West African nations Nigeria and Togo are implementing biometric digital ID systems to oversee their respective government loan schemes. In Nigeria, applicants for student loans must now provide their National Identification Number (NIN) and a biometric bank verification number (BVN), aiming to enhance transparency in the process and financial inclusion by linking loans to bank accounts.

Meanwhile, Togo is deploying facial recognition technology under its National Inclusive Finance Fund (FNFI) to identify loan defaulters, preventing them from accessing further loans across financial institutions. Togo is renowned for innovative financial inclusion methods, particularly evident during the COVID-19 crisis.

Why does it matter?

Despite the innovative technological methods for loan management, there are potential concerns regarding privacy and data security, with questions arising about the secure storage and protection of sensitive data. Moreover, challenges in ensuring the accuracy of facial recognition technology could lead to misidentification of loan defaulters and unjust denial of further loans, necessitating a critical address of these issues for effective governance.