Nigeria, Ghana dominate identity fraud in West Africa, higher fraud rates on Mondays and Wednesdays

 

By Abimbola Tooki

Identity fraud in West Africa is largely dominated by two countries, Nigeria and Ghana. Due to the broad adoption of digital and biometric ID verification in Nigeria, the use of physical documents is less common than in other markets. However, Ghanaian ID documents have a higher fraud rate.

This disclosure was contained in 2024 Digital Identity Fraud in Africa Report by Smile ID

The Ghanaian Social Security and National Insurance Trust (SSNIT), in particular, has the highest fraud attempt rate (20 per cent It is an old ID document being phased out in favour of the newer Ghana Card, which has advanced security features and a lower fraud rate.

In the last two years, an overwhelming number of fraud attacks were directed at National Identity Cards (ID) cards, which accounted for 80 per cent of all document fraud attacks. 12 out of the top 20 most attacked document types were also National IDs. 

This preference for National ID cards among fraudsters results from two factors. In most countries, the national ID is the most common form of government identification and is mandatory for most adults. 

With more national ID documents in circulation than ever before, the chances of them getting lost or stolen get increasingly higher by the year, exposing holders to potential document fraud.

Many African countries like Nigeria have either recently implemented new national IDs or plan to in the coming years. Logistical issues around properly discarding the older IDs can lead to them falling into the wrong hands. An excellent example is South Africa, where the older Green ID card saw significant fraud targeting.

ID fraud in Eastern Africa reflects the overall trend across the continent, with national ID documents constituting the majority of document fraud attempts. Of the top 5 most attacked ID documents in the region, four are national IDs. Overall fraud rates in Kenya remain stubbornly high.

There are several contributing factors, one of which is the continued prevalence of old National ID cards which are constructed of black and white paper images, laminated in plastic.

The newer Huduma Namba cards have faced several challenges to adoption, beginning with opposition in the courts to how the data was collected. The current government has announced more investment in, and consolidation of, existing ID systems in 2024.

Owing to the size of its economy, fraud in South Africa has an outsized impact on the region representing almost 85 per cent of the total fraud recorded by Smile ID. South Africa’s developed digital ecosystem poses multiple opportunities for fraudsters to exploit. Botswana’s National ID also witnessed a lot of attacks in the period under review

Central Africa bucks the trend of national IDs featuring predominantly among the fraudulent ID types as we saw other ID types like passports feature heavily in our analysis of most vulnerable documents.

A good example of this is the passport of the Democratic Republic of Congo, which has the highest fraud rates in the country and across the region. 

A similar trend is observed in Gabon, with international passports finishing the year as the document with the highest attempted fraud rate. In contrast, in Cameroon, the National ID is the most vulnerable document.

Time Analysis: How do fraudsters behave?

The report data analysis showed that fraud trends across days of the week differed significantly between 2022 and 2023.   In 2022, document fraud rates trended consistently throughout the week.

However, in 2023, a shift in behavior was observed, with higher fraud rates being caught on Mondays and Wednesdays.

With biometric fraud, a similar trend is observed with consistent trend rates across weekdays in 2022 but significant variation in 2023. Fraudsters preferred weekends when committing biometric fraud in 2023. 

A regional analysis of the data reveals that fraud in all regions on the continent follow the same pattern except for Southern Africa where fraud appears to peak during midday between the hours of 8 am GMT to 2 pm GMT.

Gender Insights: Female IDs are targeted almost as much as male IDs

Over the last few years, the report’s verification data showed a remarkable improvement in the inclusion of women, both financially and identity-wise.

In 2023, the report saw an overall rate of 35 per cent of verified IDs belonging to women, a significant improvement from recent years and an indicator of progress towards equality. ‘’While we have historically seen more fraud attacks from male IDs, our 2023 data suggests that the gap in fraud attempts between genders is closing, with a difference in fraud rates by gender of less than 10 per cent by year end. This is compared to the remaining 30 per cent difference in volume of overall onboarding attempts by gender

Industry Insights

In 2023, the report said fraud rates across all industries varied significantly across the year in all industries. Companies in the crypto industry experienced the most fluctuation in fraud rates between six per cent in September and around 16 per cent in November.

Fraud rates in the finance industry remained fairly constant between 10 per cent and 15 per cent over the course of the year Fraud in all industries decreased in December, an indication that businesses may be running fewer promotions at the end of the year

While businesses in all industries can be victims of fraud, financial service businesses have long been the focus of fraudsters across the continent.

The payments industry showed high levels of fraud, reaching as much as 42 per cent in February 2023 and 35 per cent in August. While the banking and lending industry saw consistent fraud trends over most of the year  (under 10 per cent) it experienced a spike at the beginning of Q4 2023, peaking in November at nearly 20 per cent

Charting the Path

In 2024, businesses have a duty to customers and stakeholders to stay ahead of identity fraud. Fraud is constantly evolving, so businesses must be proactive in their approach to security.

Businesses can maintain trust and safeguard their reputation by prioritising security and staying informed about the latest fraud tactics.

What to know when expanding across Africa

For businesses looking to expand across Africa, it is crucial to recognise the unique landscape of identity fraud within this region. Unlike other parts of the world, the trends and methodologies of identity fraud in Africa are distinct and complex, shaped by a combination of socioeconomic factors, regional variances, and technological disparities.

Biometrics is crucial to preventing identity fraud. In the battle against fraud (identity or financial), biometrics is a non-negotiable tool, much more so in Africa, where the foundations of digital identity are still taking root.

This evolving dynamic presents a unique opportunity for companies operating in the continent. While navigating the diverse regulatory environment, businesses must leverage biometric technologies to enhance their fraud prevention strategies.

Biometric systems, being more complex to falsify and closely tied to individual identities, offer a more secure and reliable verification method. Implementing biometric solutions not only aligns with the global trend towards enhanced digital security but also addresses the challenges faced in the African context, such as a high rate of identity fraud and a significant number of unbanked individuals.

Businesses that adopt biometric verification systems are complying with emerging regulations and positioning themselves as trustworthy and forward-thinking entities.

Mobile-first authentication is a priority

Africa is becoming an increasingly digital continent led by the proliferation of mobile phones. In 2023, there were an estimated 451 million smartphone subscriptions in Sub-Saharan Africa alone; that number is expected to reach 632 million in 2028.

Many of Africa’s digital subscribers use smartphones as a primary gateway to access the internet and essential services like banking, etc. With this in mind, businesses need to meet African users where they are with selfserve mobile-first authentication as a priority.   

Although the agent-led approach may be useful, especially in rural regions with poor technology access, it can be fraught with challenges, including customers sharing personal information with agents who may sell it or use it for fraud.

A self-serve mobile-first authentication approach means that customers have the autonomy and security to verify their identity through their smartphones. This approach aligns with the growing preference among African consumers for digital solutions that offer convenience, speed, and security.

Future Outlook

The rapid advance and accessibility of AI tools is reducing the cost of sophisticated fraud. In 2024, the report expects to see substantially more synthetic identity fraud in Africa. These attacks often combine hyper realistic deep fakes with stolen ID credentials obtained via the web or data leaks.  

 Although there hasn’t been a significant uptick in synthetic identity fraud on the continent, global fraud trends already indicate that fraudsters are increasingly using deep fakes to try and beat biometric checks including liveness checks. As AI solutions become more accessible and the skill requirements lessen, more of these kinds of attacks are expected.

These attacks may include the use of multi-modal deep fakes, combining audio and video to create highly realistic content that cannot be easily identified by humans alone.

 More sophisticated identity theft attempts and financial scams that test the limits of today’s identity verification protocols will evolve. Social engineering and phishing attacks are also expected to become more difficult to spot as people will struggle to tell the difference between deep fakes and real media. The realistic nature of these deep fakes may also cause an erosion of trust in digital services.

AI will be integral in the fight against fraud

As fraudsters become more sophisticated, so will the AI-driven technologies designed to thwart them. AI will enable the constant monitoring of user activities and transactions, providing real-time alerts for suspicious behaviors and potential fraud.

This level of vigilance is crucial in the fast-paced digital world where threats can emerge rapidly. By analyzing patterns in user behaviour, AI systems can identify deviations that may indicate fraudulent activities, offering an additional layer of security.

Active liveness detection systems, where users are required to perform specific tasks, will be more widely implemented. These tasks ensure that a real, live person is present during verification, significantly reducing the risk of spoofing and impersonation by deepfakes. Advanced anti-spoofing models will be developed to combat new and evolving methods of identity fraud.

AI will be pivotal in detecting deepfakes with accuracy far surpassing human capabilities. This includes identifying even the most subtle inconsistencies and anomalies in synthetic media. Generative Adversarial Networks (GANs).

AI will also help establish trust in digital interactions by analyzing data provenance – the history of data including its origins and changes over time. This includes tracking specific devices used, locations, and consistent behavior patterns of users.

By assessing historical data, AI systems can create reliable trust profiles, making it easier to identify legitimate users and flag potential fraudsters. We can also expect AI integration with other state-of-the-art technologies, such as blockchain, to provide secure and transparent digital transactions. Multifactor and adaptive authentication systems, bolstered by AI, will become more prevalent. These systems will adapt to various risk levels and provide stronger, more nuanced security measures to protect user identities and financial transactions.

Significant Acceleration in Performance

Looking ahead, the report expects to see a continued decline in median verification time. In response to growing demand and feedback from verification providers like Smile ID, African ID authorities are investing in server capacity and designing systems based on performance rather than politics, resulting in better uptime and API responsiveness.

On the commercial side, Smile ID is seeing more global companies enter Africa and demand the same levels of performance as in the US, Europe or Asia.