Somalia leverages its national ID system to drive financial inclusion

The Horn of Africa nation of Somalia has taken its digital transformation push a notch high with a recent Memorandum of Understanding (MoU) that seeks to drive financial inclusion using the country’s national identification apparatus.

Somalia launched a comprehensive national ID program a year ago. Since then, the government has been using the momentum and support from partner entities to expand its benefits for the population of 18 million people, per UNFPA figures.

This explains why the country’s National Identification and Registration Authority (NIRA), this week, sealed a deal with the Somali Banks Association (SBA) to facilitate access to financial services in the country using the national ID. The SBA is made up of 13 Banks operating in Somalia.

According to a joint statement issued after the signing of the MoU on August 25, the two parties said the move aims to facilitate the identification of bank customers nationwide using their National Identification Number (NIN), thereby enhancing access to banking and related services.

“Identifying customers through their National ID will play a pivotal role in advancing the country’s economy, aligning our business practices with global standards, simplifying banking processes, ensuring accurate customer information, and reducing costs associated with managing fragmented identities,” the announcement says.

“Moreover, the use of the National ID will significantly mitigate financial risks, including those related to legal violations, fraud, and money laundering.”

While NIRA is already making inexorable efforts to facilitate citizen enrollment for the national ID program, it is believed that the partnership with the SBA will help “bring registration and National ID issuance closer to the public, ensuring that every resident of the country can obtain a unified identity that facilitates access to essential financial services.”

This, they say, will be done by carrying on with “widespread public awareness about the importance of the National ID in driving economic development and ensuring access to modern financial services that comply with international standards and procedures.”

In his remarks at the MoU signing ceremony, Somalia’s Minister of Interior, Federal Affairs and Reconciliation, Ali Yusuf Ali said “the integration of the National ID System and banking services will enhance financial security as well as compliance with national and international laws.”

“This integration is vital for bolstering financial security, increasing public trust, and ensuring strict adherence to international regulatory standards, thereby contributing to the overall stability and transparency of the financial sector.”

Other speakers at the event such as the Deputy Prime Minister of the Federal government, Salah Jama; the Governor of the Central Bank of Somalia, Abdirahman Mohammed Abdullahi; the CEO of the SBA, Yasin M. Ibar; the Deputy Minister of Finance, Abdiqafar Elmi Hange; Minister of Communication and Technology, Mohamed Adan Moallim, and the World Bank Country Director for Somalia, Kristina Svensson, all praised the partnership and highlighted the crucial role the national ID system can play in furthering the country’s development pursuance.

Recently, NIRA held consultations with some national stakeholders and international partner organizations to review the legal framework and technology used in the national ID program, the goal being to strengthen the system and make it more relevant and impactful.

In a blog post published in June, the World Bank outlined suggestions which fragile states like Somalia must undertake to reform their financial systems and enhance service delivery for their populations.

The points include states understanding their uniqueness, setting up market-based banking and financial systems, strengthening the capacity of agencies fighting money laundering and other financial crimes, building strong and modern payment systems, and taking steps to empower small and medium-sized enterprises who form the backbone of the economy of such countries.

Article Topics

biometrics  |  digital identity  |  financial inclusion  |  national ID  |  NIRA Somalia  |  Somalia