Water is life

It’s no exaggeration to say that water is the very essence of life. So it stands to reason that not having access to clean water is the antithesis to life. But regardless of its essential necessity, health issues caused by poor sanitation and no clean water plague more than 100 million people in Latin America. That’s 100. Million. People. And women and children are impacted most by this disparity.

Microfinancing has emerged as a way to help suffering communities by leveraging the power of crowdsourcing to fund necessities such as municipal clean water. And that’s a great thing. But there needs to be a way to ensure that all countries have equal access to this funding. For example, 58% of the Peruvian population is unbanked, with 9% having no access to clean water and 25% without improved sanitation. But the microfinancing loan process has tremendous problems, including low efficiency with a high potential for errors; poor visibility into the impact and allocation of contributions — all which affects who gets what.

Can the microfinancing process be improved?

The short answer is: yes. If microfinancing can help these communities receive funding and assistance — and it’s been proven it can — it can help even more through the use of Blockchain, which can track and attribute delivery of funding — independently and securely.

To prove this, BanQu partnered with Inter-American Development Bank (IDB) and Water.org to pilot a groundbreaking Blockchain solution that ensures fresh water for the poorest communities that need low-cost, reasonable and seamless access.

The “Blockchain Uses for Microfinance Institutions in the Water and Sanitation Sector” study tested if Blockchain technology can improve the efficiency of the existing microfinance model  and promote financial inclusion of unbanked individuals. It also looked for data on how transparency, data democracy and digitizing data capture and processes can strengthen and  improve the existing microfinance model.

The results are in

Using Blockchain, the IDB was able to set up an easier, more efficient and accurate microfinancing loan application process with a real-time communication channel for borrowers. Paperwork, which could be time-consuming and prone to errors, was replaced by digital processes. Sharing, transparency and accountability were all improved.

“Here are the results that prove that #microfinance CAN and SHOULD be transformed in a way that –> banks the unbanked; enables #genderequality and provides access to something so basic and human as a clean toilet!” BanQu CEO Ashish Gadnis said in a recent LinkedIn post.

Conclusion

Blockchain technology has incredible potential in the microfinance sector to improve systems and ultimately, ensure that natural resources such as clean water are allocated properly and equitably. We enthusiastically encourage additional research and further pilot studies in this very important area.