The Republic of Sierra Leone, despite its good mineral and natural resources and a developed diamond-mining industry is one of the poorest countries in the world. 70% of the population live below the poverty line. The value of one leone today is $0.00012. Most residents do not use computers and cannot imagine what the blockchain and cryptocurrency are. Here the mobile phones are in use - as a universal means of communication and secure payment transactions. There is only one credit bureau in the republic, whose services are used by less than 1% of the population - the majority of the credit history has even no official identification. In addition, 80% of citizens do not have access to banking services.
This is especially problematic for startups and small businesses, who are constantly looking for capital to start their own enterprises or expand them. And in general, it hinders the efforts of Africans to improve their standard of living. And credit cards, which are expensive to maintain, often do not function, and only those who can afford it - a privileged minority - use them. For all others the issue of money transfers is painful. The commission from cash transactions is so high that it is simply unprofitable to carry them out.
It would seem that magic pills are what the people in West Africa need at a minimum. But this is not the case at all. The marriage of mobile devices and blockchain technologies can generate savings, since intermediaries - officials - will no longer be participants in the payment chain. The poor of Sierra Leone and other countries of the Black Continent, who are looking for any opportunity to make money with the help of technology, are ready to make efforts on the cryptocurrency market, even if this does not bring them quick results.
Future Credit Bureau
The project, which will fundamentally change the economy in Sierra Leone and could cause a big echo, is planned to be implemented in 2019. It was presented at the 73rd session of the UN General Assembly on September 27 this year. The partnership between the non-profit start-up Kiva and the two UN divisions - the Capital Development Fund (UNCDF) and the Development Program (UNDP) - is to create a national blockchain system in Sierra Leone that will allow every citizen of the country to get personal digital identification tools and digital wallet with credit history, manage personal information and register all transactions in the account.
The Kiva protocol extends to a wide range of monetary transactions: bank loans, loans for businesses, basic medical and educational services, even a loan from a local shopkeeper. Data on loans and payments of 7 million citizens will be stored in the blockchain system. This credit rating will be able to be used by the government and other companies for making loan decisions.
“As part of the project, Sierra Leone is capable of creating one of the most advanced and secure credit bureaus, - said Xavier MICHON, Deputy Executive Secretary of the UNCDF, at the Assembly session. - Perhaps this will serve as an example for developing and developed countries in the future; the project has enough potential to radically change the area of financial inclusion.”
Kiva is an international non-profit organization that specializes in expanding financial access for low-income people. Since 2005, this global community has raised $1.2 billion in microloans to borrowers in more than 80 countries. “Thanks to the project in Sierra Leone, we hope to develop a path to a system of global identity and a federated credit history, - said Kiva CEO Neville CROWLEY. - It will help unlock capital for those most in need of it, allowing lenders to significantly increase the volume of services and the flow of funds for non-banking countries.”
Is Sierra Leone a guinea pig?
The initiative of the UN and Kiva looks very attractive for the republic. However, over time, pitfalls can be found. The country will experience all the pros and cons of financial technology. In developed countries, where the national currency is strong, the risks are not so great and the consequences of failure will not be so strong. In Sierra Leone, the same proposal of the UN and Kiva is able to change the world. “Exalt you, O kingdom of freedom,” is sung in the hymn of the republic. Obviously, in the minds of many, the blockchain is now the guarantor of that very freedom. But despite the well-established view of the decentralization of cryptocurrency, one cannot deny that there are still those who rule the process. No wonder many digital assets tend to be closer to the state and banks - contrary to the very idea of the blockchain.
It turns out that Sierra Leone is a guinea pig. This is not the first project for an African country whose goals include implicit scoring. The world community wants to assess how well the citizens of the country are learnable, solvent; how profitable to deal with them. Here, in addition to the internal consequences for the economy of Sierra Leone, the issue of the republic’s reputation in the digital market is important. “Happiness for all, for nothing” is a utopia, you should not ignore the risk of default, forgetting that on the African continent corruption and money laundering have long found a place for themselves at all levels.
Cryptotechnology for Europeans or Americans is an alternative to existing systems, born of disappointment in Fiat. For some of them, operations with a crypto can be just a hobby, and for West Africa, the blockchain phenomenon is a breakthrough and, perhaps, a matter of survival. Changes in the lives of citizens of Sierra Leone are likely to be more than noticeable - it remains only to wait for the project. Creating a national blockchain system is a bold move, since innovation goes against the traditional economy of this country. But what to lose if there is no real economy?
In general, the forecasts of many experts are optimistic. “The world benefits from a strong Africa. Over the next few decades, the main part of the working population of the planet will live here, - says a partner of a venture company on the blockchain, Olaoluwa SAMUEL-BIYI, - A strong and successful continent is needed for the prosperity of the whole world. Small African countries such as Sierra Leone have a unique opportunity to experiment with potentially transformative technologies. In such regions with a low level of distribution of banking services, it is possible to implement the mass introduction of new, more efficient systems. This phenomenon has been demonstrated in East Africa using the example of M-Pesa, and any African country can take the lead with the blockchain. Sierra Leone got into the news as a result of an experiment with a blockchain election. These real experiments are important for global adoption of technology in the future.”
Sierra Leone is not the first time participating in the "test run" of technology. On March 7 of this year, the blockchain technology was tested in the country when calculating the results of presidential elections. When using digital technologies, according to experts, cost reduction, elimination of human errors and quick public access to the election results have been achieved. Yaron LUKASEVICH, technical director of the blockchain developer, believes that in the future all countries will use such a voting system: “Blockchain is the only technology that can offer a completely transparent platform for fair elections.”
Pitfalls of coastal waters
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