India, Nigeria, Pakistan discuss sustainable financing for digital ID schemes with ID4Africa

Designing identity authorities based on business models which can generate funds for the proper functioning and sustainability of their systems was the focus in Part 2 of ID4Africa’s 34th Livecast which took place Wednesday 28 September, and was moderated by ID4Africa Chairman Dr. Joseph Atick. The panel discussing the subject was made up of Aliyu Aziz, director general of the National Identity Management Commission of Nigeria (NIMC); Tarik Maliq, chairman of the National Database and Registration Authority of Pakistan (NADRA) and Saurabh Garg, CEO of the Unique Identification Authority of India (UIDAI), which operates the Aadhaar national ID system. It emerged from the exchange that although all three digital ID authorities have different institutional and governance structures based on their different country realities, and hence different business models, making the authorities financially sustainable and viable is an important aspect to consider.

How funding happens

Speaking for the case of Nigeria, Aziz said all of their financing is gotten from the government, to which all other money made from its different products and services, is also handed. He explained that for sustainability, the NIMC charges little fees for some of its services, but clarified that what they get is not yet enough to get them running on their own without government assistance. “NIMC has been charging fees for some ID services. We allow that citizens’ first contact with government services is always free of charge. When you come back for things like data update or modification, we charge something little. This also includes NIN slip reprint, authentication or verification services or even enrollments outside the country. We don’t have any particular model that captures everything, so it depends on the use cases,” says Aziz. India has had a similar experience to Nigeria. The UIDAI says because India considers digital ID as a public good which is intended to leverage the livelihoods of citizens, the government bears most of the operational cost to get the system functioning. According to Garg, government continues to avail the agency of substantial amounts of money, thus they have no plans whatsoever in overly monetizing their services as a way of making UIDAI self-sustaining. He says however that they charge minimal costs for certain services, mostly in the private sector. “The essence of digital identity is to empower the most vulnerable and weakest persons. We have documented that the benefits accrued to the government from the digital ID system over the past ten years are about ten times more than what the government has spent. This is in terms of de-duplication which removes people getting welfare funds twice and ghost earners,” says Garg. “The savings that the state and central governments have recorded is ten times higher than the expenditure. So we have no plans to have UIDAI charge for its services to make it financially independent. Having said that, we do charge nominally for updates and private sector usage. We don’t charge for government services. There is a differential pricing, but that can in no way meet the operational costs,” he adds. Unlike Nigeria and India, Pakistan has an entirely different model. NADRA Chairman Tarik Maliq says the agency gets no funding from the government except as payment for services delivered to government Ministries, Departments and Agencies (MDAs). No government funding notwithstanding, he says there are able to run the agency from money earned from the products and services they offer both nationally and internationally, as well as from their partnerships. “We charge for the applications, systems and platforms we develop for the MDAs. Government sets the fees for products such as ID cards, ID cards for oversees citizens, family registration certificates, and all other ID documents. We also offer services to banks, insurance companies, microfinance institutions, credit lending institutions, health insurance companies,” says Maliq. “It’s not easy, but we have been challenging ourselves to keep 776 registration offices, 222 mobile vans and biker services, as well as technology upgrading cost. It is a tough journey but it is very much sustainable in a way. Our business model is set up in a way that we charge fees for services we provide in terms of digitization. The general public gets very subsidized and cheap fees, but if you want to procure something like an ID card in a few days, you have to pay more. The volume is so large that it caters for the infrastructure as well,” he adds.

ID authorities’ critical assets

The trio also addressed questions from Atick on what their prized assets are as ID authorities. All of them mentioned the people, demographic and biometric data, and infrastructure as their most critical assets, without which an ID authority cannot succeed. “Data is the big asset. Data is the oil for us, and we guard it very passionately,” Maliq says. “The biggest and most important asset that we have is the biometric and demographic data of our residents. Biometrics includes ten fingerprints, the two irises and a facial photo,” explains Garg. To Aliyu, “biometric and demographic data is important and for us and in the 21st century, data is the new oil and a very vital asset.”

Data protection imperatives

While the three authorities agree that data is one of the most crucial assets in any digital ID scheme, they are also aware that such an asset has to be protected jealously especially for ID systems with a centralized data repository. Here, Garg says UIDAI has the appropriate data security protocols, multiple firewalls and even regulatory provisions in the Aadhaar Act which outline rules to safeguard personal data. “Another important issue in safeguarding a centralized database is having regular and mandatory third-party audits to check whether the protocols which were supposed to have been set out, have actually been done. Prohibitive penal provisions to respond to cases of violations by the ID authority or any of its ecosystem partners, are also important,” says Garg. Meanwhile, as part of efforts to enhance data protection and security, all of them said their respective country governments are working on personal data protection legislations which will be okayed by their parliaments in the next couple of weeks, for eventual enactment.

Update on digital ID figures

The authorities from India, Nigeria and Pakistan, during the discussion, also gave an idea of updated figures in their different digital ID enrollment processes. “We have issued 1.35 billion Aadhaars over the past ten years. All Indians above the age of 18 have been issued the Aadhaar identity card. We are searching for remote areas where they might be some people left out. Between the ages of 6-18, the coverage is about 93 percent. Between zero to five is a moving target because every year, we have about 25 to 30 million births. We are now linking the digital identity and the time of birth. So along with the birth certificate, we will issue the IDs and I am sure the penetration will also increase,” Garg disclosed. “We have captured the data of around 90 million people, which is about 43 percent of the population. As the population is growing, so is the need for identity. We capture ten fingerprints and the face. We have not yet started capturing the iris. Children can also be registered for as long as one or all of their parents are already registered,” says Aziz for the case of Nigeria. For Pakistan, Maliq explains: “NADRA has registered about 97 percent of the adult population, that’s about 121 million adult people. But we have started registering children and we have come up with an inclusive registration department. We are also issuing cards to refugees, aliens and other forms of ID so that everyone can have a unique ID. Already, we have issued around 189 million IDs in total. We take ten fingerprints, a facial photo and a digital signature. We are in the process of integrating iris biometrics as well.” At the end of the discussion, moderator Atick emphasized the need for ID authorities to have sustainable financing models. “There is need to establish a sustainable funding mechanism which goes beyond the initial loan or seed money that was used to set up the authority. There is nothing wrong in trying to be innovative and starting to provide products and services which can fetch you money. There is value for that,” he advises.