Should Australia use blockchain in delivering humanitarian aid?
26 Apr 2018|

Australia, like many countries, provides overseas humanitarian assistance in times of humanitarian crises. As part of DFAT’s humanitarian strategy, Australia transfers money to Australian non-governmental organisations, international humanitarian agencies and UN agencies, which then provide supplies and relief to those affected.

Receiving assistance in emergencies and crises is a critical component of security for people in highly vulnerable situations. They often need to receive the aid quickly. At the same time, donors want their aid to be put to the best use and to reach as many people as possible.

Unfortunately—and often despite the best efforts of everyone involved—current aid delivery processes are full of inefficiencies and opportunities for fraud. Humanitarian aid agencies are criticised for shortcomings in responding to disasters, including uncoordinated and duplicated efforts on the ground and for not being able to meet the needs of every individual.

A 2016 report by the UN High-Level Panel on Humanitarian Financing raised concerns about the lack of transparency in UN aid agencies and the need both to improve their delivery and to address their financing shortages.

Additionally, the 2017 Global Humanitarian Assistance Report reveals that there has been a global slowdown in international humanitarian assistance due to changing priorities and availability of funds. The report also states that despite an increase in the amount of funding UN-coordinated appeals received in 2016 (US$12.4 billion compared to US$11 billion in 2015), UN agencies still face a 40% shortfall, or US$8.2 billion, in requirements. Therefore, it is clear that we need to make the best use of the humanitarian funds that are available.

This is where blockchain could make a contribution.

Blockchain is a technology that facilitates digital transactions and permanently stores a copy of each record at multiple locations. This distributed aspect of the technology is one of its main attractions. Not only does it make data much more secure, but it also creates an unchangeable record of each transaction’s source and destination. There remain questions around blockchain’s security, as well as issues of digital identity, how the technology can be scaled and in which industries it could be most effectively applied.

Despite being an emerging technology, governments and international organisations alike are starting to realise its potential.

The UN is beginning to seek alternative ways to deliver aid in humanitarian contexts using blockchain. For example, one year ago the UN piloted its first blockchain program. The World Food Programme’s (WFP) Building Blocks program used blockchain to provide cash-based assistance to Syrian refugees. Monetary allowances were transferred to local suppliers near refugee camps using the ethereum blockchain. Refugees could go directly to those suppliers to redeem their allowances.

Biometric identification via an iris scan gave each refugee a unique identifier to access. With these digital cash allowances, some 10,000 Syrian refugees could buy supplies directly from a supplier rather than going through the traditional means of receiving in-person vouchers or food aid from the WFP itself.

So what have we learned? The results of the pilot project significantly enhanced the efficiency of aid delivery. According to Hila Cohen, WFP’s Innovation Accelerator, 200,000 transactions were processed without any glitches during the pilot program. The electronic transfers reduced WFP’s costs by 98%, essentially by cutting out the need to process money through a bank and to set up a bank account for each individual refugee. In essence, the blockchain technology streamlined the money transfers and ensured that the allowances went directly to refugees.

So why should this be of interest to Australia?

The Australian government has already demonstrated that it’s open to investing in blockchain. It’s also exploring the possibilities of blockchain technology through the CSIRO Data61 initiative.

At the end of 2017, DFAT published its International Cyber Engagement Strategy. The strategy includes a chapter on development technology, focusing on three key areas:

  1. Improving connectivity and access to the internet across the Indo-Pacific
  2. Encouraging the use of resilient, development-enabling technologies
  3. Supporting entrepreneurship, digital skills and integration into the global marketplace.

The section on development-enabling technologies focuses on improving financial inclusion, particularly for people in rural and remote areas. It aims to use online and mobile banking technologies to connect the 400 million unbanked people in Southeast Asia to the formal financial sector.

It also focuses on the digital delivery of services, highlighting the importance of digital technologies to increase the efficiency and effectiveness of government services.

Given these objectives, Australia could also extend this use of innovative technologies to vulnerable populations in humanitarian crises. The WFP example shows that this is possible with available technology. Blockchain’s distributed ledger network makes it a resilient technology, which fits with the Australian aid program’s mandate to build resilience into its humanitarian assistance and its overseas aid. Between July 2015 and June 2016, Australia’s emergency assistance totalled more than $231.3 million in response to more than 20 crises, including in Myanmar, Syria, Iraq, Africa, Afghanistan and the Pacific.

And by making the process of delivering aid more efficient, blockchain could help Australia stretch its aid budget further.

There is an emerging awareness in the region of blockchain’s applications in the financial sector, such as Japan’s microfinance program in Myanmar. Cambodia hosted the 2018 ASEAN Blockchain Summit in March, launching ASEAN’s very first blockchain payment and cryptocurrency, Entapay.

Similarly, Australia should start thinking about the potential of blockchain technology in humanitarian aid and work with its humanitarian partner organisations to show what is possible when technology and aid intersect.