A single digital identity for South Africa is imperative for inclusive economic growth

9 Jul 2023

The much-publicised case of body swapping to assist Thabo Bester’s breakout from a maximum-security prison and his escape from South Africa with fake travel credentials has exposed one of the enduring problems bedevilling the country today — the digital divide.

The right of citizens to a distinct identity is recognised as a fundamental human right by the United Nations. This obscure and little-known assertion, particularly as it relates to the international trend towards a single digital identity, conceals another human rights violation on the African continent. It contributes to Africa’s continued marginalisation through the manifestation of another divide – the digital divide.

Failure to bridge this divide will entrench a massive democratisation deficit, perpetuate a lack of financial inclusivity, impede fiscal sovereignty through tax losses, restrict global participation through cumbersome travel bureaucracy, and overall, put a brake on economic and social development.

It has been shown that the effective and empowering institution of digital identity has a beneficial impact on Gross Domestic Product (GDP) of up to 3% on average per annum in nations that have successfully implemented it.

What does this mean for the people, and countries where identity documentation is far from universal? In the 2021 Digital Identity in South Africa Report, it is estimated that as many as 137 million people in southern Africa do not possess identity documentation, of which 15 million are in South Africa – accounting for roughly 25% of the population.

The report emphasises the rising digital divide between the developed and developing worlds, as well as the necessity for an African digital identity programme. According to the Organisation for Economic Cooperation and Development (OECD), a single digital identity is imperative for societal and economic inclusion, as well as the prevention of identity theft.

Identity fraud

Identity theft is one of the fastest-growing crimes globally – experts estimate that someone’s identity is stolen somewhere in the world every two seconds. An exposé on Carte Blanche in April 2023 uncovered a syndicate operating in Soshanguve, near Pretoria, which sells fake identity documents and identity profiles for just R3,000.

A case in point is the much-publicised case of body swapping to assist Thabo Bester’s breakout from a maximum-security prison and his escape from South Africa with fake travel credentials, which could have been avoided if an Indian Aadhaar-style biometric identification system was in place.

Such instances of identity fraud cast huge doubt on South Africans’ international mobility as foreign governments begin to question the validity of the South African passport through enhanced visa requirements.

The execution of this Aadhaar-like system has found fertile ground inside the BRICS bloc, with the rapid acceleration of smart technology applications to advance democracy and social inclusion in India serving as an example. India’s 17-point biometric system for its 1.3 billion residents will soon see its citizens’ faces become their visas, marking a quantum leap in innovation by a developing country.

The scale of biometric mapping in India has been enabled by its large, liberalised internet and affordable data at $0.17 per gigabyte, where 70% of its population of 1.2 billion mobile phone users have access to smartphones. This contrasts sharply with South Africa’s excessive data costs and prohibitively high smartphone prices.

Following India’s demonetisation initiative in 2016, the combined synergy of advanced biometric mapping and a liberalised internet brought 80% of Indians into the banking system, decisively moving India further into a cashless society. One is physically able to buy goods from street vendors with your phone, and with Aadhaar-enabled banking, the transaction is cleared instantly and accurately.

In 2022, the Unified Payments Interface (UPI), an instant payment system developed by the National Payments Corporation of India, processed 74 billion financial transactions, cementing India’s position as the global leader in digital payments. UPI processed 8.9 billion financial transactions with a total transaction value of $170-billion in April 2023 alone, representing a tremendous acceleration.

With these advancements, India, which is currently the fifth largest economy in the world, is projected to become the third largest with a GDP of $5-trillion, and the third largest cloud-enabled market of $5.6-billion, fuelling fintech and new age ecosystems.

Rwanda

On the African continent, there have also been significant smart initiatives. The Smart Africa Alliance, led by Rwanda, is a partnership among 32 African countries that adopted the Smart Africa Manifesto. Its goal is to accelerate sustainable socioeconomic development on the African continent through smart uptake of Information and Communications Technologies (ICTs) and improved access to broadband services.

The African Union, the International Telecommunications Union, the World Bank, the African Development Bank, the United Nations Economic Commission for Africa, the GSMA, and the Internet Corporation for Assigned Names and Numbers (ICANN), are among the international members of the Smart Africa Alliance.

The use of ICTs to address the continent’s most important development imperatives, such as poverty, access to basic services, and job creation is one of the parameters framing “smart development” and “smart solutions”.

For example, M-Pesa in Kenya, the world’s most successful mobile phone-based financial service, drives 98% of mobile money transactions in a pro-cashless society of more than 53 million people with its pioneering mobile money wallet. And Rwanda was the first country in the world to use drones to offer lifesaving medical services through the delivery of blood and essential medicines to rural hospitals.

Rwanda, unlike several of its neighbours, is a small landlocked country with a high population density and few natural resources. It has experienced an extraordinary post-genocide development trajectory and is generally praised for its economic growth, poverty reduction rates and public safety and security. A key outcome was the identification of critical problems and solutions through its Vision 2050, set out by the government to shift Rwanda to an upper-middle income country by 2035 and a high-income country by 2050.

Some of the country’s catalytic projects include a “smart calendar” for all the government’s activities which allows improved coordination of missions, conferences and site visits; an e-waste recycling project to reduce the environmental footprint of modern gadgets and household electronics, while creating thousands of jobs; and smart solutions that enable farmers and cooperatives to participate in the knowledge economy and trade their commodities by leveraging platforms such as the Esoko mobile marketplace (for which Rwanda has already won two international awards).

Smart economy and society in SA

The launching of Artificial Intelligence (AI) hubs at the University of Johannesburg and Tshwane University of Technology, as contemplated by the Presidential Commission on the Fourth Industrial Revolution, is the first national consolidation of disparate initiatives within the academic, public and private sectors, and is intended to provide impetus to many policy endeavours around AI as a mechanism to promote a smart economy and society in South Africa.

South Africa’s Cabinet approved the publication of the National Identification and Registration Bill of 2022 for public comment in February 2023. This bill implements the Official Identity Management Policy by creating a single, inclusive, and integrated digital National Identification System (NIS) for all South Africans. The intention is for the NIS to seamlessly interface with other government and private sector identity systems.

While many countries around the world are hamstrung by enabling regulatory frameworks, South Africa, with the publication of the National Identification and Registration Bill of 2022 as well as the Protection of Personal Information Act, is well positioned to rapidly advance the single digital identity project earmarked for execution through the National Artificial Intelligence Institute Hub resident within the Johannesburg Business School at the University of Johannesburg.

Although the South African government has recognised multiple catalytic projects for development and implementation, the single digital ID project has been identified as the most impactful and cross-cutting. It will be a significant enabler for other smart projects like crime prevention and intelligence gathering, agriculture and food security, and smart manufacturing.

While detractors cite job loss as an unintended consequence of artificial intelligence, this is a critically important debate in South Africa, which has the world’s largest youth unemployment rate at 65%, and graduate unemployment at 12%, in 2022.

The pervasiveness and ubiquity of AI globally are irreversible and demand the development of new skills and substantial retraining to keep up with workforce repurposing and reorganisation. As with the single digital identity programme, political will, coupled with focused, coordinated, and adequate resourcing, will be the real catalysts for change in South Africa. DM

Prof Randall Carolissen is Dean of the Johannesburg Business School (JBS) at the University of Johannesburg (UJ) and Distinguished Professor, Woxsen University, India.

Liezl Rees is Head of the Centre for African Business and a doctoral candidate at JBS specialising in digital transformation.

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South Africa

Identity fraud

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Smart economy and society in SA