How can blockchain help to increase access to finance for Caribbean SMEs?
Block-chain has the potential to combine dimensions of digital identity like never before. Not only aggregating
alternative information, block-chain maximizes frictionless transactions, security, and individual autonomy.
Caribbean firms consistently lag behind the ROSE benchmark: macro-economically illustrated, between 2010 and 2013, the Caribbean growth rate fell to an average of 0.8 percent while ROSE grew by 3.6 percent. The particularly unfriendly business environment is largely to blame, characterized by a general lack of transparency, heavy reliance on collateral, and near absence of CRAs. Thus, the current TIB access to finance model systematically sidelines many credit-worthy individuals, to the disadvantage of SMEs, TIBs, and Caribbean economies.
Block-chain has the potential to combine dimensions of digital identity like never before. Not only aggregating alternative information, block-chain maximizes frictionless transactions, security, and individual autonomy. It essentially replaces trust in humans (which is fallible) with trust in mathematics (which is demonstrably infallible). Creating a self-sovereign identification system, or a digital identity landscape, on the block-chain would democratize economic participation, anticipate future regulatory standards, and lay the foundation for all future use cases for block-chain in development.
Compete Caribbean and the London School of Economics (LSE) have partnered to conduct research in this area. This report has investigated alternative data that has been brought into consideration by some lenders and CRAs. The report also proposes a new system that is needed to assess credit-worthiness of Caribbean SMEs. The proposal emerges in the context of the insecurity of present databases, regulatory movements that are sweeping governments, private sectors, and CSOs around the world, and an increasingly important role of digital identity. The presentation will be streamlined live on our Facebook page on April 27, 2018 10am AST, for those interested.
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