The World Bank will be exploring if blockchain technology can be used to help the Kenyan government raise money.
In a recently published report the global financial institution lists the development objective of the projects:
“…to strengthen the legal, regulatory and institutional environment for improved financial stability, access to and provision of, affordable and long term financing.”
Among the key parts of the research project involves supporting market research relating to:
“…assessing the use of Fintech technology, particularly distributed ledger –Blockchain to simplify the platforms backing the system.”
The bank’s work will begin once the Kenyan government approves the pilot.
Blockchain bonds
The report follows the pilot in March 2017 where a mobile-based bond issuance scheme called M-Akiba was launched. The scheme allowed for the purchase of small amounts of government bonds without the need for a bank account.
As of April 10, there were 92,739 investors that registered on the M-Akiba platform, and the Kenyan government had raised $1.1 million. The government has plans to sell similar products and this is where the World Bank thinks blockchain could improve the issuance process.
The funds will be invested in infrastructure projects.
The potential role that blockchain technology could play in bond issuance has already begun to develop traction across the world. Examples of this kind of activity are the creation of a prototype that simulates the exchange of US Treasury bonds and the Commonwealth Bank of Australia blockchain for the issuance of semi-government bonds.
The bank has been showing interest in blockchain as a tool to help it increase financial access to the world’s poorest. In April, World Bank Group Senior Vice President Mahmoud Mohieldin made the following remarks at the Global Development Conference:
“The fintech world needs to demonstrate the benefits of these changes, because the risks of greater concentration of wealth are very high in this new, more mobile world. The evolution of the system is accelerating its pace, but the financial system is always changing, from paper checkbooks, to plastic credit cards, to ATMs, to mobile money, and now Blockchain.
“If the evolution of the financial system had always provided better access to the real economy for the poor, then much of our work in development would already be done.”
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