MICROFINANCE PAPER WRAP-UP: "Leveraging Digital ID and e-KYC for the Financial Inclusion of Forcibly Displaced Persons: Risks and Opportunities;" Published by Alliance for Financial Inclusion

The authors of this paper discuss the use of electronic know-your-customer (e-KYC) procedures and digital forms of identification (ID) to support financial inclusion for forcibly displaced persons (FDPs) in Eswatini, Mauritania and Rwanda.

In Eswatini, refugees and asylum-seekers may apply for refugee ID cards and non-Swazi ID cards, respectively. After acquiring IDs, individuals may access services from financial institutions, under tailored KYC procedures. However, refugees in particular often struggle to provide the documentation required to obtain IDs. Eswatini is now developing “a single digital ID system that can be used as a foundational ID system and enable e-KYC” to connect existing ID systems such as voter IDs, passports and driving licences. The authors argue this is an important opportunity to reduce the barriers commonly faced by FDPs

In Mauritania, asylum seekers and refugees may receive ID cards under the purview of the UN High Commissioner for Refugees (UNHCR), although these cards may not be used to purchase SIM cards for mobile phones or to open accounts at financial institutions. Refugees are eligible to receive national ID cards, although only 2,000 of the 76,000 FDPs in Mauritania have received one. Nonetheless, the state’s inclusion of FDPs in its Social Registry allowed for the delivery of social assistance in many cases. Meanwhile, UNHCR and the World Food Programme carry out digital humanitarian aid programs that contribute to financial access and improvements in financial literacy for FDPs.

In Rwanda, the national financial inclusion strategy includes efforts to facilitate financial access for FDPs, and the government issues registration documents to FDPs in partnership with UNHCR. These documents allow asylum seekers to access financial and other services as well as to travel outside the country. Although the authors note that 75 percent of refugees in Rwanda are participating in biometric enrolment for government-issued IDs, they argue that more effort is needed to ensure that refugees have success in acquiring ID documents, such as via simplified KYC requirements.

Because FDPs often lack education regarding consent and data privacy, they are especially vulnerable to unauthorised leaks of their data. As the use of digital ID for this population likely will increase in the future, humanitarian organisations and governments need to promote more reliable data security and privacy infrastructure as well as legal mechanisms to enforce data protection. Additionally, policymakers and regulators should collaborate with other relevant stakeholders in conducting needs assessments to identify context-specific challenges that stand in the way of the financial inclusion of FDPs and other means of integration with their host societies.

This is a summary of a paper published by the Alliance for Financial Inclusion, July 2022, 42 pages, available at https://www.findevgateway.org/case-study/2022/07/leveraging-digital-id-and-e-kyc-financial-inclusion-forcibly-displaced-persons.

By Saulius Simonas Ramanauskas, Research Associate

Additional Resources

Alliance for Financial Inclusion homepage
https://www.afi-global.org

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