African Development Bank disburses $8m to enhance financial sector efficiency in West Africa

BY BAMIDELE FAMOOFO

The Board of Directors of the African Development Fund has approved $8 million in funding toward the establishment of a digitally interoperable unique bank identification system and 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, working 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, 2023.

The new bank identification system will link banking accounts of individuals across different financial service providers.

Over 53 financial service providers across the participating countries will 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.

Olorunsola Olowofeso, WAMI Director General, said: “The Unique Bank Identification (UBI) and Digital Interoperability project was borne from the success of the Bank Verification Number (BVN) implemented by the Central Bank of Nigeria. The BVN, an 11-digit unique identity for each individual across the Nigerian Banking industry, is tied to all bank accounts and has resulted in a drastic reduction in electronic banking fraud, non-performing loans and elimination of ghost names from the civil service payroll.”

Olowofeso further noted that the Unique Bank Identification will leverage existing national identification systems and help to strengthen financial integration in the West African Monetary Zone.

African Development Bank Director for the Financial Sector Development Department, Ahmed Attout, welcomed the Board 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.

Meanwhile, the 58th Annual Meetings of the Board of Governors of the African Development Bank and the 49th Meetings of the Board of Governors of the African Development Fund will take place in Sharm El Sheikh, Egypt, from May 22 to 26, 2023.

The theme of the 2023 Annual Meetings is Mobilizing Private Sector Financing for Climate and Green Growth in Africa.

It provides a framework for Bank Group Governors to share their experiences with galvanizing private financing domestically and internationally and harnessing natural capital to bridge the climate financing gap and promote the transition to green growth in Africa.

Particularly, the theme offers an opportunity for the Governors to discuss Africa’s challenges in attracting private sector financing in low-carbon investments and practical policies that governments can deploy to address these bottlenecks.

The Annual Meetings of the African Development Bank Group comprise statutory meetings of its Governors (finance ministers or central bank governors representing the 81 member countries – and knowledge events. Attendees will include representatives of bilateral and multilateral development agencies, leading academics and non-governmental organizations, civil society, and the private sector.

The meetings are the Bank Group’s most important event annually, attracting around 3,000 participants. They allow the organization to take stock of progress with its shareholders.