ADF earmarks $8m for banking upgrade

The African Development Fund (ADF) has approved a sum of eight million dollars to bolster the banking sector in Africa. The African Development Bank (AfDB) has announced that the funds will be used to establish a unique bank identification system that will be digitally interoperable. Additionally, a harmonised customer identification framework will be established for the Gambia, Guinea, Liberia and Sierra Leone. Implementation of the project is expected to begin in July 2023 and will be led by the West African Monetary Institute (WAMI).

The project will work closely with the central banks of the participating countries and will collaborate with banking and non-banking financial service providers. The objective is to enhance financial sector efficiency within the countries, leading to increased access to finance and further regional integration efforts. The approval for funding was made on March 29 from the bank’s concessional lending window. The African Development Fund expects that the new bank identification system will link the banking accounts of individuals across different financial service providers, with over 53 financial service providers across the participating countries to be included in the project.

The new system will allow financial service providers to verify their clients’ identities on an ongoing basis, combat fraud, discourage loan defaulting and strengthen correspondent banking relationships. The KYC-compliant finance sector will bolster trust and confidence among customers, ultimately encouraging access and usage of financial solutions. The WAMI Director-General, Dr Olorunsola Olowofeso, said that the Unique Bank Identification (UBI) and Digital Interoperability project was inspired by the Bank Verification Number (BVN) success implemented by the Central Bank of Nigeria.

According to Olowofeso, the Unique Bank Identification will leverage existing national identification systems and help to strengthen financial integration in the West African Monetary Zone. The AfDB Director for the Financial Sector Development Department, Ahmed Attout, welcomed the board approval, stating that it attested to the strong partnership between the Bank and WAMI. He further observed that irrefutable and secure identification is fundamental to building financial consumer access and trust, which is necessary for the development of the financial sector.