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Ethiopia Unveils Mandatory Digital ID For Banks
The Ethiopian government has introduced a new policy requiring all bank users in the country to link their accounts to a national digital ID system known as Fayda.
Effective since January 1, 2025, in Addis Ababa, the policy is the first step in a phased rollout expected to cover the entire country by December 31, 2026. For now, the requirement applies to banking transactions like opening accounts in the capital city, with plans to expand to other major cities in July before going nationwide in 2026.
This initiative aims to tackle long-standing challenges in Ethiopia’s financial ecosystem. By linking bank accounts to Fayda IDs, the government hopes to reduce fraud, strengthen data security, and making banking easier and more accessible for all. With over 11 million people already registered for the Fayda ID, the program is building momentum toward its goal of widespread adoption.
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The policy is a collaboration between the National Bank of Ethiopia and the National ID Program. Fayda ID leverages biometric data and advanced features to provide secure and reliable identity verification. Beyond enhancing banking security, it also aligns with Ethiopia’s broader efforts toward digital modernization.
Beyond its immediate impact on banking, the Fayda ID is a key component of Ethiopia’s digital government strategy for 2025-2030. This initiative is supported by international partners such as DT Global and the European Union. Among its standout projects is EthioConnect, a data exchange infrastructure designed to facilitate programs like Fayda and improve access to digital services.
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The digital government strategy is supported by a budget of approximately US$103 million, which is aimed at advancing key areas such as digital skills, cybersecurity, connectivity, and improving access to government services. This funding will be critical in expanding Ethiopia’s digital infrastructure and ensuring that the government can offer more accessible and secure services to its citizens. The strategy also focuses on fostering innovation and local development, which will play a key role in building a more efficient and interconnected society.
By gradually rolling out the policy, authorities aim to give citizens ample time to register for Fayda and adjust to the new system, ensuring a smooth transition toward a more secure and inclusive financial framework. The Fayda digital ID simplifies banking tasks like opening accounts and making transactions, while also enhancing transparency and accountability in financial dealings. These improvements are crucial in addressing challenges such as money laundering and identity theft, making the entire financial ecosystem safer and more accessible for Ethiopians.