Kiva, a non-profit organization that claims to make it possible for people to lend money to low-income entrepreneurs and students in various countries, has launched a blockchain-based credit database in Sierra Leone, to enable residents to easily prove their credit history and secure loans.
Earlier in May 2019, Deloitte conducted a Global Blockchain Survey and 83 percent of respondents hinted that their companies see real use cases for DLT, while another 53 percent revealed that their firms have prioritized blockchain adoption this year.
According to Sierra Leone also,The World Bank indicates that 80 percent of Sierra Leone citizens are unbanked and cannot access financial services due to a lack of formal identification and verifiable credit history.
These people are blocked from the global economy and cannot leverage financial transactions such as gaining credit from a local shopkeeper due to their lack of formal identification. Sierra Leone citizens primarily operate in a cash-only economy which brings with it a lot of risks and prevents individual and their families from breaking free from the poverty cycle.
Against that backdrop, Deloitte decided to develop BIAB to give clients a better understanding of what blockchain technology can do, as well as its limitations.
Kiva Making Life Easier with DLT
In a bid to make it easier for millions of unbanked Sierra Leoneans to get their credit history verified by lenders and enable them to obtain loans, Kiva has launched a distributed ledger technology (DLT) powered credit database in the nation.
Per sources close to the matter, the Kiva team and President of Sierra Leone, Julius Maada Bio who was present at the official launch, firmly believe that the solution will foster financial inclusivity by bringing over three-quarters of the nation’s citizens into the financial system.
The team says the blockchain-based credit history database allows lenders to quickly verify the credit histories of Sierra Leoneans using their fingerprint and other biometrics data already in the government’s database.
Commenting on the launch of the innovative solution, Safiatu Mariama Bangura, a young woman who sells food in a makeshift restaurant made with an aluminum shack, noted that the new system will give their business a significant boost since they can now get loans to run it. She stated:
“It’s difficult to do business because we don’t have a bank account or any way of obtaining loans. The program would benefit us because my mother doesn’t know how to sign her name, she only knows how to use her fingerprint.”
How it Works
Reportedly, prospective users of the system will be provided with a digital wallet which can be accessed through a mobile app and all transactions will be stored on a distributed ledger to ensure transaction records, as well as user information, are tamper-proof.
Despite the fact that only 15 percent of Sierra Leoneans have access to the internet, the team plans to overcome this challenge by using mi-fi devices that can connect to the internet through phone networks.
If all goes as planned, the government says it will get all financial institutions in the state to adopt the system by the end of 2019.
President Bio said:
“This visionary step here today guarantees that Sierra Leoneans are not excluded from the global digital economy.”
Currently, the centralized databases of banks and governments can cause wide-scale disaster if hacked. These databases have biometric information for almost the entire country.
The Equifax incidents teach us that centralized databases do have a single point of failure, bound to fail at some point or the other. It is imperative to integrate decentralization into person security at the earliest possible instance. Developments in the realm of digital identity management have been encouraging this far.