Why 100m Nigerians could soon have a MasterCard in their wallets

At the end of August the Nigerian government, headed by President Goodluck Jonathan, announced the launch of the new National Electronic Identity (eID) card. The programme is expected to streamline and integrate all identity databases – including driver’s licences, voter registration, tax, health insurance and the National Pension Commission – into one shared services platform. In addition, the cards come with electronic payments functionality.

Nigeria's new national eID card.

Nigeria’s new national eID card.

But what makes the project particularly interesting (and controversial) is that it is being rolled out in partnership with American payments company MasterCard.

At the moment the project is in the pilot phase where the Nigerian Identity Management Commission (NIMC) will issue the MasterCard-branded identity cards to 13m Nigerians. After this, the NIMC plans to introduce over 100m cards to citizens 16 years and older.

Daniel Monehin, division president for sub-Saharan Africa at MasterCard, says it was the Nigerian government that approached MasterCard with the idea to develop the eID card. “The idea was put forward by the government. It did not come from us… we just developed the road map to make it work,” he told How we made it in Africa, adding that it took 18 months to develop.

No charge for the service

MasterCard is also not charging the government for its services, as the business model behind the eID card is the same as with any MasterCard-issued card, according to Monehin.

“This is exactly what we do. It is no different from our existing model – we just made [our card] work in an ID environment. Just like our current business model, the banks are our customers and they are the ones that pay us for our services. So we are not charging individuals, and definitely not charging the government anything.”

However, MasterCard can assume substantial benefits. It is expected the eIDs will become a permanent fixture for all Nigerians and legal residents, and President Jonathan has indicated that without the eID, Nigerians will be unable to vote in the 2019 elections.

When and if the cards do become compulsory, Africa’s largest population will be required to hold a MasterCard-branded eID and electronic payments card.

Potential benefits amongst controversy

But the announcement of the new eID card has sparked much criticism and controversy, with some comparing it to slave trade.

“The new ID card with a MasterCard logo does not represent an identity of a Nigerian. It simply represents a stamped ownership of a Nigerian by an American company,” said Shehu Sani, president of the Civil Rights Congress of Nigeria.

However, Monehin believes the eID has the potential to solve two key problems. For starters, Nigeria previously did not have one central repository of identification. The card will hold all biometric information including an individual’s photo, fingerprints and digital signature.

But the greatest potential lies within financial inclusion. A 2012 survey estimates about 40% of the Nigerian adult population are financially excluded and only around 33% are banked. The card’s electronic payments function is a huge step towards increasing financial inclusion.

“The eID is a good development and we intend to support it so it reaches its potential because it is a game changer when it comes to breaching financial inclusion obstacles,” said Monehin. “The two biggest obstacles for this is identity and access to financial services, and this programme actually solves both.”

President Jonathan has said pensioners will be enrolled so all pensions can be paid through the card, and the Nigerian government is also focusing on enrolling other groups that rely on government payments.

“For example, the Nigerian Minister of Agriculture Akinwumi Adesina mentioned in his speech at the eID programme launch that over 14m farmers are now being enrolled,” Monehin noted. “So we are going to move past the pilot phase very quickly.”

At the moment, Access Bank is the partner bank being used during the pilot phase, but potentially all banks in Nigeria could become issuers of the card.

A first for MasterCard

“The card is not only a means of certifying your identity, but also a personal database repository and payment card, all in your pocket,” President Jonathan said during the card’s launch.

While MasterCard has developed similar programmes in other places in the world, this is the first project the company has been involved in at a national level, and Monehin said the world is looking to Nigeria to see how the multipurpose eID cards will work.

“Many countries are in different phases of doing something like this, but trust me this is catching the attention of a lot of countries,” he stated, adding that MasterCard is open to engaging with other governments with introducing similar projects.