers individuals to make informed decisions about their data sharing and identity verification. Data protection expert Ilamosi Ekenimoh, believes: “There needs to be more transparency by companies and regulators. People need to know what you’re using their data for, to trust you with their information.”
The importance of a secure and reliable digital identity system cannot be overstated in an increasingly digitised world. However, there is also an equal need to balance these innovations with safeguarding data and privacy. Esigie recommends that the government needs to have non-technological discussions to provide structure for innovators to build technology on.
This article is part of the Inside Identity Series brought to you by TechCabal in partnership with QoreID. QoreID is a dedicated digital identity and analytics solution for B2B.
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