The most used documents for identity fraud in Africa

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January 29, 2024
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4 min read
An image describing how fraud is done with national IDs
Image source: Smile ID

Key takeaways:

  • Smile ID's fraud report has revealed the most used document for verification fraud in Africa.
  • The report is based on a dataset of over 100 million identity verifications conducted by the company between 2021 and 2023.
  • Being the most popular document for ID verification, national IDs are fraudsters' preferred choice for identity fraud in Africa.

African identity verification startup Smile ID has released its yearly report based on identity checks conducted on the continent throughout 2023.

Since the company was founded in 2017, it has done over 100 million checks in Africa. It used the data from these checks to draw insights into fraudulent verification attempts on the continent.

One such insight is that fraudsters use national IDs for identity fraud more than passports, driving licences, and other means of identification, representing 80% of total fraud attempts using document-based verification.

A chart showing which documents are mostly used for identity fraud
Documents are mostly used for identity fraud

The report noted that the reason for this is that the national ID is the most popular form of government identification in most African countries. Meaning they are the most likely to get lost or stolen, making it possible for fraudsters to use them.

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Interestingly, Smile ID's 2024 Digital Identity Fraud in Africa Report ranked countries with national IDs that have been used for the most fraud attempts and Nigeria ranked ninth with a fraud attempt rate of 18%.

Topping the list with the most fraud attempts is South Africa’s national ID at 38%. Tanzania came in second at 32%, Kenya at 26%, and Uganda was fourth at 25%.

Which countries had the highest fraud rates in Africa in 2023?

Of the four regions — East Africa, West Africa, Central Africa, and Southern Africa — compared in the report, Central and East Africa saw the highest rate of identity fraud in 2023. Both regions reached a peak of 29% and 30% respectively.

Southern Africa reached a peak of 23% while West Africa had the lowest fraud rate, peaking at 20%.

A deeper analysis of fraud trends in the continent revealed that fraudulent activities increased around 6 p.m. and peaked at 9 p.m. Fraudsters were also known to be more active on Mondays and Wednesdays.

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a chart showing Times when fraudulent activities rise in each region in Africa
Times when fraudulent activities rise in each region.

Times when fraudulent activities rise in each region.

Which industry had the most fraudulent verification attempts?

While there wasn't a significant difference in identity fraud rates among industries in 2023, the financial industry saw fraud rates peak in October.

Interestingly, the financial industry also saw the highest fraud rates in 2022, with the buy now pay later (BNPL) sector seeing the highest rate of biometric fraud.

However, payment platforms took the top spot for the most fraud attempts in 2023, reaching a peak of 43% in January, while savings and investment platforms had the second-highest rate at 24% in October.

A chart showing Platforms with the most fraud rates in 2023
Platforms with the most fraud rates in 2023

BNPL platforms which held first place in 2022 only saw fraud rates peak at 18% in April 2023. According to this article, there was an explosion in usage and investment in BNPL startups in 2022. The sector which barely saw any funding a couple of years ago, had startups like Kenya's Lipa Later raising $12 million pre-Series A and Nigeria's Klump raising a $780,000 pre-seed in 2022.

CredPal even partnered with Bolt to create a ride-now-pay-later offering for riders.

Eric Muli, CEO of Lipa Later, attributed the explosion of the usage of BNPL platforms to low credit accessibility in Africa. BNPL made it easy for ordinary Africans who weren't part of the privileged few to access credit quickly and easily.

While this ease could have spurred an explosion in usage of BNPL platforms, and subsequently led to an increase in fraud rates, there's no clear reason why fraud rates on payment startups have gone up.

However, we saw payment startups like Flutterwave suffer a ₦2.9 billion hack, with Interswitch losing ₦30 billion to chargeback fraud.

Preventing identity fraud in Africa

Smile ID's report focused on biometric and document verifications, and found that businesses that “rely on textual verification are 4 times more likely to be breached by fraudulent actors than their counterparts that rely on biometric authentication."

A combination of both forms of verification makes it harder for fraudsters to game the system because "an ideal identity verification system should be capable of verifying that the ID presented is an original copy issued by the appropriate agency and authenticating that the person presenting the document is the owner."

However, the age of generative artificial intelligence could help fraudsters pass biometric checks. However, Smile ID notes that AI models will be created to spot anomalies in synthetic media.

He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
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He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.

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