Ethiopia Mandates Digital ID for Banking Transactions

The National Bank of Ethiopia (NBE) has mandated that all bank branches in Addis Ababa must verify customers’ identities using the Fayda ID, a digital identification system, starting next year. This requirement is part of a broader initiative to enhance financial inclusion and security in the country.

On January 1, 2025, the requirement will take effect in all bank branches in Addis Ababa, necessitating customers to present their Fayda ID to open or maintain bank accounts. By July 1, 2025, this requirement will extend to major cities across Ethiopia, further integrating the digital ID system into the banking sector.

The implementation of the digital ID system aims to improve the efficiency and security of banking transactions. According to the National Bank of Ethiopia, this initiative is designed to enhance financial inclusion by ensuring that all transactions are verified through a reliable and secure means of identification. The move is also expected to reduce the risk of fraud and money laundering, thereby strengthening the overall stability of the financial system.

The Fayda ID is a digital identification system that includes biometric enrollment and other advanced features. It is part of the Ethiopia Digital ID for Inclusion and Services Project, which aims to define terms for payment and other services using the digital ID. The use of digital IDs in banking is expected to streamline the process of opening and managing bank accounts, making it more convenient for customers while ensuring higher security standards.

The development reflects Ethiopia’s broader digital transformation efforts, which include the recent launch of the country’s first Public Key Infrastructure (PKI) by Prime Minister Abiy Ahmed. The PKI is designed to enhance digital security across various sectors, including banking, by enabling secure communication and data encryption.

Source: Capital Market Ethiopia

–

December 2, 2024 – by Ji-seo Kim