Interoperable Regional Services

In West Africa’s informal sectors, Covid-19 has hurt millions who rely on in-person labor but are now without jobs or income.

Our solution follows India’s Aadhaar approach to enroll recipients and disburse temporary basic income (TBI) payments via third-party, mobile-money agents of Orange, MTN, and Société Générale. Using a permissioned blockchain with national central-bank nodes, regulated by ECOWAS, and aligned in a federated eIDAS-type framework for interoperable, national, digital IDs, the plan will also include incentives for future savings and pension-payouts mirroring Rwanda’s Ejo Heza.

In the short- to medium-term, the solution will help the poor and near-poor make up for income lost in the pandemic, and in the long term, provide incentives to save with matching pension payments, according to defined contributions. Scaled regionally, the platform will also provide financial help and services to those who migrate across national boundaries—in the course of normal life and during emergencies.

30-50% of West Africans need a foundational ID, and nearly half suffer from chronic or transient poverty. 100m live in the six contiguous countries of the World Bank’s WURI project. In the current pandemic, the poor and near poor need TBI, based on foundational digital IDs using minimal demographic data and biometrics of fingerprints, iris scan, and facial photo.

In 2019, West Africa had 161m registered mobile-money accounts, of which 34% were active, with the number of registered accounts rising by 15%, and the value of transactions up 35%. With 7 times the reach of ATMs and 20 times that of bank branches, mobile money is best placed for financially including the informal sector (GSMA).

In the West African Economic and Monetary Union (WAEMU), the Central Bank of West African States (BCEAO) is completing a regional interoperability project to make all types of financial accounts in its member countries interoperable (ibid). To enhance regulators’ comfort with mobile money, the GSMA has already certified regional telecom providers, MTN and Orange. Similarly, Société Générale is expanding its YUP mobile-money solution to 1m accounts this year and is contracting 8,000 more mobile-money agents to service the unbanked in West Africa.

The UNDP proposes daily TBIs of USD 3 for Sub-Saharan Africans. Per-capita transfers of USD 1-2 per month could reduce the poverty gap by up to 40%.

The Bank of France has ties with West Africa and was the first central bank to deploy a permissioned blockchain to coordinate activities of multiple banks (WEF). Other central banks are testing ledgers for wholesale digital currencies, similar to a regional sharing of records among West African central banks managing cross-border digital IDs and authentication. A distributed ledger would enable de-duplication of records so that individuals crossing national boundaries could not request multiple foundational IDs and/or receive multiple TBIs and matching contributions to savings and pensions.

The incentive of TBI will boost enrollment, and matching payments for savings in mobile-wallet accounts will encourage long-term contributions to informal-sector pensions. To address gaps in literacy and numeracy, a promotional campaign would explain the receipt of one day’s supplement every 90 days if TBI balances stay untouched. Like Rwanda’s Ejo Heza, our solution would be open to all. To focus on informal workers, however, it would not supplement formal-sector pensions or go to registered taxpayers. It will have no work requirements or conditionalities.

Our solution will address all three components described in Phase 1 of the WURI program documents: 

(1) strengthening the legal & institutional enabling environment by working with ECOWAS and national central banks to set up a permissioned blockchain linking them together;

(2) establishing robust and inclusive foundational ID systems patterned after India’s Aadhaar; and

(3): Facilitating access to services such as TBI, savings, and defined-contribution pensions through this regionwide, interoperable system of national IDs.

Phase 2 of the WURI program lists a total of six francophone countries as participants. All of these have relations with the innovative Bank of France.

Like a combination patent that combines, enhances, and alters the usability of two existing patents, our solution combines, enhances, and alters the usability of three existing systems: India’s Aadhaar, the European Union’s eIDAS, and Rwanda’s Ejo Heza Long-Term Savings Scheme. All three are proven, functioning systems. There are no “competing” solutions to ours because none of these three existing leaders in their respective domains combines the core attributes of the others:  a foundational ID (Aadhaar), a regional framework for cross-border recognition of IDs (eIDAS), and a savings program for all, including the informal sector (Ejo Heza).

One regional solution that aims to address an initial aspect of the problem of interoperable regional IDs is the Common Market Protocol of East African countries to recognize one another’s national ID cards as valid documents for crossing borders. Likewise, In 2014, ECOWAS Heads of State approved the ECOWAS National

Biometric ID Card (ENBIC), for use as a regional travel document. So far only two countries have deployed ENBIC although others have plans to do so.

The permissioned blockchain or distributed ledger linking nodes of central banks for authentication and de-duplication of records would also be the first instance of such a use for foundation IDs and the services associated with them. ECOWAS would coordinate the effort and has already received a World Bank grant to coordinate the creation of the region’s national foundational IDs.

Having the benefit of coming after other technology deployments, our solution can use the best in class of various technologies and technical standards for foundational IDs such as those of the International Organization for Standardization (ISO)—from two-dimensional barcodes (QR codes), interchange formats for biometric data, digital-signature cryptography, physical eID cards, federation protocols of OAuth and Open ID Connect (OIDC), and frameworks of assurance levels for identity systems, as well as data privacy and management (World Bank).

Aadhaar provides examples of the three types of biometrics to collect, a low-cost manner of enrollment, and provision of various functional services including direct cash payments via the foundational ID. eIDAS offers a framework for federation of different national ID systems. Ejo Heza provides parameters for incentives to encourage informal savings and longer-term pensions with flexible uses in a similar francophone Sub-Saharan country.

The Central Bank of West African States (BCEAO) has created interoperability standards for financial institutions in the region, and the Bank of France has shown how permissioned, distributed ledgers or blockchain can link them together. Moreover, WAEMU has agreed on the need for ECOWAS-wide interoperable foundational ID systems to facilitate know-your-customer (KYC) financial requirements via BCEAO.

Distributed ledgers are an ideal solution when multiple parties, such as West African central banks, need to coordinate the updating of database records and transactions in a secure, transparent, and accountable manner.

The World Bank has already laid the groundwork for a regional, foundational ID in West Africa under the aegis of ECOWAS. In addition to this, ours is a top-down solution in that it involves obtaining buy-in from national governments in the West African region on the necessity of implementing a temporary basic income (TBI). Although there may be political resistance from traditional quarters to giving “hand outs”, without conditions, most governments around the world are providing some sort of similar cash aid to combat the economic impact of the current pandemic.

The actual implementation of the solution will depend on regional organizations such as BCEAO and ECOWAS, national governments, and their development partners, who fund 60-90% of the region’s social safety nets. Helping the final beneficiaries of the poor and near poor in the short, medium, and long term will be possible only through policy and regulatory change, coordinated not just within individual countries but across them as well.

Our ideas are not radical, but are grounded in proven, successful implementations elsewhere in the world and use technologies agreed upon by reputable standards bodies and organizations that have worked on these issues for many years. With the rapid rollout of Aadhaar, India has proven that a developing country can make skillful use of technology to move from identity silos for disparate functional services to a unifying foundational ID.

Collection of biometric information inevitably involves concerns over data privacy and data security. Without adequate legal and technical safeguards, Kenya has recently shown that courts are likely to step in to halt implementation until the adequate resolution of such concerns. Nevertheless, despite criticism, Aadhaar has not suffered crippling technical cyber breaches of the kind that can plague centralized databases, particularly of valuable biometric data.

The eIDAS-type framework of our solution presupposes differing national digital-identification systems; the addition of functional services similar to Rwanda’s Ejo Heza model of social-savings promotes inclusivity; and the solution’s use of India’s Aadhaar approach is tailored to conditions of marginalized groups in urban and rural areas. The solution would borrow from recent CGAP research on ways to extend networks of mobile-money agents to “the last mile” in hard-to-reach locales. By so doing, the platform would reach more of the poor, involve more women, and engage digitally or financially illiterate via a combination of agents’ “tech” and “touch”.

Like India’s Aadhaar, our solution will take three types of biometrics: fingerprints, facial photo, and iris scans. Iris scans are important because fingerprints can wear away over time for the elderly and manual laborers—two vulnerable groups that need attention.

Our proposed, regional framework of systems that collaborating central banks manage and regulate also addresses two other marginalized and vulnerable groups:  (1) informal-sector migrant workers that have to cross national borders in their work and (2) the internally displaced, refugees, and stateless persons, who must move across local boundaries in response to slow-onset catastrophes such as climate change and rapid-onset ones of war, persecution, and pandemics.

The rapid, widespread, and low-cost roll-out of the Aadhaar system has shown what user-friendly technology can do—from scannable or photographed QR codes for authenticating  transaction to handheld mini-ATMs, similar to point-of-sale (POS) devices, for dispensing and receiving digital-cash payments. Likewise, networks of mobile agents help make a system user friendly by explaining its rationale to locals who know and respect their local agents and who have already interacted with them—for mobile money and other services. 

Our solution will propose public-private partnerships (PPP) to overlay government-to-person (G2P) payments and collections with similar transactions of private firms using the same agent networks and network infrastructure. Such PPPs offer the most cost-effective approach and the only feasible means for sustainably servicing hard-to-reach locations (Boston Consulting Group).

New technology must be backwards compatible, particularly in less-developed countries that can leapfrog intermediate stages of development, but which still must contend with legacy communications infrastructure. For example, Société Générale partly owns Tagpay, a French fintech that developed Near Sound Data Transfer (NSDT) contactless, authentication technology. NSDT is more intuitive for users than existing solutions on the market. With no changes to hardware or software and regardless of the service provider, the NSDT technology turns into a contactless payment device any mobile phone, including the old feature phones that are most common in West Africa.

Most technologists, particularly in the social sector, recognize the need for open standards and backward compatibility with existing technologies. Even for-profit platforms rely on these basic tenets. Our non-profit solution will be no different.

In 2019, global cross-border transfers via mobile money rose by a third to USD 7 billion on the recognition of the benefits of greater transnational interoperability and integrations.  An increasing number of mobile-money providers, such as MTN’s MoMo in West Africa use open application program interfaces (APIs) to integrate with an average of 17 government agencies (GSMA), providing what are known as “bulk disbursements” to recipients’ mobile-money accounts via G2P payments or from development partners to beneficiaries.

To avoid lock-in to any specific vendor, we will not advocate the use of any proprietary technology, despite its potential merits. For example, Guardtime’s Keyless-Signature Infrastructure (KSI) blockchain offers the world’s first accredited blockchain-based trust service accredited by eIDAS, but because it uses a proprietary technology, we would not recommend it for our solution. Instead, we will test and then use one of numerous open-source, distributed ledgers or blockchains so long as it is neither patent-protected nor patent pending.

In Sub-Saharan Africa, 90% of mobile-money transactions still go via Unstructured Supplementary Service Data (USSD) messages, but recently experts recognize that standardized and interoperable Quick Response (QR) codes make more sense for functionality and ease of use. Such QR codes can function without access to the mobile Internet, require only static QR stickers to start payments, and work with a phone and camera along with USSD. Merchants using QR codes transact three times more in value than those relying on USSD or Near-Field Communication (NFC). China, India, and Indonesia use QR codes extensively.

Our solution will use QR codes for low-connectivity environments. Since these codes are simply point and scan or photographed, they do not require literacy or numeracy to function properly. Likewise, 2G and 3G feature phones are still prevalent in West Africa due to their low cost and because of rural areas’ intermittent network coverage that cannot yet sustain high-bandwidth traffic. As mentioned above, we propose using the Tagpay authentication technology that works with such phones.

Nevertheless, a lack of demand rather than a lack of connectivity has hampered greater use of mobile-broadband telephony. Even in Africa, mobile-broadband coverage exceeds usage by fifty percent. As more poor, illiterate, and innumerate people realize that, despite their handicaps, they can still receive valuable services, and not just social media, via their mobile phone, we expect demand to rise. To accomplish this, the GSMA last month added a training module on mobile money to its training-of-trainers Mobile-Internet Skills-Training Toolkit.

As an idea, our solution is not currently serving anyone. Ideally, national governments within West Africa will have disbursed the temporary basic income (TBI) within one year, but not necessarily through our solution.

Within five years, if the rollout of Aadhaar is any guide, the number of people served in West Africa via the other functional services of savings programs could number in the tens of millions. By comparison, the World Bank’s WURI program aims to reach the entire 100m population of its six project countries by 2028. Our rough estimates presuppose “standing on the giant’s shoulders” of the World Bank project and leveraging the resources it has already committed to its multi-year WURI program.

Within the next year, our goal is to have buy-in from West Africa’s national governments and development partners on the appropriateness of our approach, with commitments of funding commensurate with our role.

Within five years, if we achieve the first year’s goal, we would hope to have a functioning foundational ID system, interoperable across the region, and begin having meaningful impact on the poor and near poor via the functional savings and cash-payment services that the foundational ID system would enable.

The most immediate barrier for the next year is the ongoing Covid-19 pandemic, but such a crisis also presents an opportunity:  to change mindsets on the need for universal basic incomes, albeit initially on a temporary basis, and to accelerate the digitalization of economies in an inclusive manner for all.

Legal, regulatory, and market barriers will require cooperation among the ECOWAS states to harmonize laws, regulations, and financial markets, or where necessary, to accept and work around existing differences in the policy framework. Participating member nations will also need to each recognize the need for a temporary basic income (TBI) as well as our proposed approach for creating a regional, foundational ID via databases linked through distributed ledgers and housed as individual nodes at each central bank, with an additional node at the oversight and regulating organization, ECOWAS.

Each nation will also have to commit to paying TBIs for all identified poor and near poor who happen to reside in their countries, regardless of original nationality. In recent years there have been as many as three million internally displaced and refugees in the ECOWAS region, with the highest population of stateless persons in Cote d’Ivoire. This payment requirement will, therefore, put an added burden on Cote d’Ivoire. Nevertheless, many countries in the region, including Cote d’Ivoire, have recently committed to comprehensive measures to address statelessness within their borders (UNHCR).

Our main resource is our human labor and experience in advocacy for technology-based improvements to policy and regulatory environments. Part of advocacy involves bringing together coalitions of disparate parties. Due to current circumstances, much, if not all, of this advocacy will need to occur remotely rather than in person.

As the main barriers at the initial stage of the project are on a national or regional level, we will need to rely on multilateral and global organizations such as the World Bank that have the clout to encourage those types of changes. Behind the scenes, we would provide advice and suggestions to the World Bank and others for their approaches to advocacy and on issues of technical considerations.

Winning the Mission Billion Challenge would provide credibility both within the World Bank and outside for us to have an impact in our advocacy and in our push for the  proposed technological solution to a regional foundational digital ID and associated services such as a TBI and savings scheme.

Two persons—Paul Ulrich (full time) and Keith Ulrich (part time)—work on this solution team.

The primary delegate for the solution is Paul Ulrich, a Harvard- and Stanford-trained public administrator and development economist whose most recent work experience involved researching blockchain for digital IDs at the GSMA, the global trade organization for mobile operators. He is joined by Keith Ulrich, a Harvard-trained software programmer with recent program experience in front-end, mobile applications for multilingual use. Both Paul and Keith learned French in school and have used the language during work or travel in Africa.

Paul has worked on microfinance projects for ACCION and USAID in Africa, Latin America, and Asia. His PhD research at Stanford applied the lessons of self-targeting social safety nets such as food- and cash-for-work programs in India and China to the African context. At CARE in Sudan, he designed the first food-for-work project since the British colonial era. At Harvard, his graduate work focused on public administration for developing countries. More recently, he has studied data science and applications of blockchain for various developmental and commercial uses while working with the GSMA to improve mobile-telecom and mobile-money policy and regulatory environments in developing countries of Asia Pacific.

Keith has twenty-seven years’ experience in freelance software engineering for a variety of clients from Rosetta Stone to Pearson Education in various computing environments and languages— including AWS cloud computing, Javascript, React, PHP, Java, Ruby, and both SQL and NoSQL databases. He attended Harvard College at 16, majored in applied math, and was qualified to graduate in three years.

We have not yet partnered with any organizations but hope to do so, based on the catalyst of winning the World Bank ID4D’s seal of approval in the current competition for good ideas via the Mission Billion Challenge.

In anticipation for this kind of work, Paul has connections via LinkedIn or other exchanges to numerous potential development partners, funders, and implementing firms—from regional mobile-telecom providers, MTN and Orange, to the GSMA, to blockchain organizations such as Hyperledger, the Enterprise Ethereum Alliance, and the Stellar Foundation, to finance, technology, and telecom professionals and officials working in, or on behalf of, the West African region, including the two co-founders of e-commerce marketplace Jumia, the founder of Waystocap, a Jumia competitor, and the founder of fintech payments firm Flutterwave.

Among development partners and funders, in addition to the World Bank, Paul’s contacts also span persons involved in foundational IDs and / or mobile money at the UNDP, UNICEF, European Union, ITU, UNCTAD, World Food Program, and the Gates Foundation.

The value propositions to the end beneficiaries are as follows: (1) a foundational ID to enable them to receive social benefits, travel, and work more easily; (2) more money in their pocket through a TBI, without restrictions on its use or conditions for earning it; and (3) a savings plan that rewards them for both short- and long-term saving through matching contributions and that allows flexible use of the savings based on their needs.

The value proposition to the intermediate customers of national governments and development partners is advice on conducive policies, regulations, and procedures for achieving their aims of more equitable societies that benefit the poor and near poor while achieving better regional integration and flexibility to respond to external shocks such as the Covid-19 pandemic.

Most, if not all, governments and their partners are probably already convinced of the need for foundational IDs and the advantages of digital ones. The World Bank’s West Africa Unique Identification for Regional Integration and Inclusion (WURI) project has already achieved acceptance for a regional approach, as shown by, for example, the regional central bank’s progress on financial interoperability. We will show to governments and their partners that, rather than create dependencies, a TBI will be a more efficient and effective means of helping people than current systems in place.

This is not a revenue-generating scheme and will rely on donor and government support. It will, however, measure and project the impact of each stage of its implementation.

At present, our expected expenses are largely non-monetary: they consist of our time and the opportunity cost of working on this project. The path to financial sustainability will depend on sustained grants and in-kind donations of expertise from knowledgeable development partners that have been involved in areas of foundational IDs and functional services such as mobile money to enhance financial inclusion.

Potential donors or contributors include the World Bank, the UNDP, UNICEF, the African Development Bank, the Gates Foundation, the GSMA, the ID2020 Alliance and its founding members Microsoft and Accenture, which recently launched a blockchain-based ID prototype, the Stellar Foundation, which worked with a local fintech firm to implement a cross-border blockchain project in West Africa, MTN, Orange, Société Générale, and well-funded tech firms planning to develop e-commerce in less developed and rural areas of Africa such as Jumia, the Sub-Saharan Africa’s version of Amazon, and Facebook with aspirations for its Libra mobile-money wallet, now called Novi.

Another source of in-kind contributions would be the Unique Identification Authority of India (UIDAI), the creators of Aadhaar. Already some twenty countries around the world have asked UIDAI for advice on how to set up a similar foundational ID system, although none of the solicitations have yet come from the WURI region. Other sources of consultation would be Rwanda’s central bank, which oversees Eja Heza Long-Term Savings Scheme, and the European Commission’s eIDAS Observatory, which works toward overcoming obstacles to the uptake of eIDs and trust services.

We have not yet raised any funds because we only just thought of this project in late July 2020 after learning about the World Bank’s Mission Billion Challenge for good ideas on creating regional, foundational IDs and functional services based on these.

As a not-for-profit, consulting endeavor, funds for this solution would be in the form of grants and in-kind donations from organizations with expertise in the respective areas of the project. To justify continued expenditure of our time, we would hope to raise the money as soon as possible, beginning with seed funding from this World Bank competition, the Mission Billion Challenge.  

We do not anticipate much expense for 2020 since most, if not all, of the work from us can occur online and via phone, particularly until the pandemic ends, which may not happen until 2021 or later. As mentioned, the main expense is the opportunity cost of our time.

The prize will provide credibility as to the merit of our proposed framework for a regional, foundational ID modeled after eIDAS and the technology of Aadhaar, with functional services based on Ejo Heza’s Long-Term Savings Scheme. A seal of approval from the World Bank, as cornerstone investor, i.e. funder, would act as the catalyst for follow-on funding and entrée in advocating for our ideas and approach to governments, development partners, and implementing organizations.

In the initial stage, the key area of need will be obtaining buy-in from governments, donors, and potential private-sector partners operating in the West African region. Exposure from the Mission Billion Challenge and introductions from the World Bank’s Identification for Development (ID4D) department to relevant contacts will be of great help for that.

Subsequently, prototyping the distributed ledger to connect West African central banks’ ID databases and a digital ID, with physical card counterpart, will require assistance, as will the distribution and marketing of these IDs to end beneficiaries.

We will also need to decide on the most appropriate permissioned blockchain solution—whether Hyperledger Fabric, Enterprise Ethereum, R3’s Corda, or something else. The Vajra platform of the National Payments Corporation of India (NPCI), which works with the creators of Aadhaar, the Unique Identification Authority Of India (UIDAI), has been testing all three, and the NPCI’s results will inform our decision.

Last year, Paul spoke on an Asia Pacific Telecommunity panel in Bhutan on national digital IDs with a director general of UIDAI. Due to their wealth of expertise from ten years of testing, administering, and refining Aadhaar, UIDAI would be an excellent partner.

Likewise, he has contacts in the European Commission’s DG Connect, which manages the European Union’s digital agenda and could advise on potential barriers to regional regulations and integration for foundational IDs.

Recently, he also sent LinkedIn contact requests to the head of Ejo Heza LTSS in Rwanda and to a director of the Rwandan central bank, which regulates it.

In addition, he has contacts at MTN, Orange, and Société Générale, including Jokko Labs in Senegal, which helped develop the bank’s YUP mobile-money solution for West Africa.