Page 45 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

The implications of this goal; the embodiment of a legal identity as a digital identity; and the implications for
DFA and financial inclusion, are the subjects of this paper.

1.3 Legal identity, digital identity, and DFS

Across the industrialised world, the issuance of birth certificates and the registration of deaths are generally
well-established, formal processes. These typically follow a similar pattern, in which attending midwives or
other medical staff issue a ‘birth notification’ document to the mother (and typically also notify the registration
authorities, together with any information about the mother that they hold). The parents are then required to
present themselves to the public registration authorities within a set time period of perhaps one or two months,
in order to formally register the birth, including notification of parental relationships and home address. It is
this registration that is at the root of legal identity.

However, there are complications in many emerging economies, due to non-issuance of birth certificates; for
example, according to a UNICEF report on Nigeria (2007):

“….in urban areas, approximately 50 percent of births are registered, while in rural areas, only about 21 percent
are registered (UN July 2007). Low registration rates in Nigeria have been attributed to a number of factors,
including lack of awareness of current legislation and of the importance of birth registration, limited number
of registration centres, limited financial resources and a lack of effective registration infrastructures”.

In many cases, there are strong correlations between communities that are already at the fringes of society
and those who lack proper birth registration. This creates a wide range of issues , ranging from non-issuance
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of national identity cards - to problems with immigration into Western countries such as the United States,
and of course financial exclusion.
But the problem in many cases is not necessarily limited to registration difficulties. There are often issues with
the accuracy of information held on birth certificates, due to the prevalence of multiple languages and the
representation of those languages in written form. For example, in Kenya, which has a relatively well organised
system in which medical facilities provide a birth notification card, followed by birth registration at the local
town hall (other arrangements are in place for births that take place outside medical facilities), there are
occasions when discrepancies occur. For example, a parent’s identity card might have a different spelling of
the parent’s family name from the child’s family name on the birth certificate. This can give rise to problems
in later life with the claiming of inheritances from parents, the issuance of identity and voters’ cards, and,
of course, passports and international travel. Even data such as birth dates and marriage certificates may be
problematic and many registries have special investigation teams for issues like allegations of bigamy, proposed
corrections to the records (including revised paternity details), etc.

It is in response to these issues, and perhaps in some cases with fulfilment of the commitment to the SDGs
in mind, that many countries without comprehensive registrars of their citizens are seeking to create formal
national identity programs. These programs typically involve a number of steps to register citizens, including
at a minimum:
• formal identification of the citizen, through a range of country-specific means;
• the creation and issuance of an electronic or digital identity, held in a central database or on an identity
card held by the citizen.
In addition, the capture or creation of a means of authenticating the citizen (that is, that the person presenting
themselves with a digital identity is the person to whom the digital identity was originally issued) forms a part
of the registration process, and may include biometrics, PINs, and other authentication technologies.
Independently of state-issued digital identities, there is a need to identify and authenticate customers for
access to DFS. This is typically achieved through the creation of a digital identity, but in order to satisfy national
financial regulations and international know your customer (KYC) obligations, it is necessary to undertake a

2 http:// blogs. lse. ac. uk/ humanrights/ 2015/ 05/ 28/ questions- of- legal- identity- in- the- post- 2015- development- agenda/

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