The UN Capital Development Fund (UNCDF) and the United Nations Office for South-South Cooperation (UNOSSC), partnered through the India-UN Development Partnership Fund to further develop the Reserve Bank of Malawi’s efforts on electronic-KYC and digital identity in Malawi.
This project will reach the low-income population in Malawi, who often experience low financial and digital inclusion rates and have challenges with identification when requesting basic services such as health, education and finance. Electronic digital identity can potentially help in addressing this challenge and increase access to financial products and services.
Know Your Customer (KYC) refers to the process that financial institutions use to verify the identities of their customers. Financial institutions typically use nationally acceptable forms of IDs and additional information to verify the identity and address of their customers. For many Malawians seeking basic services in finance, health and education, it is not easy to adequately prove that they are who they claim to be to service providers or government. This hinders their access to services and limits their inclusion and participation in the economy. In addition, use of manual KYC procedures by financial service providers renders the process of identifying customers inefficient and cumbersome. Once rolled out, this unified centralized e-KYC database will be utilized by all financial service providers and public sector departments for beneficiary verification in delivery of various services, and thus has the potential to bring more people onto critical services and open up their use of financial and digital services.
This project builds on the work undertaken by the United Nations Development Programme in Malawi, where a strong foundation for digital identity was built. On that platform over 9.2 million citizens were registered, creating various opportunities to leverage the national ID database.
The implementation of this project will allow the stakeholders to revamp the current manual and disjointed KYC systems processes which will enhance the national payment system and enable a modern approach for oversight of the regulatory environment. The project will target 1500 clients registered to the e-KYC platform of which 50% will be women. RBM will serve as the project implementer, with UNCDF providing technical assistance, while working with market players to reach the objectives.
When speaking of the new partnership, representatives of the organisations said the following: “Digital financial inclusion is an area in which South-South cooperation has particular promise and is already delivering remarkable results — given the plethora of technological innovations born within the developing country context, and effectively rolled out in other developing countries lifting millions out of poverty. India has shown great leadership on last mile digital financial inclusion — reaching remote and vulnerable communities. The India-UN Fund support to this initiative goes beyond their technical leadership and provides the resources to enable policy and practical roll-out of systems.” -- Mr. Adel Abdellatif, UNOSSC Director a.i.
As we move towards digital transformation in Malawi, we must ensure that the key enablers for a digital economy such as infrastructure and identity requirements are supportive of this goal. e-KYC has the potential to impact the digital economy holistically from a societal, consumer and business perspective making it easier for Malawians especially women, youth and rural communities to access and use formal financial services. -- Iris Kissiti, Digital Finance Coordinator (UNCDF)
The launch of this project shows great collaboration between several parties that aim to leverage digital solutions to help the Malawian people make meaningful contributions to their communities and improve their lives.
The United Nations Office for South-South Cooperation (UNOSSC) promotes, coordinates and supports South-South and triangular cooperation globally and within the United Nations system. It manages the India-UN Development Partnership Fund. The Office engages a wide range of partners toward achievement of the Sustainable Development Goals, and to foster collective self-reliance among developing countries according to their national development strategies and priorities.
The UN Capital Development Fund makes public and private finance work for the poor in the world’s 46 least developed countries (LDCs).
UNCDF offers “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development.
UNCDF’s financing models work through three channels: (1) inclusive digital economies, which connects individuals, households, and small businesses with financial eco-systems that catalyze participation in the local economy, and provide tools to climb out of poverty and manage financial lives; (2) local development finance, which capacitates localities through fiscal decentralization, innovative municipal finance, and structured project finance to drive local economic expansion and sustainable development; and (3) investment finance, which provides catalytic financial structuring, de-risking, and capital deployment to drive SDG impact and domestic resource mobilization.