Blockchain Technology Identified as Game-Changer for Vanuatu’s Financial System: Report

April 5, 2023 8:00 am | Posted in Business News | Share now TwitterFacebook

A recently released report by Pacific Advisory, funded by Oxfam International and Australian Aid, has identified blockchain technology as a game-changer for Vanuatu.

The report provides a path forward to achieve the Vanuatu Government’s goals of a more inclusive financial system, better and faster access to relief in the time of a natural disaster, and to make Vanuatu a more attractive investment destination.

The report outlines the potential of blockchain technology to enhance financial inclusion for Pacific people, facilitate government payments such as public service salaries and payments to suppliers and between government and business, and distribute relief payments more efficiently. It also highlights the importance of digitising national identification systems, which has been consistently highlighted by global policy-making and institutional finance bodies such as the Asian Development Bank and World Bank Group as one of the building blocks for development.

“This report identifies and explains why blockchain technology is the way forward for Vanuatu. At a time where evidence shows access to finance has been contracting, a review of how we do business was critical,” Pacific Advisory’s Managing Director, Glen Craig said.

Pacific Island nations that have implemented biometric and digital ID systems have experienced accelerated economic and social development. A strong and accurate national ID system built on automated blockchain technology would increase Vanuatu’s capacity to efficiently deliver government services, facilitate digital payments and a digital economy, and improve citizens’ rights and access to services.

The report found that 86.7% of private sector and 100% of public sector respondents indicated that a digital ID is one of the most important factors in achieving regulatory adaptation and eventually integration for widespread adoption of blockchain technology and blockchain finance in Vanuatu.

“Blockchain technology takes the doubt out of financial transactions and is particularly suitable to the conditions in the Pacific Islands. Decentralised finance and data management applications can be set up and used at the ministry level to facilitate, track, and more easily account for the delivery of payments across Vanuatu,” Mr. Craig said.

The report also provides a roadmap for integrating blockchain technology further into the financial, business, and development landscape in Vanuatu. This includes the adoption of international best practices, the development of a Data Protection and Privacy Act, building capacity via increased financial and fintech literacy, and engaging infrastructure providers.

Vanuatu’s Minister for Tourism and Trade, Matai Seremaiah, welcomed the report and emphasised the need to embrace the opportunities that arise from digital transformation in the tourism industry.

“As we move towards a digital economy, Vanuatu’s tourism industry must embrace the opportunities that arise from digital transformation. By leveraging technology, we can unlock new trade possibilities, develop market access for our small businesses, and create new avenues for growth and prosperity,” Minister Seremaiah said.

He also highlighted the importance of national ownership and political leadership to ensure adoption occurs in a manner that brings resources, better systems, and positive change to the financial sector, business community, and the public at large.

The report’s findings are particularly significant given that banking services and staff numbers at outer island branches have declined in recent years, with no viable substitute for financial access provided.

Recommendations have the potential to accelerate progress towards economic inclusion, development, and growth, but will require legislative and regulatory reform to perform responsible de-risking and ensure protections are in place for users, businesses, and institutions using blockchain systems and applications.

“The report has the potential to change the landscape of financial services in Vanuatu and create new opportunities for economic growth and inclusion,” Mr. Craig said.

“By implementing the report’s recommendations, the government of Vanuatu can achieve its goals of creating a more inclusive financial system, with better access to relief during natural disasters and a more attractive investment destination.”