Why the Ethiopian Economy Needs a National ID?

Let’s say you are an Ethiopian living in an area categorized as deep-rural by the Ethiopian government. Chances are that the Ethiopian government doesn’t identify you for various reasons, including the high identification cost, complex administrative requirements you won’t fulfill, and geographical constraints. This entails that you wouldn’t be able to access various public and private services that are crucial for economic growth and development that is inclusive for all.

To address such problems, governments worldwide are developing a variety of national digital ID programs, with the NID program in Singapore and the Aadhaar program in India serving as success stories. To achieve this, Ethiopia created the Bureau of National ID Program to identify 70 million Ethiopians by 2025. The initiative is linked to several regional and global development programs, including SDG 16.9, AU 2063, and AfCFTA 2063.

Both biographic (name, age, and date of birth) and biometric data (fingerprints, iris pattern, and face shape) are recorded by the Ethiopian Digital ID system. The Fayda Identification Number (FIN), a unique 12-digit number generated by the Digital ID system using an individual’s data points, is given to a person upon successfully completing the process.

The Ethiopian National ID program will have several advantages over current identification programs in Ethiopia. The Kebele ID, issued by the lowest level of governmental administration, is currently the identification method most frequently used in Ethiopia. The Kebele ID has several shortcomings, such as the absence of a central registry, corruptibility, identity duplication, and the inability to last over time.

Several research articles discuss the benefits and drawbacks of national identification around the world. In Ethiopia, national ID will stand to have a multi-faceted impact on addressing the problems of economic growth and opportunity fairness on two fronts, financial inclusion, and governance.

Financial inclusion is one of the primary benefits of the Ethiopian National ID. As demonstrated by India’s National ID program, more people will have access to formal financial products by speeding up the KYC and bank account creation processes.

To facilitate the account creation process and provide the necessary data based on the user’s consent, National IDs can also collaborate with mobile money providers like Tele-Birr and CBE-Birr. Aadhaar has proven to be a key building block in India’s efforts to achieve financial inclusion through the Pradhan Mantri Jan Dhan Yojana (PMJDY) program, which saw the creation of 430 million new financial accounts between 2014 and 2021.

Digital IDs can make governance easier for the Ethiopian government. Regarding the effective management of social programs, having a central system for identification by governments can help reduce spoilage, especially with cash subsidies and distribution programs being major beneficiaries.

Governments in some countries have been able to remove phantom workers from payrolls thanks to systematized national IDs, which have also made it possible for those citizens who live in remote areas to access government services and realize their constitutional rights to identification and service delivery.

Despite the benefits Digital ID offers the Ethiopian economy, there are several drawbacks as well. The main concern over the National Digital ID is the concern over data privacy. Many critics have claimed that governments possessing biographic and biometric information about their citizens poses a threat to their right to privacy and restricts several unalienable rights of people, which could impact how institutions function and how laws are applied.

The initial cost of establishing a national ID system and whether the cybersecurity in place can protect the sensitive data stored on a cloud system are some of the issues critics bring up. The cost of national ID systems is high because various items must be purchased, including biometric equipment and personnel, as well as ICT and cloud-related expenses. Additionally, the foundation upon which cloud systems are built demands the highest level of security.

In my view, Ethiopians stand a lot to gain from having a unified system for identification as it aids our development. Increased access to finance can solve many of the challenges facing MSMEs, who are in a position to reduce unemployment in both urban and rural areas. Efficient governance can reduce money spoilage, translating into better spending for social and developmental infrastructure. Ethiopians deserve to be identified, and the time is here to have a Fayda Number.