Blockchain Based Kiva Protocol Set to Help the Unbanked: Juluis Maada Bio


During the 73rd session of the UN General Assembly which took place on September 27, 2018, the president of Sierra Leone, Julius Maada Bio announced that he has set a new goal for the country, wherein he wants to create a national, blockchain-based credit bureau which can completely transform the Country’s Financial Inclusion section. With this national aim set, lets take a look at the details of this blockchain application by the Government to  improve people’s banking usability.

Why Implement Blockchain for Financial Inclusion?

The concept is focused on the actual need for enhancement of financial inclusion experience, which is primarily targeted at one specific group – the unbanked. According to  recent research conducted on the World Bank financial inclusion database in 2017, it was found that there were around 1.7 billion adults who were unbanked. This culminates to approximately 30 % of the global population, making it a topic for global concern. Also according to a 2015 Federal Deposit Insurance Corporation’s report, even the US (which is a highly developed country) is taken into account , in which there are estimated to be 9 million households who are unbanked.

Flag of Sierra Leone

If someone is unbanked, they are disadvantaged to obtain credit cards and loan services as well. It may be that the unbanked is not able to meet the conditions provided by the financial institution. This can include self-identification, such as complying know your customer principles, a physically challenging problem, or language barrier. For a bank to extend credit or provide any other services to the underbanked person, they commonly  charge higher interest rates to mitigate the risk of borrowing to a less creditworthy person, regardless of other favorable factors.

Here are the two problems or obstacles that blockchain technology can overcome in order to enhance financial inclusion of the country:

Identification Verification

For the purpose of identification, a person needs to submit a lot of documents which reveals a sort of evidence or proof that he exists on a particular part of the country. It becomes very difficult for a person who doesn’t have his own house or is homeless. Data says that there are more than 1.1 billion people worldwide existing without an identity proof. It is also a surprise which needs to be noted that out of this 1.1 billion it is estimated that around 500 million left in Sub-Saharan Africa.

But with blockchain, the person who needs to participate in financial activities should need to have at least a phone, to smoothen the process of verifying and providing digital identity. If a person has a mobile phone, then is biometrics will do rest of the things. Many blockchain related companies/ startups use fingerprint sensor or face lock as an identity factor for authentication and authorization. This will reduce a lot of paperwork involved in the traditional method.

Validation of Credibility

While extending credits for loans to a person, it is required to check his past creditworthiness. But using blockchain’s decentralized public ledger, things become seemingly comfortable and efficient. Lenders can check over the ledger to validate his creditworthiness. Traditional techniques use the third person who enables the trust on the behalf of the customer/borrower. They too charge heavy charges to mortgage themselves for the lending. Again Blockchain will enable trust. cutting out bloats and rent-seeking.

Kiva Protocol


Sierra Leone’s President Julius Maada Bio took the initiative which resulted in the consortium between Technology nonprofit Kiva, the U.N. Capital Development Fund (UNCDF), and the U.N. Development Programme (UNDP). The main part or the heart of the project is the Kiva protocol. The protocol is established on a distributed ledger technology which will help to ensure that every citizen in Sierra Leone has secure and complete ownership of their personal data and information.

Now using Kiva, any citizen can apply for a loan. The request goes through a verification process to ensure the credibility of the person through the Distributed Ledger. This verification is performed through friends and relatives or by an approved trustee vouching for the borrower. Because of this technology crowdfunding is heavily boosted over the years. People can validate a person’s credibility and provide a part of crowdfunding.
According to the distributed ledger Technology Protocol in Sierra Leone, the project will commence from 2019 and the completion of the first stage will take around 3 years.

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