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A study by Cenfri indicates that 38 per cent of the Kenyan population does not have a legal means to prove its identity thereby excluding it from financial services. In Nigeria, this population stands at 78 per cent, South Africa at 22 per cent, Tanzania at 52 per cent, Ghana at 16 per cent, Congo at 9 per cent, Rwanda at 18 per cent, Mauritius at 4 per cent, and Uganda at 49 per cent.

In total, 48 per cent of the Sub-Saharan population (454 million people) do not have a legal means of proving their identity emphasizing the need “for a comprehensive approach to national identification systems across the continent.”

Low-Income Groups Most Affected

The report shows that identity exclusion in Sub-Saharan Africa is prevalent in the low-middle income and low-income groups.

“As a percentage, 95.4 per cent of individuals without a legal identity are in the lower-income groups compared to 4.6 per cent that are in higher-income groups,” the report reads in part.

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According to the report, the lack of a proof of identity for some populations in Sub-Saharan Africa prevents them from accessing formal services. That also means that participation in politics is also in favour of higher-income groups.

Financial Exclusion

The report indicates that 19 per cent of the Kenyan adults have given a lack of a formal identification document as the reason for not having a bank account. In Uganda, Tanzania, Rwanda, and Ethiopia, the population that gave the same reason stands at 24 per cent, 27 per cent, 8 per cent, and 2 per cent respectively.

The lack of a formal identification results in people moving to the informal sector and eventually leads to illicit activities, the report observes.

“Financial needs do not go away in the absence of formal financial services. The movement to informal also drives the illicit. Therefore, by not providing citizens with the ability to engage in the formal financial services, governments are creating an enabling environment for illicit activities,” explains the report.

The report also notes that the greatest challenge “to financial inclusion is the lack of reliable identification mechanisms and verification for individuals.”

Cenfri is a non-profit organisation that offers insights on the financial sectors of emerging markets.

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