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The West African nation Sierra Leone, together with the UN and other organizations, are teaming up to develop a decentralized identity platform using blockchain technology. The initiative is set to provide personal identification tools and digital wallets to the country’s citizens with a goal geared towards delivering a financial footprint for the unbanked.
The project, which is a collaboration between the United Nations Development Program (UNDP), the United Nations Capital Development Fund (UNCDF), the technology not-for-profit Kiva, and the government of Sierra Leone, will provide a modernized credit bureau for the country’s unbanked. As part of the project’s announcement, deputy executive secretary of the UNCDF Xavier Michon stated that:
“Through this implementation, Sierra Leone is setting out to build one of the most advanced, secure credit bureaus. It could serve as a model for both developing and developed nations in the future and has the potential to radically change the landscape of financial inclusion.“
According to the team, Sierra Leone was chosen as a result of its weak credit bureau and sizeable unbanked population. According to the UNCDF, more than 80 percent of the country’s citizens, including women, young people, marginalized population groups, and smallholder farmers, are unbanked. The only existing credit bureau in the country, according to Kiva, reaches only 2,000 citizens, who constitute only one percent of the country’s population.
This decentralized solution, announced by partners and the president of Sierra Leone Julius Maada Bio seeks to “modernize the credit bureau” system in the country and provide financial products and services for the unbanked. Additionally, the project will give the citizens a credit score, which they can choose to reveal to third parties or not – giving them freedom on how to manage their data.
The project would be administered on the Kiva Protocol, which will allow citizens to keep records of repayment transactions and borrowing in a decentralized database. It will also enable participating organizations and financial institutions to use this data to gauge the credit scores of individuals before giving out loans.
As a country that has most of its population excluded from the financial system, this is a great move not just to get them saving, doing business, and managing their finances, but also give them the power to own their financial data and decide how they want to control it. It’s the power of decentralization realized through the blockchain.