June 4, 2012 -
A new “know-your-customers” exercise will commence by the Central Bank of Nigeria on September 1, 2012. The exercise aims to adopt a new national identity number (NIN) that will be used for all financial transactions.
A circular issued by the bank compels the financial sector to capture its customers’ biometrics and issue them NINs and general multi-purpose identity cards. The NIN is an eleven-digit number that will be issued to an individual customer. It is unique and is unchangeable. Verification infrastructure will be provided to link the customers’ bank accounts to the issued NIN within a National Identity Management Commission (NIMC) database. All these tasks are expected to be complete by December 31, 2012.
Convergence is underway to integrate various sources of data under one system, entitled the National Identity Management System (NIMS). This is in line with the NIMC Act 2007’s objective “to establish, operate, maintain and manage the new NIMS, which is the avenue for achieving government’s desire to develop and deepen the consumer credit sector, enable e-payments, facilitate financial inclusion, develop commerce and harmonize all existing and future identification schemes.”
Presently, the Nigeria Interbank Settlement System is working on enabling banks to conduct identity verification on NIMS.
The current effort to come up with one standardized system is key to future development of Nigeria’s financial system, according to the Central Bank of Nigeria.
In a policy statement the bank has noted: “The absence of a central standardized identity database, and the relevant infrastructure to support access to this database, for the verification and authentication of identity, have had a constraining effect on the country’s growth and development, effective credit administration, effective administration of most government services and collation of accurate data and statistics that could be leveraged on to drive effective planning, both in the public and private sectors.”
Will mandatory biometric verification improve the Nigeria banking system? Will it reduce fraud?