Ethiopia Mandates Faida Digital ID System for New Bank Accounts in Addis Ababa

The National Bank of Ethiopia (NBE) has implemented a new requirement mandating all banks in Addis Ababa to use the Fayda digital ID system when opening new bank accounts. The requirement, which took effect on December 23, 2017, requires customers to provide their “Fayda number” as part of the account opening process.

The initiative forms part of a broader strategy to integrate the Fayda digital ID across all financial institution transactions. The expansion follows successful pilot programs conducted in partnership with TECH5, which provided the core biometric and digital ID infrastructure. The NBE plans to enroll all bank customers in the digital ID system during the 2023/2024 financial year, implementing Fayda as the primary identification method for Know Your Customer (KYC) checks and remote onboarding procedures.

The system aims to streamline identity verification processes, reduce paperwork, and accelerate account-opening procedures. The implementation works in conjunction with Ethiopia’s recently launched Public Key Infrastructure (PKI), which provides enhanced security for digital transactions and identity verification. Banks throughout Addis Ababa are advising customers to obtain their Fayda digital ID to prevent delays in banking services.

Ethiopia’s approach differs from other African nations like Nigeria, where banks can issue cards that function as both national identification and financial transaction tools. The country is currently developing a MOSIP-based digital ID project with the goal of enrolling all eligible citizens by 2025, supported by the World Bank. The implementation builds on MOSIP’s open-source identity management platform, which has been successfully deployed in several developing nations. The government has also established a partnership with IrisGuard to implement iris-based biometrics for benefits payments, enhancing the security and efficiency of social service delivery.

ZamZam Bank, one of Ethiopia’s interest-free banks, is adapting its five-year strategy to accommodate these changes and prepare for the entry of foreign banks. “Foreign banks will contribute global expertise, increased competition, and new capital to Ethiopia’s economy,” says Melika Bedri, CEO of ZamZam Bank.

The bank is currently collaborating with international financial institutions, including the World Bank, to strengthen its financial foundation and develop competitive products in preparation for increased international competition in the banking sector. The modernization effort supports Ethiopia’s broader digital transformation initiatives, including the recent establishment of its national PKI system and the expansion of digital financial services.

Sources: Addis Insight, Addis Insight, Meta Appz

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January 01, 2025 – by the ID Tech Editorial Team