AfDB earmarks $8m to establish interoperable bank ID system in 4 West African countries

The West African Monetary Institute (WAMI) is leading the implementation of a project aimed at creating an interoperable unique digital ID for banking and a harmonized customer verification network for four countries of the West African Monetary Zone (WAMZ).

The new bank ID system will also leverage the national identity systems of the concerned nations and help them in their efforts to enhance financial integration.

According to a press release, the African Development Fund (ADF), the concessional entity of the African Development Bank Group (AfDB), is making available the sum of $8 million to get the project done in The Gambia, Guinea, Liberia and Sierra Leone.

The funds were approved by the Board of the institution on 29 March.

The project, expected to commence in July, will be implemented with the collaboration of the central banks of these countries.

The main purpose of the new bank ID system is to enable the linkage of bank accounts across different financial service providers in what is seen as a financial inclusion push.

More than 53 financial service providers will be part of the system which will be built to enable them carry out Know Your Customer (KYC) checks, anti-fraud operations, reduce debt payment defaults, and boost cordial relations among the service providers.

Also, the system, according to its implementers, is to enhance the efficiency of the financial systems of these countries with the goal of increasing access to finance and ramp up monetary integration with one another.

“The Unique Bank Identification (UBI) and Digital Interoperability project was borne from the success of the Bank Verification Number (BVN) implemented by the Central Bank of Nigeria. The BVN, an 11-digit unique identity for each individual across the Nigerian Banking industry, is tied to all bank accounts and has resulted in a drastic reduction in electronic banking fraud, non-performing loans and elimination of ghost names from the civil service payroll,” said WAMI Director General Olorunsola E. Olowofeso.

Also praising the move is the AfDB Director for Financial Sector Development Ahmed Attout who underlined that a secure bank ID system is important in “building financial consumer access and trust and overall development of the financial sector.”

Nigeria to close millions of bank accounts without bank ID

Meanwhile, in Nigeria, which inspired the upcoming WAMZ project, the country’s central bank (CBN) has announced plans to clean up bank accounts which are yet to be linked to the bank ID (Bank Verification Number — BVN).

These are mostly Tier-1 accounts which are opened with little or no documentation, daily newspaper Leadership reveals.

The Central Bank of Nigeria’s director of risk management Blaise Ijebor said on a panel recently that Tier-1 accounts are among the factors identified by the CBN as favoring banking fraud, saying most of them are not linked to the biometric BVN and are thus an easy entry point for fraudsters.

Other factors he mentioned include regulatory non-compliance by some banking institutions especially digital banking institutions, and then the ability by fraudsters to exploit all avenues that allow them access to bank accounts in the first place, notes Leadership.

It is not clear when the CBN will begin the clean-up exercise of the accounts, but Ijebor says the move is part of efforts by the banking regulator to put in place a more inclusive compliance mechanism.

This, the official says, will drastically curb fraud as banking agents will be re-granted the powers to oversee account opening and KYC compliance procedures for those opening new accounts.

Around 700,000 BVNs were issued to bank account holders in Nigerian between April and July last year.

Article Topics

Africa  |  banking  |  digital ID  |  ECOWAS  |  financial inclusion  |  interoperability  |  KYC  |  Nigeria