Report proposes digital ID changes for financial inclusion of forcibly displaced persons
A report produced by the Alliance for Financial Inclusion (AFI) on the state of financial inclusion in three African countries has made policy recommendations aimed at clearing the hurdles preventing forcibly displaced persons (FDPs) in these countries, and others, from having access to financial inclusion services.
Some of these hurdles as mentioned in the report include the lack of officially recognized identification documents, the limited number of access points where formal financial services can be obtained, as well as strict KYC policies which have been put in place by some governments, mostly to prevent money laundering and the financing of terrorism.
Eswatini, Mauritania and Rwanda were used as case studies for the 42-page report which was put together from interviews with stakeholders representing national governments, international organizations and the private sector.
The report examines the key challenges and bottlenecks preventing the wider adoption of digital ID and digital Know Your Customer (eKYC) to enhance financial inclusion for FDPs, and proffers policy recommendations which can be implemented by other financial policy makers and regulators not only in the countries understudied, but across the continent.
Authors of the report note that it provides insights into the extent of digital ID and online KYC implementation for the financial inclusion of FDPs in the three countries, and also discusses the risks and opportunities. It equally looks at data protection and data privacy policies.
Specifically, the report considers the situation of digital ID access for FDPs in the three countries, access to formal financial services, the KYC ecosystem, data protection and privacy, and the steps taken to ramp up financial and economic inclusion for FDPs. On the whole, the report finds that in each of these areas, there has been meaningful progress recorded, but holds that more has to be done in order to improve the financial inclusion situation.
The report rolls out country-specific as well as general recommendations.
For the case of Rwanda, the report calls on the national identification authority of the country (NIDA) to enhance its capacity to issue more refugee identification cards. It also urges the country to streamline KYC regulations to address systemic gaps; enable KYC for refugees based on their refugee ID; increase access to mobile money services; improve access to more complex financial services such as loans, remittances, and insurance; enhance the financial and digital literacy of refugees, and ensure the data protection and privacy of refugees.
In Mauritania, recommendations include the need to make the digital ID ecosystem more efficient for FDPs; consideration of launching an online KYC facility for FDPs; leverage the potential of mobile money; streamline eKYC regulation to address systemic gaps; and improve access to more complex financial services.
Per the report, Eswatini should include FDPs and stateless persons in the digital ID system; conduct a sectorial risk assessment for FDPs and facilitate access to KYC documents; provide regulatory clarity to financial institutions on KYC process for FDPs; expand financial infrastructure where FDPs reside, as well as improve the financial literacy of FDPs.
Concerning general recommendations which are intended to help developed and developing country financial policymakers and regulators leverage digital ID and online KYC to improve financial inclusion for FDPs, the report emphasizes the need for greater collaboration to include FDPs in national ID systems; conduct an assessment of the state of digital infrastructure; develop appropriate policies and regulations to provide recognition to FDPs; co-design digital financial literacy programs with humanitarian organizations and FDPs themselves; put in place data protection and privacy laws, and also conduct a data privacy risk assessment.