Sierra Leone: The Reasons Behind UN's Experiments With FInTech
TechnologyBit News Today2 min read
The UN Capital Development Fund (UNCDF) and the UN Development Programme (UNDP) have formed a partnership with the technology nonprofit Kiva. The centerpiece of this collaboration is the new Kiva Protocol, a distributed ledger technology-based system designed to create a national digital identification framework.
UN and Kiva Partner to Transform Financial Inclusion in Sierra Leone
Through this initiative, Sierra Leone intends to upgrade its Credit Reference Bureau and reshape its financial inclusion landscape. Following ongoing implementation talks, the project is scheduled to launch in Sierra Leone in 2019 and could eventually serve as a template for both developing and developed nations.
The Challenge of Financial Exclusion and Identity
Worldwide, 1.7 billion adults lack bank accounts and cannot obtain the financial services needed to better their lives and their families' futures. In Sierra Leone, the situation is acute: 80% of its citizens lack access to a formal identification system.
While the Sierra Leone government launched a Credit Reference Bureau, it alone could not support those with zero credit history. The Kiva Protocol marks a new step toward bringing advanced banking access to unbanked populations, starting in Sierra Leone.
How the Blockchain-Based Kiva Protocol Works
The new Kiva Protocol is designed to overcome these obstacles by providing digital identification to every citizen, allowing formal and informal lenders alike to contribute to verifiable credit records. By recording transactions ranging from commercial bank credit to balances with neighborhood shopkeepers, the protocol helps individuals obtain financing for businesses, schooling, or healthcare.
The Role of Kiva and UN Agencies
Kiva, an international nonprofit that has raised over $1.2 billion in crowdfunded loans across more than 80 nations, is developing the platform using distributed ledger technology. Over 13 years, Kiva has built strong ties and a trusted reputation across global microfinance by expanding financial access to underserved and unbanked populations.
Kiva CEO Neville Crawley stated, "With this partnership in Sierra Leone, we hope to carve a path to a system of global identity and federated credit history." Since 2005, around 1.7 million lenders worldwide have used Kiva to crowdfund upwards of $1.2 billion in microloans for 3 million borrowers in over 80 countries.
Using its capital mandate and financial tools, UNCDF provides "last mile" financing approaches that mobilize domestic public and private funds to alleviate poverty and stimulate local economies.
Conclusion
The project could act as a future template for other nations by using distributed ledger technology to provide digital identification and verifiable credit histories.
