Identity and Migration — research update #2: Digital ID in Kenya
(Authors: Keren Weitzberg, Nora Naji, and Emrys Schoemaker)
In this post, we share an updates from our ongoing research project in Kenya, outlining emerging Digital Identity innovation around proxy verification and Sharia compliant identification
Agency banking and guarantors
As part of our research, we are exploring how migrants (including under- and undocumented people) access financial services. Irregular migrants, refugees, and asylum seekers (and even some regular migrants) often struggle to access the same kinds of banking and financial services as citizens. A common barrier is the lack of a foundational credential that global regulatory regimes, such as the Financial Action Task Force, require in order for service providers to enable access to things like SIM cards and bank accounts.
We are meeting people, however, who are trying to develop fintech for underserved populations and regions, and for people who lack these foundational credentials. One such organization is Craft Silicon, headquartered in Kenya. We spoke to their Head of Islamic Banking, who told us about a Sharia-compliant product, currently being rolled out in Yemen in partnership with a local bank, which will enable people to open up low-balance bank accounts in order to receive remittances. This product, which will soon include a mobile wallet, will be accessible to undocumented people, who will be able to onboard by registering with an agent using a guarantor. The guarantor will have to attest to the client’s identity and provide their biometrics during the registration process.
This is not the first product that uses a guarantor system, but it is arguably unique in its claim to be Sharia compliant. The use of guarantors can offer undocumented people, including migrants, basic banking services. However, such products also have limited utility (such as their low balances) due to the need to comply with a strict financial regulatory environment.
Providing fintech to the unbanked may not be a panacea for poverty (despite some of the more quixotic claims behind the financial inclusion narrative), but such services are nevertheless desperately needed. Often, these products are piloted successfully but then abandoned or never scaled. We hope to see that change in the future.
