Malawi Digital Financial ID Feasibility Assessment

The World Bank’s ID4D Programme estimates that 375 million adults in developing countries are excluded from formal financial services. This is on account of unavailability of a suitable proof of identity as per know your customer (KYC) requirements (ID4D 2016). This gap can only be bridged by the development of a trusted identity system that issues IDs to the excluded with the end objective of further expanding financial inclusion. Furthermore, identities in digital form can potentially create efficiencies necessary for scaling financial service provision to the underbanked (World Economic Forum 2016).

FinMark Trust commissioned feasibility assessments in Malawi and Lesotho to determine whether a digital financial ID could advance domestic financial inclusion in the two countries. Malawi was selected due to the advanced nature of its national e-ID which had just been rolled out. In addition, Malawi had already initiated project plans for implementing e-KYC in its financial sector which presented an opportunity for collaboration and providing technical expertise in their project. Lesotho was also selected due to the advanced and established nature of its national ID scheme. In addition, since it forms part of the Common Monetary Area with South Africa, it could play an important role in a potential cross-border pilot using digital IDs particularly in the shared remittances corridor which is robust.

The feasibility assessment aimed to provide recommendations on the use cases of domestic financial inclusion the digital financial ID could advance and on implementation of a digital financial ID pilot.

This report is one of two. This one focusses on findings from Lesotho while the other focusses on findings from Malawi.