Much of the world’s attention around blockchain is focused on the ups and downs of cryptocurrency values. Startups like FlexID remind us that distributed ledger technology has the potential to perform other functions, including providing trusted records of identities without the need for a centralized authority. One of the startups working to achieve this vision is Zimbabwe’s FlexID, which is building a blockchain-based identity system for people excluded from the banking system due to lack of identity documents. The idea for FlexID got funding from Algorand, a blockchain protocol created by Turing Award-winning cryptographer Silvio Mical. The two parties did not disclose the size of the investment. African countries have made great strides in promoting financial inclusion over the past decade, but it is still early days. More than 60% of adults in sub-Saharan Africa are unbanked, according to World Bank estimates for 2021. Several years ago, the numbers were starker. In Zimbabwe, for example, only 30% of the adult population had access to any financial services in 2014. The number of bank accounts in the country was 1.5 million in 2016. There is a general perception that increasing access to financial services in a country leads to an improvement in the economic well-being of people. And that is what the Zimbabwean government sought to achieve when it introduced a financial inclusion scheme from 2016 to 2020. The effort achieved some success: the percentage of Zimbabwe’s adult population with access to financial services increased to 55%, while the number of bank accounts increased. to 8.5 million in 2020. However, there is still much work to be done in this regard. When people have little or no trust in the financial system, or are unaware that there are certain financial services that meet their needs, or do not have formal identification documents to seek these services, achieving optimal financial inclusion can be herculean. These are problems that affect Africa and emerging markets, not just Zimbabwe. FlexID’s Autonomous Identity Platform (SSI) takes a decentralized approach and gives users control over their personal information, something that is not common in Africa, where other startups provide centralized solutions, such as Smile Identity, YC-backed Identitypass and Dojah. With funding from Algorand, FlexID aims to make its decentralized identity network available in emerging markets where more than a billion people are estimated to lack formal identification, the startup said in an announcement. Zimbabwean serial entrepreneur Victor Mapunga founded FlexID in 2018 out of his frustration with the banking system. FlexID provides users with a blockchain wallet that stores their verifiable credentials. Verification is done on-chain through Algorand, which bills itself as a solution to the blockchain trilemma of security, scalability, and decentralization. FlexID will also integrate with other Algorand decentralized applications (dApps). Algorand’s FlexID investment comes at a time when African blockchain startups are raising large sums of money from investors. A recent report said that more than 40 African blockchain startups raised a total of $127 million in 2021. This year has already seen some amazing investments, such as Mara’s $23 million seed round from investors such as cryptocurrency exchange giants. Coinbase and FTX encryption. Although FlexID provides service in the identity space, the general sector that its solution and most blockchain platforms are in is fintech. Companies like FlexID are reducing people’s reliance on cash and remittance fees through crypto, lowering the barriers to setting up an account through crypto wallets, and addressing the continent’s documentation challenge.
