Ethiopia’s new national digital identity system, Fayda, is meant to be the backbone of a modern state. Built to establish a “one person, one identity” framework, it promises cleaner public administration, broader financial inclusion and a foundation for digital government. Few dispute the ambition. But as currently designed, Fayda contains a costly omission: Ethiopians who live abroad are largely excluded from it.
Under the Digital Identification Proclamation No. 1284/2023, Fayda enrolment is effectively confined to those physically present inside the country. For a nation with one of Africa’s largest and most economically significant diasporas, this territorial constraint is more than a technical oversight. It is a policy flaw with tangible economic consequences.
Identity as Infrastructure — With Borders
Digital identity systems increasingly function as economic infrastructure. In Ethiopia, Fayda is fast becoming a gatekeeper for access to banking, investment approvals, land transactions and government services. Financial institutions are beginning to rely on it for customer verification; public agencies are integrating it into licensing and registration processes.
For Ethiopians abroad, this creates a paradox. They remain citizens, taxpayers, investors and remittance senders — yet are unable to obtain the very credential required to operate formally within the system. Many are discovering that without a Fayda number, opening accounts, investing in property or navigating regulatory processes has become slower, costlier or, in some cases, impossible.
This is not a marginal constituency. Ethiopia’s diaspora remits billions of dollars annually, often acting as a counter-cyclical stabilizer during periods of economic stress. It also represents a pool of capital, skills and networks that policymakers routinely court. To design a foundational ID system that excludes this group is to undermine one of Ethiopia’s most reliable external economic anchors.
A Policy Mismatch, Not a Security Necessity
The restriction is often justified implicitly on grounds of security, verification or administrative readiness. Yet globally, these concerns are not insurmountable. Countries from India to Estonia have developed mechanisms to issue secure digital identities beyond their borders, often through embassies, consulates or tightly controlled remote enrolment processes.
Indeed, Ethiopia already issues passports and civil documents abroad. Extending Fayda enrolment through diplomatic missions would not represent a conceptual leap — merely an administrative one. Nor would it dilute system integrity. Biometric capture layered identity checks and phased activation could preserve security while expanding access.
The real issue appears less technical than institutional: the proclamation was written for a territorially bounded citizen, while Ethiopia’s economy is increasingly transnational.
The Cost of Exclusion
Leaving the diaspora outside the Fayda ecosystem carries opportunity costs. It discourages formal investment, pushes transactions into informal channels and weakens trust between citizens and the state. It also risks fragmenting Ethiopia’s digital architecture, as banks and agencies are forced to maintain parallel identity workarounds for overseas Ethiopians.
At a time when Addis Ababa is seeking foreign currency inflows, portfolio stability and diaspora engagement, such friction is self-defeating. Digital transformation succeeds not merely by deploying technology, but by aligning regulation with economic reality.
A Modest Amendment with Outsized Returns
The solution need not be sweeping. A targeted amendment or directive could:
- Permit Fayda enrolment for Ethiopians abroad via embassies, consulates and certified issuers.
- Allow secure pre-enrolment or remote verification linked to Ethiopian passports.
- Ensure financial institutions recognize diaspora-issued Fayda credentials for compliance and onboarding.
Such steps would strengthen, rather than weaken, the system. They would bring diaspora activity into the formal economy, improve regulatory visibility and signal that Ethiopia’s digital state extends beyond its borders.
A Test of Digital Statecraft
Fayda is rightly described as foundational infrastructure. But infrastructure that excludes a key constituency is, by definition, incomplete. Ethiopia’s policymakers now face a choice common to many developing states in the digital age: whether to design systems around geography, or around citizens.
Amending the Fayda framework to include the diaspora would be a small legal adjustment with significant economic and symbolic payoff. It would acknowledge a simple truth — that in a globalized economy, citizenship does not end at the border, and neither should digital identity.
