Blockchain and Financial Inclusion: A New Era
Kiva, the San Francisco-based nonprofit known for its crowdfunding loans aimed at enhancing financial inclusion, isn’t just making waves – they’re riding the blockchain tsunami. In a groundbreaking move, Kiva has teamed up with the government of Sierra Leone to launch a blockchain platform dedicated to improving access to credit history, ensuring that the unbanked population finally gets their financial foot in the door.
The Launch: What Went Down in Freetown?
On August 21, in the vibrant capital city of Freetown, Kiva’s initiative was ceremoniously launched alongside President Julius Maada Bio. This blockchain project aims to use biometric data, like fingerprints, to allow lenders to easily verify the credit histories of potential borrowers. Talk about making things a bit easier for everyone involved!
Digital Wallets: Empowering Borrowers
So, how does this whole thing work? Individuals seeking loans will create a digital wallet through an app, which will make their transactions as traceable as your favorite Netflix binges. All goes well when these wallets are infused with collected biometric data, paving the way for smoother loan applications. Plus, Kiva is ensuring that users aren’t left high and dry; they’ll collaborate with partners to establish mobile Wi-Fi hotspots throughout Sierra Leone for reliable internet access.
The Internet Gap: Challenges Ahead
Despite the potential this blockchain innovation holds, there’s a stark reality to face: over 85% of the populace lacks internet access. To make matters worse, around 75% of Sierra Leoneans are unbanked, often relying on informal community banks that come with ominous interest rates and little to no transparency in credit information. As David Sengeh, head of Sierra Leone’s Directorate of Science, Technology and Innovation, pointed out, the inability to verify identification is a major hindrance, inflating costs for businesses and exacerbating the financial woes of individuals.
Banking the Unbanked: Global Perspective
This isn’t just a localized issue, as highlighted by recent efforts from companies like Share Internet Data Ltd (SID) and LDJ Capital, which launched a similar blockchain-based digital banking app called LDJ Digital. It seeks to provide crucial financial services to the underserved populations across the globe, making financial transactions as seamless as a morning coffee run. By addressing internet access and identification verification, these blockchain innovations could be the golden ticket for many.
