By Rohan, student at Geneva Graduate Institute

According to the World Bank’s 2018 report, around one billion people globally have no way to prove their identity and in Africa alone, half a billion people have no form of identification (ID). One in two women in low-income countries do not have an identity proof. Around 1.7 billion adults worldwide are unbanked. A lack of legal identification can lead to exclusion from a range of rights and services, such as health care, education, social welfare, and financial services. A multi-purpose “digital identity,” therefore, has become a critical tool for developing countries not only to uniquely identify its citizens but also to support social and financial inclusion of the poor and the vulnerable.

SDG target 16.9 aims to provide legal identity for all by 2030. Many developing countries have implemented some form of digital ID scheme tied to specific functions or serving a subset of the population. For instance, Thailand’s national ID system enabled the country to expand health insurance coverage from 71% to 95% in less than two years. Peru has achieved near universal ID and as a result brought in USD 45 million of annual revenue for the government. Nigeria implemented a digital ID system for civil servants that enabled it to remove about 60,000 ghost workers.

Given these achievements, it is pertinent to ask if a multi-purpose digital identification programme, in addition to providing a legal identity, can help advance other SDGs, such as, poverty and hunger eradication through efficient targeting of beneficiaries (Goals 1 and 2), empowerment of women through greater inclusion (Goal 5), and building effective, accountable and inclusive institutions by increasing transparency in governance (Goal 16).

It may be worthwhile to learn from India’s experience, one of the first countries in the world that has initiated a biometric identification system for all residents. The Unique Identification Authority of India (UIDAI), a statutory authority set up by the Government of India, established a programme in 2009 called ‘Aadhaar’ as a method for providing identification to 1.3 billion people. The need for switching to a biometric form of authentication arose due to the presence of multiple forms of identity that led to duplication of data, fraud, and inefficient targeting of beneficiaries under various social welfare schemes. As part of informal economy, semi-skilled and unskilled workers were often excluded from mainstream social security programmes for want of a legal proof of identity, and in 2010, it was estimated that two in three Indians did not have a bank account.

Today, 1.31 billion Indians in a population of nearly 1.39 billion have Aadhaar, and the coverage of adult population is nearly 99.7%. Aadhaar-based identity verification has facilitated a rise in the number of new bank accounts, with 85% of citizens now having a bank account. Linking of Aadhaar with bank accounts (along with increased access to mobile phones) is a significant step towards attaining the goal of universal financial inclusion, as it enables direct transfer of funds to bank accounts of targeted beneficiaries under various Government-run welfare schemes. For example, under India’s fuel subsidy programme, implementing cash transfers to Aadhaar-linked bank accounts to buy liquefied petroleum gas cylinders saves about USD 1 billion per year, and can potentially save over USD 11 billion per year in government expenditures through reduced leakage and improved efficiency. Several other welfare schemes are aimed at addressing the three pillars of sustainable development, and their linkage with Aadhaar has resulted in better administration through more efficient targeting of beneficiaries.

In the battle against COVID-19 in India, the Aadhaar-enabled Payment System (AePS) emerged as key infrastructure for direct cash transfers to mitigate the economic impacts of the pandemic on the poor and the vulnerable, especially women. A recent paper by the International Monetary Fund (IMF) indicates that despite COVID-19, India managed to keep extreme poverty at its pre-COVID levels, as a result of efficient management of its food transfer scheme. The linking of beneficiary accounts with Aadhaar resulted in swift distribution of essential food grains to migrant workers from any part of the country, with minimal leakage.

The cost of running an identification programme with universal coverage is an important factor in terms of affordability, especially for emerging economies. The Aadhaar programme, with a cost of USD 1.16 per enrolment, is among the least expensive, compared to similar programmes in other parts of the world where costs run up to USD 6 per enrolment.

While there is consensus on legal identity as a policy imperative, digital identity continues to be debated on issues such as data privacy and information security. In the absence of a suitable legislative framework for data protection and privacy, the risk of disclosure without user consent and misuse of data cannot be ruled out. Thus, there may be a need to limit the collection of data for specified usage and establish controls on the retention of data. Given the transformational potential of a digital identification system, it is important that such a system be well-designed and implemented with adequate institutional safeguards. In this regard, partnerships are key as governments could leverage the benefits of digital identity through mutual knowledge exchange and learning from each other’s best practices.

Knowledge exchange can be facilitated under the aegis of a multilateral organization such as the UN or the World Bank. The World Bank Group’s Identification for Development (ID4D) Initiative engages in leveraging global knowledge and expertise across sectors to help countries design and implement identification systems. The initiative has several advantages as the World Bank can act as a central repository of data relating to good practices adopted by different countries in implementing their respective digital ID systems, and as a facilitator in the transfer of knowledge to interested parties. A central database can help emerging economies to evaluate and opt for the best design feature(s) based on their relative strengths in terms of existing infrastructure, such as availability of cheap internet and mobile penetration, and to assess feasibility in terms of the costs involved. Efforts by emerging economies to implement digital ID systems can also be supported with soft loans or grants by the World Bank, with conditionalities to monitor and incentivize progress of such projects.

The UN provides guidance and assistance to national authorities in establishing a holistic digital system of civil registration and identity management covering an entire range of vital events – live births, deaths, marriages, and divorces. Establishing clear linkages between the work done by the World Bank and the UN in this field can help developing countries to improve the accuracy of data such as those relating to births, as a proof of legal identity. Coordination between multilateral agencies, such as through a regular exchange of reports, can also help to avoid duplication of work. 

Finally, it may be possible that countries that have successfully implemented digital ID systems are not forthcoming in sharing their knowhow with interested parties, fearing the risk of leakage of proprietary information. A memorandum of understanding (MoU) could address such concerns by including specific details of the terms of technology transfer among the parties. The transferor country could, for example, choose to share either the broad framework and architecture of their digital ID system or specific design details, depending on the terms of the MoU.

This article is a result of the Spring 2022 class, ‘Law of Sustainable Development,’ Geneva Graduate Institute, taught by Dr. Charlotte Sieber-Gasser and Dr. Manuel Sanchez.