November 21, 2017
Though developed for financial use in its early stages, the blockchain is proving beneficial for various fields that are yet to be explored. Widely known for its superiority in decentralization, security, speed and cost saving, blockchain is increasingly supporting initiatives like the UN World Food Programme (WFP) to food insecurity, a major global problem.
According to World Food Assistance 2017 published by WFP, 108 million people worldwide are facing severe food insecurity in 2017 alone. Humanitarian aid is one of the major ways to combat the issue. The WFP however notes that the volume and quality of food assistance as well as financing, access, protection and security could all be improved.
Corruption causes an enormous amount of loss of humanitarian food aid. Ban Ki-moon, Secretary-General of the United Nations, publicly stated in 2012, during the closing session of the “High-level Panel on Accountability, Transparency and Sustainable Development” that “30% of developmental aid failed to reach its final destination owing to corruption”. The misappropriation of funds, if left unsolved, is a big concern across the whole humanitarian sector.
Furthermore, transaction cost prevents humanitarian food aid from efficiently targeting hunger. WFP has recently begun cash-based assistance, which allows recipients to choose what they buy and eat, instead of handing out food. However, in order to move the money across the about 80 countries in which WFP operates, the agency relies on the services of a large number of banks and financial intermediaries that traditionally apply transaction fees of up to 3.5 percent.
Blockchain development promises to cut costs related to fees, misappropriation of funds and overhead costs.
“As blockchain automatically records transactions on a secure ledger, WFP accountants can easily follow the flow of money without spending time and energy triangulating reports from stores and banks” said WFP finance officer Houman Haddad. Advance payments are no longer necessary where blockchain development has decentralized the system, reducing financial risk and the possibility of fraud such as a bank and a store colluding to inflate bills.
Blockchain Links a Chain of Volunteers
Blockchain could also help track deliveries of food aid or securely register land titles in developing countries. In early 2017, the U.N. World Food Program launched the first stage of what it calls “Building Block,” giving food and cash assistance to needy families in Pakistan’s Sindh province. An internet-connected smartphone authenticated and recorded payments from the U.N. agency to food vendors, ensuring the recipients got help, the merchants got paid and the agency didn’t lose track of its money.
The use of blockchain for humanitarian purposes is at an infant stage, but its potential is bound to open up new potentials. Already we have seen startups Blockchains can even help individuals contribute to aid efforts overseas and ensure that people suffer less. For example, London-based AID: Tech uses blockchain-powered identity cards to ensure food aid in Syrian refugee camps is delivered to those it is intended for. Another company, Bitnation helps offer aid through bitcoin debit cards that allow people with no means for conventional bank accounts to purchase food. And the Red Cross is exploring ways blockchain’s can be used to more quickly and proactively provide people in the path of natural disasters with the financial aid needed to survive and recover. It is easy to only think about how blockchain development can help people make money, but its real power may lie in its ability to pursue a more noble purpose.
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