WFP is harnessing blockchain technology to enhance our ability to provide effective, efficient assistance to the people we serve.
Providing cash transfers to beneficiaries depends on multiple banks and other financial intermediaries. This increases costs, introduces delays, and raises risks around financial mismanagement and the security of beneficiary data.
Using blockchain—a type of distributed ledger technology— Building Blocks facilitates cash transfers while protecting beneficiary data, controlling financial risks, and reducing costs by eliminating up to 98% of fees issued by third-party institutions. The project will also speed set-up of assistance operations in the wake of emergencies.
Blockchain for Zero Hunger
At the heart of Building Blocks is research showing that direct cash transfers to those in need can be the most efficient way to distribute humanitarian assistance while also improving local economies. As a result, WFP distributed record cash transfers of $1.6 billion in 2018.
But distributing cash depends on local financial institutions, which can impose significant fees. Complicating matters, particularly where options are limited, such institutions can put beneficiary data at risk and act as a source of financial mismanagement. These issues are worse in regions governed by hostile regimes, or in business environments characterized by high levels of corruption.
That’s why in January 2017, WFP initiated a proof-of-concept project in Sindh province, Pakistan, to test the capabilities of using blockchain for authenticating and registering beneficiary transactions. The blockchain technology behind the project allowed direct, secure, and fast transactions between participants and WFP—without requiring a financial intermediary like a bank to connect the two parties.
After refining the project’s approach, the next phase of Building Blocks was implemented in two refugee camps in Jordan. Gone were the easily lost food vouchers of past years. Now, over 100,000 people living in the camps can purchase groceries by scanning an iris at checkout. Built on a private, permissioned blockchain, and integrated with UNHCR’s existing biometric authentication technology—WFP has a record of every transaction. This not only saves on 98% of financial transaction fees in the camp setting but ensures greater security and privacy for Syrian refugees.
The Father Cooking Flavors from Home
Bassam fled his home in Syria, like many, when the conflicted started. But from the beginning, he’s given his children a view of the world beyond the dusty, often monotone avenues of the Zaatari refugee camp where they have lived most their lives. With a friend, he painted a colorful mural of mountains, fruit trees, and a farm he used to visit on weekends. And now he’s sharing the flavors of home as well, in part thanks to Building Blocks.
A few times a month, Bassam shops for the ingredients he needs from a grocery store inside the camp. Because the store runs on blockchain, Bassam doesn’t worry about losing a food voucher or an external bank having his data—and he pays with an iris scan at checkout. Thanks to the close cooperation between WFP and the store’s owner, and feedback from shoppers through Building Blocks, Bassam can suggest which products he needs to cook meals from home for his children.
Where we go from here
WFP now aims to extend the value proposition of Building Blocks to explore unrestricted cash inside the refugee camps in Jordan to explore how the platform can support wider unrestricted cash distributions, starting with mobile money inside the refugee camps.
In addition, a new Building Blocks partnership will allow Syrian women who participate in the UN Women’s Cash for Work Programme to withdraw cash at a supermarket in a Jordanian refugee camp or make purchases directly. And since UN Women and WFP both validate each other’s transactions via their own blockchain nodes, the system’s security is increased.,
Now, WFP is interested in exploring the application of blockchain technology in areas as diverse as supply chain tracing and digital identity management.
What We Still Need
WFP is inviting other UN agencies and humanitarian actors to collaborate on a neutral blockchain network to improve cooperation, reduce fragmentation, bolster efficiency—and ultimately further empower the people we serve.