Blockchain’s Mission to Rescue Food Aid from Corruption

By Ken Cottrill, Co-Founder and Research Principal ​​​​​​​

Few images can be as incongruent as that of refugees in the Azraq camp, Jordan, staring into an iris scanner to confirm their identities before purchasing food in the camp supermarket.
 
This is how 10,000 refugees in the camp can get food relief, courtesy of a payment system developed by the United Nations World Food Programme’s (WFP) Innovation Accelerator in Munich, Germany. The biometric identity check system affords the camp’s refugees access to a food stipend from the WFP.
 
Unbeknown to the shoppers, sitting behind the scanner is a blockchain-based management system that delivers aid supplies faster, cheaper and, crucially, more secure in a supply chain rife with corruption, according to the WFP.
 
Welcome to the brave new world of food aid programs.

Blockchain-inspired innovation could not have come too soon to this world. An estimated 30% of all the development funds that support international relief programs fail to reach the intended recipients owing to third-party theft or mismanagement. A host of fees and costs syphon off funds flowing to the needy.

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Last year the BBC reported that up to half the food aid meant for people who fled Nigeria’s Islamist insurgency was not delivered owing to “diversion of relief materials”, which is a euphemism for theft.
 
The WFP’s Ethereum blockchain system was developed as part of program called Building Blocks. It relies on biometric registration data from the United Nations High Commissioner for Refugees. Displaced people can purchase food by using a scan of their eye instead of cash, vouchers or e-cards. The system by-passes corrupt middlemen and provides a secure – and unchangeable – audit trail of food relief payments. The distributed ledger also prevents data becoming locked up in information silos.
 
A project in Ethiopia is looking at applying blockchains to improve the efficiency of the truck services that haul food aid shipments from ports to areas of demand. The country’s highly fragmented trucking industry is vulnerable to theft and mismanagement.
 
Projects like these are helping to build momentum to deploy blockchain technology more widely in food relief programs. For example, a three-year development program called Frontier Technology Livestreaming designed to help the United Kingdom Department for International Development (DFID) apply frontier technologies, has launched a pilot project to explore the use of blockchain technology in humanitarian supply chains. The aim is to gain an understanding of how distributed ledger technology could improve the speed and efficiency of relief supplies.
 
The DFID project has identified a number of key challenges. For example, the number of donors, agencies and NGOs involved in humanitarian programs makes it difficult for participants to get a complete picture of the end-to-end supply chain. Blockchain’s ability to disseminate information to complex ecosystems could bring much-needed clarity to these supply chains. A lack of real-time, accurate information on stocks of supplies is another problem that hampers relief efforts; and one that could be addressed by a blockchain-based inventory management system. The use of smart contracts could reduce the administrative burden on aid programs. The Frontier Technology team has identified several potential use cases which could develop into pilot projects.
 
More recently, UNICEF, the United Nations Children’s Fund, has announced a $50,000 to $90,000 equity-free investment for early-stage blockchain projects. The agency is looking to invest in a group of companies developing software solutions on open blockchains. An example is the use of smart contracts to replicate and improve existing organizational mechanisms.
 
Act fast if you have a candidate project for the UNICEF investment fund – the deadline for submissions is February 28, 2018.
 
Such projects are needed more than ever. German reinsurer Swiss Re estimates that the global economic losses from natural and man-made disasters in 2017 totaled $306 billion, up 63% on the previous year. The fallout from disasters and an increasingly risky political landscape across the globe add up to unimaginable human misery and an urgent need for more efficient food relief efforts.