An Aadhaar biometric identity card, issued by the Unique Identification Authority of India (UIDAI). (Photographer: Dhiraj Singh/Bloomberg)

How India Could Transform Africa

(Bloomberg Opinion) -- Over the last two decades, China has invested more than $125 billion in Africa to build ports, highways, airports, railways and other infrastructure. Chinese President Xi Jinping says funds, to the tune of $60 billion, will continue to flow because "inadequate infrastructure is believed to be the biggest bottleneck to Africa's development."

China’s largesse has certainly benefited the continent. An Indian innovation, however, could be what African countries really need.

India’s Aadhaar biometric identification system has given hundreds of millions of citizens a portable digital ID, allowing them to receive government services, join the banking system and otherwise partake in the formal economy. The need for similar technology in Africa is acute: According to the World Bank, the continent is home to 502 million of the world's identity-less individuals, half of the global total and roughly 40 percent of Africa’s population. The problem is worse for women, who in many African countries are critical to family finances. In low-income countries surveyed by the World Bank, over 45 percent of women lacked identification, compared to 30 percent of men.

These citizens face towering social and political challenges. Services such as education, health care and welfare are often targeted and delivered on the basis of identification, thereby bypassing those who need them most. In many African countries, individuals are required to show identity when registering a mobile phone or signing up for value-added services such as Africa’s pervasive, feature phone-based mobile money systems. Getting a formal bank account is even harder, which helps explain why over half of Africa’s population remains unbanked. Those who can’t vote because of a lack of identification are politically excluded, which only reinforces their economic isolation.

The Aadhaar system creates a 12-digit unique identification number for each citizen, issued on the basis of biometric and demographic data. Data is stored centrally and enrollment is free, simple and document-light. From the start, particular efforts have been made to enroll women and ensure that births are recorded (and prenatal benefits received).

By most metrics, the system has been a success. Over 1.2 billion people have enrolled, including in rural locations disconnected from the modern digital economy, making Aadhaar the world's largest biometric database. It's improved access and delivery of government services, and promoted digital and financial inclusion. According to one recent survey, more than three-quarters of new bank accounts in three Indian states were opened using Aadhaar biometric data, while mobile-phone registrations have boomed.

Not all of these benefits will hold, of course. Privacy concerns and bureaucratic interference are beginning to curb the private sector's ability to use Aadhaar. But there's no turning back to a pre-identity India.

At a September roundtable at the United Nations, the World Bank estimated it will cost $6 billion to meet Africa's civil registration and digital identification needs by 2030. Currently, at least 23 projects are underway. Some are country-specific, while others focus on regional solutions designed to ensure that the new IDs are interoperable across Africa's porous borders.

The potential benefits are immense. Registering women and births can play a crucial role in curbing threats from child marriage to sex trafficking. Africa is also home to the world’s highest rates of female entrepreneurship (more than a quarter of adult females in sub-Saharan Africa are engaged in early-stage entrepreneurial activity). Digital IDs would enable them to acquire bank accounts, save assets, register property and formalize their businesses.

A continent-wide system similar to Aadhaar could be even more beneficial. Africa is home to large volumes of intra-continental economic migration, and individuals who cross borders without identification are forced to use irregular channels that promote smuggling. Migrants who might have been exploited in the past would be able to assert their citizenship rights, both at home and abroad. That could be especially valuable for Africa's large population of forcibly displaced people.

Above all, an African Aadhaar would help to spur digital and mobile innovations in a region that's been a pioneer in fintech and shown a capacity to leapfrog older technologies. More people with registered mobile phone accounts means more opportunities to leverage Africa's emerging digital sector. At a time when Africa is building more physical highways than ever before, the digital ID could be the expressway it actually needs.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Adam Minter is a Bloomberg Opinion columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade.”

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