ADF okays $8 million to facilitate digital banking system in West Africa
April 10, 2023223 views0 comments
By Cynthia Ezekwe
The board of directors of the African Development Fund (ADF) has approved $8 million to facilitate the digital banking system in West Africa.
A statement by African Development Bank (AfDB) disclosed that the fund was for establishing a digitally interoperable unique bank identification system in West Africa, and to establish a harmonised customer identification framework for the Gambia, Guinea, Liberia and Sierra Leone.
AfDB noted that the implementation of the project will commence in July 2023, led by the West African Monetary Institute (WAMI), and will work with central banks of the participating countries and in close collaboration with banking and non-banking financial service providers.
It further stated that the new bank identification system will link the banking accounts of individuals across different financial service providers, as the project is expected to enhance financial sector efficiency within the participating countries, leading to increased access to finance and further regional integration efforts.
The multilateral development finance institution disclosed that over 53 financial service providers across the participating countries would be included in the project, which will allow them to verify their clients’ identities on an on-going basis with the “Know-Your-Customer (KYC),” format, combat fraud, discourage loan defaulting and strengthen correspondent banking relationships.
It also stated that the KYC-compliant finance sectors will bolster trust and confidence and ultimately encourage access and usage of financial solutions for the customers.
Olorunsola Olowofeso, WAMI director general, said the Unique Bank Identification (UBI) and digital interoperability project was borne from the Bank Verification Number (BVN) success implemented by the Central Bank of Nigeria (CBN).
Olowofeso explained that the BVN, an 11-digit unique identity for each individual across the Nigerian banking industry, is tied to all bank accounts and has drastically reduced electronic banking fraud, non-performing loans and eliminated ghost names from the civil service payroll.
He further noted that the UBI will leverage existing national identification systems and help to strengthen financial integration in the West African monetary zone.
On his part, Ahmed Attout, AfDB director for the financial sector development department, welcomed the board’s approval, noting that it attested to the strong partnership between the bank and WAMI, while stating that Irrefutable and secure identification is fundamental to building financial consumer access and trust and overall development of the financial sector.