Sierra Leone Partners Tech Firm to Boost Financial Inclusion
A San Francisco-based technological
nonprofit organisation, Kiva, is using blockchain to create an online ID
database in Sierra Leone. This will allow people to get loans by having a
credit history, provide
Kiva and President Julius Maada Bio
officially launched the system in the capital Freetown mid-week. President Bio
hopes it will bring more Sierra Leoneans into the financial system.
Kiva already facilitates small loans in 80
countries, but Sierra Leone is the first country to implement an online
credit system designed by the organisation.
More than three quarters of Sierra Leone’s
population lies outside the formal banking sector, according to data from the
central bank. Informal institutions like community banks and microfinance
lenders are more common, but they rarely share credit information and often
charge extortionate interest rates.
The platform will enable lenders to look up
citizens’ credit histories using fingerprints and other biometric data that
was collected a few years ago by Sierra Leone’s government to print voter ID
cards.
Ordinary Sierra Leoneans appear excited by
the prospect, including Safiatu Mariama Bangura who with her mother runs a
rice restaurant out of an aluminum shack with tarpaulin walls in the capital
Freetown.
“It’s very difficult to do business because
we don’t have a bank account or any way of getting loans,” Bangura said.
“[The program] would help us, because my mother doesn’t know how to even sign
her name - she only knows how to use her fingerprint.”
Each prospective borrower will be assigned
a digital wallet, with transactions recorded in blockchain to keep user
information secure and prevent tampering with the leger.
“A national identity program here would
provide the foundation for the growth of a robust financial services
ecosystem,” said Schan Duff, Kiva’s Vice President of Strategy.
Borrowers will access the wallet through an
app. That presents a problem for many in Sierra Leone, where the Information
Ministry says less than 15 percent have access to the internet.
Duff said its partners in the field,
including banks, overcome this by using mi-fi devices that can connect to the
internet via phone networks.
Sierra Leone’s government aims to have the
the system in use by all banks and microfinance institutions in the country
by the end of this year, Bio said.
“Lack of identification, or an inability to
verify that identification for credit purposes, increases the cost of
business for everyone,” David Sengeh, who heads Sierra Leone’s Directorate of
Science Technology and Innovation, told Reuters over the phone.
“A national platform ... means that companies,
institutions, and whoever can verify that what I’m saying about my loan
history is (true). Anyone can fake a drivers licence, but not a system like
this.”
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