Voice of the Industry

New frontiers: the challenge or success of digital IDs in emerging markets

Tuesday 3 September 2019 08:23 CET | Editor: Melisande Mual | Voice of the industry

Digital IDs implementations have always come with challenges. But have emerging markets reached the success? Malaysia and Nigeria are two cases worth studying

A digital identification or digital certificate is the electronic equivalent of an individual`s identity card, which is used to demonstrate their identity and right to access information or services online. These electronic documents are issued by a Certification Authority, and aim to unlock access to banking, government benefits, education, and other services. However, digital ID programmes have had mixed success to date: while some have failed to attain modest levels of usage, others have achieved large-scale implementation (e.g. BankID in Sweeden, eIDAS in Europe). This article focuses on the approaches, challenges, and outcome of digital IDs implementation in emerging markets: in Asia: Malaysia, and in Africa: Nigeria. Malaysia has addressed this topic since 1999, having so far an advanced progress, whereas Nigeria started the digital ID programme quite recently, having a gradual adoption. But do these two countries have the same stories? Their perspectives and learnings are presented below.

Malaysia’s digital drive

The Malaysian Communications and Multimedia Commission (MCMC), together with the ministry of the country, and Malaysia Digital Economy Corporation planned to co-operate on a digital ID system, which has just been launched on August 2019.

The goal of this project is to create a ‘platform of trust’ in the cyberspace, as this national digital ID is meant to enable ‘trusted ecommerce transactions, where both the seller and buyer are verified using a secured national digital ID system’. Thus, through identity verification, transactional crimes and fraud can be reduced or eliminated.

Time for a change

This is not the first time the Malaysian government aimed to create such platform. In 2011, as part of the Economic Transformation Programme, the 1Malaysia email project was designed to form the basis of a national digital ID. This initiative was meant to provide an official email account and ID for Malaysians, which would allow them to receive statements, bills, and notices from the government. This initiative was abandoned because of financial irregularities and fraud accusations.

The current form of identity verification is a compulsory card – MyKad – for citizens with ages between 12 and above. In 1999, the Malaysian government awarded the MyKad project to the Government Multi-Purpose Card Consortium, and since then, several government agencies collaborated on the project – the lead government agency is the National Registration Department. MyKad comprises Malaysians’ national ID, their driver license, immigration and health care records, and it allows transportation e-payments and banking services, as well as it enables payment applications. The card has complete ATM functionalities, which support most of the top-ranked Malaysian banks.

All that being said, in October 2018 the minister argued that the new solution ‘is not meant to replace the MyKad nor would it be mandatory for everyone’, but it aims to complement the existing ID card. The goal is to update the MyKad identification card system with something similar to India’s Aadhar model – which uses unique random 12-digit numbers –, as well as to avoid duplicity of payments and fraud. Moreover, to join an organisation, citizens are currently asked for a photocopy of their MyKad, which, according to the minister of Malaysia, ‘is not an example of trust’. So, a new digital ID with a form of identification that can’t be tampered with and a system that would safeguard personal information is crucial in the country.

Nigeria’s journey

2014 marks the start of the broadest financial inclusion program in Nigeria, when the country revealed a new eID program for its almost 170 million inhabitants. Through this, the country aims to create a cashless economy, a more effective governance, and to ‘stimulate economic growth, investment, and trade’. The Nigerian Identity Management Commission (NIMC) is the project lead, and its new Mastercard-branded identity card has electronic payments functionalities with which Nigerians can deposit funds, receive social benefits, or engage in financial transactions.

Thus, citizens of 16 years of age and above are provided with an official proof of identity, which can be used as follows: 

National identity card

Travel document

Electronic ID - the card comprises the National Identification Number (NIN), the holders address, name, and other details

Biometric eID - fingerprints are captured into the card

Payment card - used at ATMs or for transfers; it allows electronic payments with 13 applications (e.g. Mastercards prepaid payment tech).

NIN – a Nigerian panacea?

Prior to 2014, Nigeria had no unified national system for recording identity data, hence the card’s goal is to harmonise all national databases (e.g. drivers’ licences, voter registration, health, tax, national pension commission) into a single shared services platform.

As per an Australian report, ‘Nigeria experiences high rates of document fraud. Most documents, from birth certificates to diplomas, can be falsified and procured’, while the Inter-Bank Settlements Systems estimates that Nigeria lost USD 800 mln to electronic fraud between 2000 and 2013. Another issue is the lack of access to banking, since 70% of adult citizens do not have a formal bank account. In 2013, NIMC suggested that ‘75% of ID cards in Nigeria are counterfeits without any form of verification or authentication’ and over 100 million citizens have no official identity at all. The new e-ID card wants to solve all these issues, as it offers Nigerians a high level of security (its computer chip embedded eliminates the possibility of counterfeit cards) and the government can avoid financial exclusion in the country, as the unbanked and under-banked are enabled to gain access to mainstream economy.

To enroll, an individual’s demographic and biometric data (e.g. capture of 10 fingerprints, facial/iris picture) are recorded for authentication. This ensures that no duplicates are found on the system. After the registration, NIMC issues each Nigerian with a unique NIN, and within 12 months after each citizen receives its NIN, the national e-ID card will be issued. NIMC explains NIN’s importance in comparison to a physical card which ‘can be discarded’, while the ‘number is for life’. The number is intended to be used ‘for all transactions in Nigeria requiring identity verification’ (e.g. opening bank accounts, obtaining driver’s license, voter’s card).

The good, the bad, and the…facts

As per the World Bank, less than 50% of Nigerians had any ID card at all, and 9% of citizens had a national ID number. The results of a Global Findex Survey taken in 2018 found that 33% of those individuals who do not possess an ID argue that it is too difficult to obtain one. At the same time, almost 20% blame the lack of supporting documentation.

Nigeria’s National e-ID was launched on 28 August 2014, however its adoption rates are low (below 10%). Complementary applications, including drivers license or e-services (e.g. eVoting, eHealth, eTransport), are in plan to be implemented, with Gemalto’s Trüb and Auspoint being selected as suppliers for Nigerias multi-purpose e-ID card.

In regards to the implementation, NIMC – the body who handles the administration of the identification data – has already registered 37 million Nigerians by May 2019. Also, the NIN use became mandatory in January 2019, and officials in the country have planned to build a national digital identity platform, which is meant to support ecommerce, e-payments, e-transactions, and other innovations by 2021.

Take aways

Whether these countries had an early inception or not, whether they advanced rapidly or they took baby-steps in their implementation, both Malaysia and Nigeria intended to overcome the bumpy road from the past, and to draw new identities in accordance to their own plan for the evolutionary changes. If they already achieved this or will achieve this successfully…it’s a matter of ‘wait and see’.

About Simona Negru

vspace=2A graduate of English Language and Literature studies, with an MA in American Studies, Simona is always on the lookout for the best and new stories to capture. A passionate content editor, Simona is keen on discovering and sharing all the relevant news and topics on both distributed ledgers and cryptocurrencies, as well as online security and digital identity, all while finding the hottest trends in the industry for The Paypers’ readers.

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Keywords: digital ID, identity, banking, government, authentication, security, ecommerce, verification, financial transactions, fraud, biometrics, payment cards, fingerprints, Malaysia, Nigeria
Countries: World