‘Digital identity key to deepening Africa’s open finance’
Stakeholders in the digital identity and finance space have been charged to work together to establish a workable framework for open finance in Africa.
This was contained in a keynote address delivered by Co-founder and Chief Executive Officer, VerifyMe Nigeria, Esigie Aguelea, at the just-concluded fifth edition of the Africa Tech Summit held in Nairobi, Kenya.
Speaking during the decentralised finance (DeFi) session, Aguele said open finance, backed by a strong digital identity infrastructure, was key to bridging the gap between identification and financial inclusion to achieve results at a scale for the over 500 million people living in Africa without a recognised form of identity.
He said: “In an increasingly interconnected world and with the rise in peer-to-peer transactions, facilitating openness, transparency and lower costs is key. Digital identity will be critical to driving this. Thankfully, open finance initiatives, such as mobile payments are already making the difference for many of the 85 per cent of unbanked adults in sub-Saharan Africa. However, we need accelerated action to achieve results on a large scale.
“In Nigeria, for instance, digital identity has the potential to unlock opportunities from open finance initiatives that will address the 16 million home mortgage shortfall as well as the insurance and auto-loan markets which are under-scaled at 0.3 to 0.5 penetration on maturity and have the potential to grow to $800-$1 billion industries.”
Elaborating on how digital identity will impact open finance, Aguele stated: “Undoubtedly, the regulatory systems of Web2 have proven to be insufficient for the growing pivot to Web3. As operators innovate around standards to provide holistic digital identity solutions, we are witnessing a scenario where regulators are pushing back against any fully decentralised privacy methods especially if it denies them access to security, oversight and governance.
“Accordingly, while proper regulation is necessary to standardise and grow the ecosystem, it is critical to ensure a balance, such that regulation aims at enabling, and not stifling, innovation.
I see a future where there is increasing convergence between innovators and regulators to work together to find solutions that work for all parties without compromising on standards, quality, identity privacy and ownership.”