Sierra Leone unveils Africa’s first blockchain online identification platform to capture the unbanked

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Sierra Leone has launched a blockchain platform to create online identities for its citizens, making it the first African country to unveil what has been described as a blockchain-enabled digital national identification system.

The platform, which was officially launched on Wednesday by Sierra Leonean President Julius Maada Bio in the capital Freetown, will allow citizens who have difficulty obtaining loans to prove their credit history.

“This visionary step here today ensures that Sierra Leoneans are not excluded from… the global digital economy,” Bio said at the launch.

The National Digital Identity Platform operates on the Kiva Protocol, a digital identification system that uses blockchain, a distributed ledger technology.

According to a report by Devex, the platform was developed by the country’s National Vital Statistics Commission with support from Kiva, a San Francisco-based nonprofit, as well as the United Nations.

It is hoped that the initiative will enable Sierra Leonean citizens to obtain loans, build a credit history and access financial services.

In Sierra Leone, which is one of the poorest countries in the world, more than three-quarters of its seven million citizens live outside the formal banking sector.

The use of informal financial institutions such as community banks and microfinance lenders is therefore common. But the problem is that these institutions have no way of establishing the identity or credit history of borrowers and hence they tend to offer loans at very high interest rates to minimize the risk of borrowers. lender.

This is subject to change, thanks to the online credit platform.

“The platform works by giving every potential borrower a digital wallet. Their transactions are recorded in a blockchain ledger, which ensures that user information is secure and cannot be tampered with. Lenders will then be able to access citizens’ credit histories using fingerprints and other biometric data previously collected by the Sierra Leonean government, ”a report from The New Economy said.

Prior to this initiative, people in Sierra Leone who wanted to open a bank account may have had to provide utility bills or credit history information, which they may not have.

“Now they can come in and because the government has already done all of this work around digital ID, they can use a fingerprint and use a national ID card,” said Matthew Davie, chief strategy officer at Kiva in Devex. “And thanks to the technology of the Kiva protocol, we can enable a KYC check in two seconds that would normally have taken two weeks.”

Citizens can access the digital wallet using an app, but analysts believe this could be a problem as only 15% of the population has internet access. Kiva plans to address this issue by using MiFi devices that can connect to the Internet through phone networks.

“Lack of identification, or the inability to verify that identification for credit purposes, increases the cost of doing business for everyone,” David Sengeh, who heads the Science and Technology Branch, told Reuters and innovation from Sierra Leone.

“A nationwide platform… means businesses, institutions and anyone else can verify that what I’m saying about my loan history is (true). Anyone can fake a driver’s license, but not a system like this.

The West African country is currently working to get all banks and microfinance institutions in place with the system by the end of the year.

Last year it was widely reported in the media that Sierra Leone had used blockchain technology during its general election on March 7 to count the votes.

Swiss blockchain start-up Agora said it was authorized by the NEC to use its blockchain technology to verify votes in parts of the capital Freetown.

But Sierra Leone’s National Election Commission dismissed the reports, saying in a tweet that “he has not used and is not using #blockchain technology in any part of the electoral process.”


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