Ethiopia Mandates National Digital ID ‘Fayda’ for All Banking Transactions by 2026

Ethiopia has implemented a new policy requiring the use of its national digital ID system, Fayda, for all banking transactions as part of the country’s broader digital government strategy. This mandate builds upon the country’s recent launch of its Public Key Infrastructure (PKI) and represents a significant expansion of the digital ID program that began with a limited pilot in 2023. The initiative aims to modernize Ethiopia’s financial sector while enhancing security and financial inclusion.

The implementation follows a phased approach, beginning with a pilot program in Addis Ababa from January 1, 2025. The system will expand to major cities by July 1, 2025, and achieve nationwide coverage by January 1, 2026. All bank account holders must link their accounts to their Fayda IDs by December 31, 2026.

Currently, over 11 million Ethiopians have registered for Fayda digital IDs, marking substantial growth from the initial rollout when TECH5 provided the biometric and digital ID solutions for the system’s pilot phase. Registration centers operate across the country, including the Tigray region, where more than 235,000 citizens have obtained their digital IDs despite previous regional conflicts.

The government is developing supporting infrastructure, including EthioConnect, a data exchange system facilitating information sharing across government agencies. This development receives support from DT Global through an EU-funded project with a €100 million budget allocated for improving digital skills, cybersecurity, connectivity, and government services.

The initiative incorporates Public Key Infrastructure (PKI) to provide enhanced security for digital transactions and identity verification. The PKI system, launched at the Information Network Security Agency (INSA) headquarters, enables secure digital signatures and encryption capabilities essential for protecting financial transactions. The system aims to streamline operations for financial institutions through e-KYC processes, potentially reducing operational costs and improving efficiency.

ZamZam Bank CEO Melika Bedri notes, “Foreign banks will contribute global expertise, increased competition, and new capital to Ethiopia’s economy.” This statement reflects the broader context of Ethiopia’s financial sector reforms, which include opening the banking industry to foreign investment for the first time in the country’s history.

The digital ID system is designed to enable consistent biometric identification and facilitate secure information exchange, supporting the development of Ethiopia’s digital banking infrastructure. This aligns with the National Bank of Ethiopia’s broader strategy to modernize the country’s financial system and increase financial inclusion among its 120 million citizens.

Sources: Tech Labari, Digital Banker Africa, Fintech News Kenya, ENA

–

January 8, 2025 – by the ID Tech Editorial Team