Tech for good - How blockchain is used to transform the lives of people in marginalised communities

Cath Everett Profile picture for user catheverett October 20, 2020
Three projects introduced to support marginalised communities around the world demonstrate just how powerful a technology blockchain can be in enabling quick, secure and private transactions that transform people’s lives for the better.

Although blockchain software has only been around for just over a decade and, as such, is still very much in its infancy, it is already being applied in imaginative ways to help solve some of the challenges being faced by the world's most marginalised communities.

Dianing Yudono, a senior software engineer at BCG Digital Ventures, the incubation and investment arm of management consultancy The Boston Consulting Group, provided some insight into two of them at last week's online Ada's List conference: the United Nations (UN) World Food Programme's (WFP) Building Blocks initiative, and Grassroots Economics' Community Inclusion Currencies scheme

A key aim of the Building Blocks project is to provide people in refugee camps with the means of buying food and necessities quickly and securely using direct cash transfers. Another objective is to ensure they no longer have to worry about food vouchers being lost or stolen or about third party organisations, such as banks, having access to their personal data.

Image of a blockchain currency
(t: Image by Eivind Pedersen from Pixabay )

Direct cash transfers, according to WFP research, are often the most effective and efficient way to distribute humanitarian assistance as well as support local economies. But being able to distribute it relies on the support of local financial institutions, which are not always in a position to do so, not least because many refugees face restrictions in opening bank accounts.

To try and address the situation, in early 2017 the WFP introduced a proof-of-concept blockchain-based system to register and authenticate transactions in Sindh province, Pakistan, which did not require a bank to act as an intermediary to connect both parties. The system is now being used to support 106,000 Syrian refugees in the Azraq and Zaatari camps in Jordan and 500,000 Rohingyas in the Cox's Bazar camp in Bangladesh.

As to how the system works, after registering with the UN High Commissioner for Refugees, people receive a virtual wallet containing $30, which is stored in a beneficiary account on a private Etherium-based blockchain, so they can purchase goods at selected retailers. At the checkout, an iris scan enables them to spend the money by authenticating their identity, while the transaction is recorded using the blockchain.

Retailers are then reimbursed for the transaction by the WFP, which in the case of Syrian refugees, also shares data with other programme providers, such as UN Women. The UN Women's Cash for Work initiative allows women who are participating in the scheme to either withdraw cash at one of the refugee camps' supermarkets or buy goods directly.

Facilitating trade in marginalised communities

Meanwhile, the goal of a second project by Grassroots Economics entitled ‘Community Inclusion Currencies (CIC)' is to provide people with a means of exchanging goods and services and setting up new businesses without having to subject themselves to the risks inherent in either scarce levels of national currency or volatile market conditions. Yudono explained:

Marginalised communities, such as those living in illegal settlements in Kenya, depend on day labourers to earn shillings and bring them back to the village. But a lot depends on seasonality and crop yield and lots of jobs have been lost due to Covid. There are many services available, such as hairdressing, but not enough money circulating around to support the local economy.

To tackle the situation, reserve funds are set up in the CIC currency and, once a given community agrees to back it, it is used to undertake all trade in the village, although the currency is not valid outside. Since first being introduced in 2013, more than $147,000 has been distributed in this way, with 39,000 users having adopted the currency and performed a huge 276,000 sidechain-based transactions using it.

Over the last seven years, such activity has generated $1.5 million in local trade, creating 17% more jobs across the country in the process, boosting school attendance by 23%, enhancing food security by 78% and cutting crime and corruption by 25%. Yudono said:

The value of blockchain here is its exchangeability. One local currency equals one shilling and they can be swapped, but all transactions can be seen transparently via a dashboard. While villages don't usually have a bank or ATM, which means people have to go into the nearest town to find one, this system is accessible to everyone as long as they have a phone - and it doesn't even have to be a smartphone.

Enabling transparent trade in Haiti

A third blockchain initiative of note, meanwhile, was commissioned by Haiti's Ministry of Commerce and Industry and funded by the World Bank within the framework of a Business Development and Investment project.

The aim of the initial pilot scheme, which kicked off in the first quarter of 2019, was to use a private blockchain-based ‘Transparent Trade Ledger' in order to level the playing field for about 600 small farmers trying to sell their mangoes, avocados and pineapples into developed markets, such as the US. The idea was that the R3 Corda-based system, which went live in May, would ensure producers were paid the spot price for their fruit based on supply and demand rather than negotiation tactics as well as prevent them from being fleeced by intermediaries.

A custom-built platform created by a consortium, which includes agriculture blockchain specialist AgriLedger, food traceability system supplier SourceTrace, and local training provider Ecole Superieure d'Infotronique d'Haiti, now enables consumers to scan the QR code of the fruit they wish to buy to establish which farmer produced it, how it was packaged and transported, and what costs were involved. Authorised (and vetted) farmers can also view logistics and transaction data via their smartphone or other web-enabled device.

According to Genevieve Leveille, Agriledger's CEO, producers collected 38,000 kilos of mangos during the period of the pilot project. This yield generated sales of $40,000, of which the farmers received 68%, a 750% increase in revenue per kilo on years gone by. Next to be added to the list will be coffee and cacao producers.

Interestingly, Leveille is also currently leading a Covid Rapid Response project in the UK to enable the effective and safe delivery of testing kits, and eventually even vaccine doses if and when they become available.

My take

It's amazing how applying a bit of imagination to the use of a technology, whose first incarnation was purely as a tool for generating money, can make all the difference to people's lives when trying to solve some of the world's most intractable problems.

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