Identification Management in Nigeria: Innovations for Financial Inclusion

Abstract

About 41.6% of Nigerians have no access to formal financial services. Studies have shown that apart from factors such as distance to banks, financial illiteracy, irregular income, unemployment and complexity of account opening; lack of proof of identity documentation debars a significant number of persons from accessing finance. This work seeks to address the issue of proof of identity as a significant factor of financial exclusion in order to help citizens more easily fulfil mandatory Know-Your-Customer (KYC) checks as well as facilitate access to financial services including payments, savings, loans, pension and insurance. Significantly, the goal of citizens’ identification was entrenched as far back as 1984 in the International Declaration of Human Rights. Similarly, goal 16.9 of the United Nations Sustainable Development Goals (SDG) which envisions a legal identity for all by the year 2030 also mirrors this call. However, though the National Identification Management Commission (NIMC) was established in 2007 to oversee all matters of citizens’ registration, only about 30 million Nigerians have been registered out of the total national population of approximately 198 million. Using a doctrinal method of research, this work examines the reasons for the slow pace of registration by the commission and also attempts to offer solutions. This method of research is ideal as mostly legal literature and regulatory guidelines and policies are utilised in the analyses. Furthermore, the work draws examples from the regulatory landscape of jurisdictions such as Pakistan, Peru and India where positive strides have been achieved in the sphere of citizens’ registration. In Pakistan for instance, 98 per cent of the target population have been captured by the national identification program including socially disadvantaged groups with the help of mobile registration agents comprising of hikers, van drivers, mountaineers, bikers, and skiers to locate citizens even in the most remote locations. The author proposes a self-sustaining universal national identification system that provides Nigerians with the needed foundational identity to access financial services with a view to achieving financial inclusion as well as other social services. The paper also proposes an efficient national identification system that is cost-effective, inclusive and recognises the limitations of some Nigerians especially persons without documentation and those residing at a distance from banks. In addition, the shortcomings of the existing identification system such as funding strategies, mode of registration and logistics management are * Law Lecturer, University of Benin, Nigeria; PhD candidate, University of Cape Town, South Africa. 1. LEIGH ANDERSON ET AL., ITU-T FOCUS GROUP DIGITAL FINANCIAL SERVICES: REVIEW OF NATIONAL IDENTITY PROGRAMS, 24 (May 2016). 34 INDIANA INT’L & COMP. LAW REVIEW [Vol. 30:33 highlighted. Finally, a more effective means to reach excluded populations founded on emerging technology particularly digital identification using biometrics and associated technologies such as blockchains is suggested. The paper is expected to contribute to the growing body of literature on improving national identification and to add some thoughts to the global conversation on financial inclusion bolstered on an effective national identification system. Furthermore, the recommendations are intended to foster socially inclusive gains in several other sectors beyond the financial sector including agriculture, health, and social security. Finally, even though this work is specifically focused on Nigeria, the findings offer veritable lessons for other nations grappling with financial exclusion by reason of inadequate or unsuitable identification systems. This work is divided into 3 parts. Part I provides an overview of the national identification and financial inclusion efforts in Nigeria. Part II provides some insights into national identification in Nigeria while Part III highlights the value in developing a system based on biometrics and the positive link with financial inclusion. Keywords/Phrases Financial inclusion, financial access, national identification