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Biometric identification: a coveted African market

In depth
This article is part of the dossier: Biometric Identification: how far can we go?

By Saïd Aït-Hatrit
Posted on Monday, 22 June 2020 17:43

Senegalese President Macky Sall, who was at the opening of Blaise-Diagne airport on December 7, 2017.
Senegalese President Macky Sall, who was at the opening of Blaise-Diagne airport on December 7, 2017. HO/PRESIDENT'S OFFICE/AFP

In a booming sector, international giants are winning most of the contracts related to digital and facial recognition. Pending the emergence of an African challenger.

Dr. Joseph Atick, President of ID4Africa, welcomes the increase in participation at its fifth annual forum, which is being held from 18 to 20 June in Johannesburg.

“At our first forum in Dar es Salaam in 2015, we had 300 delegates, including 95 government representatives from 20 countries,” says Atick. In Johannesburg, we will welcome 1,500 delegates, including 650 officials from 50 countries,” he said.

ID4Africa, which he has been piloting since its creation in 2014, bringing together companies, African governments and donors, promotes “legal identity for all in Africa” through modern recognition tools that use fingerprints, iris or facial features.

According to a World Bank estimate, the continent alone accounts for half of the 1.1 billion people in the world unable to prove their identity, making it a major potential market for companies in the sector.

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On the continent, the market for biometric and digital identity documents alone is estimated at €1.4 billion by the specialist firm Acuity Market Intelligence.

On a global scale, the mobile biometric recognition segment (using smartphones and tablets, particularly for payments) is set to become the driving force in this market, with global turnover expected to rise from €18 billion in 2018 to €44.7 billion in 2022, according to the same source.

This revolution will inevitably affect the continent, already well versed in skipping technological milestones.

The figures illustrate the size of the market, which emerged in the early 2000s before experiencing strong growth since the 2010s.

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In its 2018 activity report, the market leader Gemalto (3bn euros in revenue in 2018), acquired at the beginning of the year by the French technology giant Thales, indicates that the 11% growth of its “Identity, Internet of Things and Cybersecurity” business is benefiting from the growing number of government programs relating to civil status registers and electoral records.

This market has moreover been set as a priority by the Franco-Dutch firm in 2019, while the activity of the “smart cards and issuing services” segment is stagnating and that of its “removable SIM cards” branch is in decline.

Impact on public finances

Voter registration in Nairobi in January 2017.
Voter registration in Nairobi in January 2017. Charles Onyango/XINHUA-REA

“Demand is currently driving the market,” says Dr Atick. Regulatory requirements – such as those of ECOWAS – supported financially and technically by donors, have encouraged states on the continent to launch projects to modernize their civil registration services. But market players also insist on the political will of governments.

Among the arguments that are hitting home, in addition to securing the recognition of people’s identity for voting, travel or access to healthcare, is the strong economic impact of the implementation of these technologies on the activity of certain sectors, but also on public finances.

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In a year and a half, India has saved more money than the cost of its new biometric identification system for beneficiaries of its social welfare system. Its implementation has greatly reduced multiple identity fraud, an extremely costly phenomenon that also affects the African continent.

“Precisely because of this rapid return on investment, African countries don’t need large amounts of financial support to set up biometric identification systems, but only seed money,” says Dr Atick. The World Bank has thus lent 1.8 million euros to Côte d’Ivoire for its new identity card programme; 4.4 million euros to Ecowas; and 5.3 million euros to Djibouti.

In all, the Bretton Woods institution has accompanied many countries, with some 30 evaluations over the past five years, each of which may give rise to a loan or a grant from the institution, which then makes it possible to mobilize other financial partners. The European Union’s Emergency Trust Fund is disbursing €25 million and €28 million for the modernisation of civil registers in Mali and Senegal.

A Congolese semi-biometric passport.
A Congolese semi-biometric passport. © Trésor Kibangula/J.A.

“With the issue of immigration, which has become a major theme in Western countries, led by Europe and the United States, some development agencies have increased their funding to improve the management of civil registers and border control in the continent’s states,” observes an executive from a specialist company in the sector.

As a result of the enthusiasm of African states – and their financial support – for biometric identification projects, this market is attracting new companies. Thirty-eight companies responded in 2016 to the Democratic Republic of Congo’s call for tenders to update the electoral register, won by Gemalto. But not all candidates have the same chance of winning these contracts.

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“There are only four or five of us competing on the global market, even if other companies may be able to compete locally for technical or political reasons,” explains Ronny Depoortere, vice-president of Zetes’ People ID division, which has revenues of €286 million in 2017 (including €54 million for its biometric identification division).

The executive highlights his group’s ability to organize large-scale deployments, consolidate data and integrate it with pre-existing systems. “Zetes has a decisive advantage over competitors who believe they can win contracts with technology alone, without deploying human resources in the field. »

“Technical criteria and the ability to deliver solutions on time are often equivalent to financial criteria in tenders on the continent,” added Thierry Mesnard, Gemalto’s Vice President Africa, in charge of digital security and identity activities.

Value Chain

Another heavyweight, Idemia (€2.5 billion in revenues), born in 2017 from the merger of the biometric entities of Safran, Morpho and Oberthur Technologies. Present in 25 African countries, the group currently manages the largest biometric database on the continent, in Nigeria.

It was against this giant that Belgium’s Semlex, another major player, won the huge market in Côte d’Ivoire in April for the national register of natural persons and the supply of identity cards, estimated at 703 million euros. For its part, Germany’s Veridos (167 million euros in revenues in 2017) is active in Uganda, Zambia and Morocco.

Finally, the French public company IN Groupe (€283.2 million in revenues in 2017) and the German company Mühlbauer, present in Mozambique (€266.4 million in 2017), also continue to bid for contracts in Africa.

Whereas a few years ago it was common to see several of these companies collaborating on the same project (as was the case with Gemalto and Zetes in Gabon in 2009, or Gemalto and Veridos in Zambia in 2017), today each of these giants is most often working alone.

“States now prefer to deal with a single company, usually a major international player with references, which is more reassuring. As a result, large groups, including Gemalto, have organized themselves to be able to respond alone to complete end-to-end solution tenders,” says Thierry Mesnard.

This has included a series of mergers and acquisitions to ensure they are present across the entire value chain, while at the same time being able, through partnerships, to offer their customers a choice between different technology solutions provided by independent partners.

In 2016, Gemalto took over Cogent, 3M’s Identity Management business, bringing back a range of solutions for civil identification or border control. Semlex, meanwhile, purchased its own printing facility in 2014 to move away from reliance on service providers.

Market concentration continues: one year before the birth of Idemia in 2017 and the takeover of Gemalto by Thales, Zetes was acquired by Panasonic. “This gives us the opportunity to integrate many of the cutting-edge technologies in which the parent company excels, such as facial recognition, into our offerings,” says Ronny Depoortere.

Behind these leaders, who are determined to take the biggest slice of the biometric recognition market pie, smaller African groups are struggling to win over.

South Africa’s Waymark was successful in 2010 in managing Guinea’s electoral register, but has been criticised for its lack of experience in the field. However, several companies are gradually making a place for themselves, especially as subcontractors to larger and more internationalized groups.

Among them are South Africa’s BioRugged, Secure ID and Ideco, Nigeria’s Seamfix, and Ghana’s Margins Group, which provide services ranging from supplying equipment to organising biometric enrolments. But we are still waiting for the emergence of an African challenger that can compete with the international giants currently dominating the sector.

According to the specialist firm Acuity, nearly 139 million biometric and digital identity papers were manufactured in 2019 in Africa and the Middle East. A record for the zone, even if, according to the same source, this figure should start to decrease from 2020 (119 million documents in 2021) with the end of the transition to this mode of identification in most countries.

Nigeria, a smart card

While three out of four Nigerians had no official documents in the early 2000s, the smart biometric identity card programme, launched in 2014 by the National Identity Management Commission (NIMC), is ambitious: the new card is to be used first as a travel document and payment card, and then as a driver’s licence, social insurance document and voter’s card.

As of January 2019, only 33.7 million Nigerians – out of a total population of 190 million – had received a unique identity number. The main partners in the project are Idemia and Trüb (a Gemalto subsidiary), as well as MasterCard for the payment part.

Interested central banks

“All over Africa, banking associations are telling me that we will not be able to improve access to credit for individuals until we make the identity of customers seeking financial support more secure,” says Joseph Atick, who chairs the ID4Africa movement. According to Atick, several African central banks are currently investigating the possibility of implementing systems based on biometric technologies to prevent identity theft and over-indebtedness.

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