By Noah Baalessanvu and George Muga
Twenty years ago, communication between persons across distances and services like sending money had a heavy reliance on physical channels, such as landlines, the post office and public service vehicles.
The advent of mobile telephony came with the benefit of easy, reliable, and affordable communication nationally and across borders.
This evolution has birthed benefits and in same breath risks that have propagated crime, fraud and other related illegal activities.
Fraudulence has also penetrated products and services delivered through the mobile phone for example mobile banking.
To stem these challenges, Uganda Communications Commission (UCC) has taken a bold step to adopt blockchain technology for new SIM card registrations.
Blockchain is a register of decentralised data that is securely shared. It enables a collective group of select participants to share data.
Data is broken up into shared blocks that are chained together with unique identifiers known as cryptographic hashes, which cannot be altered without the permission of a quorum of the parties who participate in the blockchain.
It additionally, provides data integrity given that all parties use the same data thereby eliminating data duplication and increasing security.
The development of the blockchain for SIM card registration is a first in the region and is spearheaded by Cryptosavannah a technology company in Uganda with requisite expertise.
The initiative is financed by Financial Sector Deepening, (FSD) Uganda to help develop, efficient financial market infrastructure and processes, that will bring to life sharing of data (interoperability) amongst actors of the same ecosystem.
According to Finscope 2018, mobile money contributed about 20% to financial inclusion, which stands at 78%. It is therefore crucial that telecom operators and other players who rely on the mobile phone as a channel for their products, ensure safety of their customers’ data.
Benefits of SIM registration blockchain to Uganda
The blockchain technology will offer a single registry that consolidates data in real time. It is expected that for every newly registered SIM card by an operator, details of National Identification Number (NIN) would be captured and automatically searched across the other registered SIM cards the NIN is registered against.
This will eliminate the need for manual intervention searches which is onerous and inefficient. Additionally, this will also address the illegal registrations as exhibited in the past, hence stem fraud and other identity theft related activities.
This technology is time saving since telecom operators do not have to share their SIM card registration data with UCC regularly. Because of it, customers will have secure access to relevant products and services offered through the mobile phone such as mobile banking.
Additionally, other actors within the private and public sector can utilise this technology when they disburse cash benefits through mobile money.
The blockchain will act as a ‘second eye’ looking at the database on behalf of the regulator, by ensuring the users are legitimate and consolidating the data. It will enhance security by tracking any inconsistencies and illegal SIM cards being registered in the black market.
The blockchain will also allow users to verify the number of SIM cards registered under their NIN, ultimately enforcing compliance to the law on SIM card holding limits.
In line with Uganda’s National Development Plan (NDP III)3 vision of enabling a truly digital economy, this platform will play a pivotal role in driving the digital economy agenda, where majority of digital products and services are offered and fulfilled via the mobile phone.
Telecom operators are currently testing this technology in conjunction with UCC with a plan to operationalise it by year end.
Before the blockchain technology
Prior to the introduction of the blockchain technology, the government of Uganda put in place several interventions aimed at preventing fraudulence in the telecommunication sector.
In 2010, the Regulation of Interception of Communications Act4 was passed. It prescribed a maximum of 10 SIM cards per customer across all networks regulated by the Uganda Communications Commission (UCC).
In 2016, the government of Uganda made it mandatory for an individual to present valid identification to telecommunication operators in order to obtain a sim card. The card would be activated upon verification via a shared system enabling a customer access to various services as offered by the operator.
While the provisions of the law are being implemented, they are largely inefficient, given several reported incidences of SIM card fraud. The lack of standardised know your customer records, a regulation by the Ugandan government across the industry also led to complexities in SIM registration data reconciliations.
This presented a challenge in enforcing the SIM card limits as the operators would not have visibility to the other operators’ SIM registration database to determine the number of SIM cards registered to everyone.
These gaps posed a risk not only to customers’ identities being abused and used for fraud but also to undertake criminal activities. Criminals would illegally register SIM cards using other individuals’ identity documents, commit crimes and discard the same. The blockchain technology comes in to fill these gaps.
Noah Baalessanvu is the head of Cryptosavannah Limited Uganda and George Muga is a Digital Finance Expert, Nairobi.