Kiva and the Sierra Leone government have partnered to launch a national digital identity platform to bolster national identity and financial inclusion in the West African country.
Dubbed as the National Digital Identity Platform (NDIP), the blockchain-based decentralized digital identity platform is a project of the Ministry of Finance, the Bank of Sierra Leone and supported by Kiva with support from the U.N. Capital Development Fund (UNCDF) and the U.N. Development Programme (UNDP).
“With this partnership in Sierra Leone, we hope to carve a path to a system of global identity and federated credit history,” said Kiva CEO Neville Crawley. “This can unlock capital for the populations who need it most, allowing lenders to massively increase services and the flow of funds to the world’s unbanked.”
NDIP will help develop digital credit histories for every citizen, improving access to and cost of credit as well as enable them to access basic facilities such as finance, health, education, and eGovernment.
Earlier, His Excellency the President, Rtd. Brig. Julius Maada Bio said the launch was the first big step towards meeting his vision of ‘deploying the credit bureau of the future’ as it will radically change Sierra Leone’s financial inclusion landscape, and make financial services, e.g. savings and loans, accessible and affordable to every Sierra Leonean. Access to affordable loan and capital is key to promoting an entrepreneurship culture, catalyzing small and medium enterprises and strengthening the private sector nationwide.
The NDIP will power Digital Know Your Customer (eKYC) within the financial sector and will accelerate financial inclusion in the country.
Globally, 1.7 billion adults are unbanked and unable to access the financial services they need to improve their lives and their families’ futures. Two of the major barriers to accessing financial services are a lack of formal identification and a lack of verifiable credit history.
The new Kiva Protocol is designed to address these barriers by issuing digital identification to all citizens and enabling formal and informal financial institutions to contribute to a person’s verifiable credit history. Currently, unbanked people cannot leverage financial transactions from the ‘informal economy,’ such as credit with a local shopkeeper, to build their credit history. The Kiva Protocol will capture a wide range of financial transactions— from bank loans to credit with a local shopkeeper—to help people access the financial services they need, including loans for businesses, education or basic medical services.
Running on the Kiva Protocol, the NDIP digital identification system uses blockchain technology to provide the individual with secure and complete ownership of their identity and allow cross-border interoperability.
“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,” said Xavier Michon, Deputy Executive Secretary of UNCDF.
In Sierraleone, just as it’s with several other African countries, unbanked, illiterate, displaced, and other vulnerable populations are unable to offer proof of identity and residential address which are required to open a bank account and continually transact.
The new ID will help end the obstacles to identity verification such as national ID or passport, and proof of address documentation such as utility bills which are systemic barriers to financial inclusion.
The platform will also reduce the costs used by financial institutions on customer identification and due diligence procedures as they render them unprofitable, reduce their market size and waste a lot of time via inconvenient onboarding procedures that deter potential customers from signing up for financial services.