Mandatory digital ID for banking policy goes into effect in Ethiopia

An Ethiopian government policy requiring the mandatory use of the national digital ID otherwise known as Fayda for banking transactions such as the opening of a bank account has gone into effect in the capital Addis Ababa.

According to authorities, the policy will be implemented in a phased manner between now and December 31, 2026, in order to allow citizens who have not acquired the Fayda ID the opportunity to do so. The Fayda now has over 11 million registrations.

Since January 1, the measure has been effective in the capital, Capital Market Ethiopia reports.

The policy will be extended to bank branches in other major cities of the country from July 1, while a nationwide implementation is scheduled for January 1, 2026. All bank account holders are required to link their accounts with their Fayda ID by December 31, 2026.

The government says the policy is part of efforts to incorporate the digital ID into all aspects of nation life, thereby making access to important services easier. Specifically, the move aims to improve financial inclusion, enable banks to better verify their customers so as to reduce banking fraud, and to ensure data security and make transactions more secure.

Per the Ethiopia ID authority, the new policy not only brings the country in tandem with international best practises in the banking sector, it also sets the template for innovation and the creation of a robust financial ecosystem which is vital for the nation’s economic growth.

The move to make Fayda mandatory for banking operations was first announced last year, and it is a joint endeavour of the National Bank of Ethiopia (the country’s central bank) and the National ID Program (NIDP).

Support for 2025-2030 digital government strategy

The Fayda ID is considered an important component of Ethiopia’s digital transformation drive.

It is also vital in advancing the nation’s five-year digital government strategy which has got support from various quarters including from DT Global, an international development consultancy, through a European Union-funded project.

According to an announcement, the support from DT Global includes the building of a data exchange infrastructure dubbed EthioConnect whose technical design has been presented, with many technical standard documents in the process of being drafted ahead of a planned pilot.

The Ethiopia digital government strategy covers the period 2025-2030.

DT Global is also said to be helping in mobilizing financial resources for the implementation of the digital government strategy estimated at €100 million (US$103 million).

The strategy hopes to build on previous initiatives which the government has deployed technology to facilitate access to digital services for Ethiopians. This will be done, among other things, by introducing an agile and well-coordinated government, improving access to connectivity, strengthening the national cybersecurity architecture, enhancing digital skills, improving the deployment of more digital services, and supporting local innovation.

Article Topics

banking  |  biometric identification  |  biometrics  |  digital government  |  digital ID  |  Fayda  |  fraud prevention  |  identity verification