The Board of Directors of the African Development Fund (ADF) has approved eight million dollars to boost the banking system on the continent.
A statement by African Development Bank (AfDB) said the fund
was for establishing a digitally interoperable unique bank identification
system.
It said the fund was also meant to establish a harmonised
customer identification framework for the Gambia, Guinea, Liberia and Sierra
Leone.
“Implementation of the project will commence in July 2023,
led by the West African Monetary Institute (WAMI).
“It will work with central banks of the participating
countries and in close collaboration with banking and non-banking financial
service providers.
“The project is expected to enhance financial sector
efficiency within the participating countries, leading to increased access to
finance and further regional integration efforts.
“Approval of funding from the bank’s concessional lending
window was made on March 29,” it said.
According to the statement, the new bank identification
system will link the banking accounts of individuals across different financial
service providers.
It said over 53 financial service providers across the
participating countries would be included in the project.
“This will allow them to verify their clients’ identities on
an on-going basis (Know-Your-Customer or KYC), combat fraud, discourage loan
defaulting and strengthen correspondent banking relationships.
“On the part of customers, KYC-compliant finance sectors
will bolster trust and confidence and ultimately encourage access and usage of
financial solutions,” the statement said.
WAMI Director-General, Dr Olorunsola Olowofeso, said the
Unique Bank Identification (UBI) and Digital Interoperability project was borne
from the Bank Verification Number (BVN) success implemented by the Central Bank
of Nigeria.
Olowofeso said: “The BVN, an 11-digit unique identity for
each individual across the Nigerian Banking industry, is tied to all bank
accounts.
“And has drastically reduced electronic banking fraud,
non-performing loans and eliminated ghost names from the civil service payroll.
“The Unique Bank Identification will leverage existing
national identification systems and help to strengthen financial integration in
the West African Monetary Zone.”
AfDB Director for the Financial Sector Development
Department, Ahmed Attout, welcomed the board’s approval, noting that it
attested to the strong partnership between the Bank and WAMI.
“Irrefutable and secure identification is fundamental to
building financial consumer access and trust and overall development of the
financial sector,” he observed.