The way organisations are delivering social assistance is changing. Payments are now digital, with refugees undergoing iris scanning for access to virtual wallets. After numerous trials, the blockchain technology behind these innovations has allowed the World Food Programme to more effectively distribute cash-based assistance to hundreds of thousands of Syrian refugees (Juskalian, 2018). The question is: Will this be the predominant method of social assistance in the coming decades?

 

Blockchain technology

 

As the world’s largest humanitarian organisation, the United Nations World Food Programme (WFP) offers assistance to over 90 million people across 83 countries every year (World Food Programme, 2018). Traditionally, social assistance has always been distributed by hand, or through costly intermediaries, if distributed virtually. However, in 2016, a new technology called ‘blockchain’ caught the World Food Programme’s eye, and executives decided to actively investigate its possible applications in the aid delivery process (WFP Innovation Accelerator 2017a, p. 10). 

 

Blockchain technology is a digital system that enables an immutable series of transactions to take place between parties in a network. The underlying technology is often referred to as ‘distributed ledger technology’. This system ensures that records of all transactions (ledgers) are permanently recorded and visible across the decentralised network on every one of its computers, and are ‘not stored by a central authority’ (Berryhill, Bourgery and Hanson 2018, p. 7). 

 

As each user has an identical copy of the overall ledger that can be inspected and verified through comparison, fraudulent transactions can be easily reported if discovered. This is in contrast to a traditional database (such as Excel), which can be altered with ease and can exist in different forms on different computers in the network, which enables corrupt practices to occur.

 

How the technology evolved

 

The first uses of this technology, tested through a proof of concept, were relatively basic. Over the course of three days, 100 people in the Sindh province of Pakistan received a sum of 3,000 rupees along with supplies of food equal to the same value (del Castillo, 2017). These entitlements were then tracked through a smartphone application using a public blockchain, which enabled World Food Programme employees to record which aid went to which individuals (Faife, 2018). In effect, the giant system, named ‘Building Blocks’, acted as a database, storing the information of refugees in a secure manner whilst not actually utilising the main unique features of the underlying blockchain technology.

 

Four months after the trial phase in Pakistan, a pilot project was initiated in Jordan. This took place in the Azraq refugee camp and included 10,500 recipients (Tholstrup Nielsen 2018, p. 17). Smartphones were replaced with ‘a third-party biometric identity system’, which allowed Syrian refugees to first receive financial support, which was sent to virtual wallets, and then pay for groceries by scanning their eyes in supermarkets across the camp. Overnight, this innovative IrisGuard eye-scanning technology virtually eliminated the identity fraud, excessive bureaucracy and systemic corruption usually present in refugee camps across the globe (World Food Programme, 2016). This technology would have been revolutionary for a developed nation, let alone a refugee camp in Jordan.

 

A transformational impact

 

The pilot project proved to be a success, and the WFP decided to extend it indefinitely (Gerard, 2017). As of December 2017, the Building Blocks scheme had reached over 100,000 individuals across Jordan and facilitated monthly savings of $40,000 in transfer fees(Munich Re Foundation 2018, p. 4; Baydakova, 2018). These fees were traditionally paid to financial intermediaries such as Jordan Ahli Bank and Middle East Payment Services, and in exchange, they would act as a trusted third-party and process transactions (del Castillo, 2017). Blockchain, however, ensured unparalleled transparency through its publicly accessible immutable ledger, removing the need for these intermediaries. 

 

During 2018, Building Blocks expanded beyond Azraq to additional Jordanian refugee camps such as Zaatari and King Abdullah Park, allowing the WFP to provide $37 million in cash-based assistance and reduce financial transaction costs by 98%. Today, Building Blocks is “the largest blockchain-based cash-distribution system in the humanitarian sector” (Ibaraki, 2019) aiming to assist 500,000 people in Jordan by the end of 2019 (Ian Wong, 2017; Lucsok, 2018). “If the project succeeds, it could eventually speed the adoption of blockchain technologies at sister UN agencies and beyond” (Juskalian, 2018).

 

The Zaatari experience

 

The Zaatari refugee camp is one of the most famous cases concerning the use of the Building Blocks technology. Located between the Syrian border and Jordan’s capital, Amman, it was established in 2012 and is home to approximately 80,000 Syrian refugees fleeing the country’s ongoing civil war. In the years since, it has become Jordan’s fourth-largest city (UNHCR, 2019), and with so many inhabitants is now a fertile testing ground for the use of blockchain technology. This has meant that nowadays every one of its vulnerable inhabitants has access to some of the most innovative payment technologies on the planet (Seibert, 2019). However, Zaatari is also the first refugee camp to encounter the technology’s unintended consequences such as the growing black-market trade of goods outside official WFP stores (Juskalian, 2018). Perhaps more than anything, the trailblazing Zaatari camp embodies the shifting attitude towards humanitarian assistance witnessed over the past few years, as governments and organisations become more willing to replace outdated working practices and implement ground-breaking technologies to deliver aid in disaster zones.

 

Blockchain technology is changing the way organisations deliver social assistance to the world’s most vulnerable individuals. Whilst we cannot be certain as to whether blockchain-enabled payments will become the most predominant form of social assistance, with countless organisations and governments starting to invest in the technology and seeing positive results, it is at least safe to say that social assistance programmes may never be the same again.

 

 

References

Baydakova, A. (2018). UN Food Program to Expand Blockchain Testing to African Supply Chain - CoinDesk. [online] CoinDesk. Available at: https://www.coindesk.com/un-food-program-to-expand-blockchain-testing-to...

Berryhill, J., Bourgery, T. and Hanson, A. (2018). Blockchains Unchained: Blockchain technology and its use in the public sector. OECD Working Papers on Public Governance, No. 28. [online] Paris: OECD Publishing, p.7. Available at: https://oecd-opsi.org/wp-content/uploads/2018/06/Blockchains-Unchained-G...

del Castillo, M. (2017). The UN Wants to Adopt Bitcoin And Ethereum – And Soon - CoinDesk. [online] CoinDesk. Available at: https://www.coindesk.com/the-united-nations-wants-to-accept-ethereum-and...

Faife, C. (2018). How the U.N.'s Blockchain Experiment Delivers More Aid for Refugees. [online] BREAKERMAG. Available at: https://breakermag.com/the-u-n-s-powerful-new-way-to-aid-refugees/

Gerard, D. (2017). The World Food Programme’s much-publicised “blockchain” has one participant — i.e., it’s a database. [online] Attack of the 50 Foot Blockchain. Available at: https://davidgerard.co.uk/blockchain/2017/11/26/the-world-food-programme...

Ian Wong, J. (2017). The UN is using ethereum’s technology to fund food for thousands of refugees. [online] Quartz. Available at: https://thelivinglib.org/the-un-is-using-ethereums-technology-to-fund-fo...

Ibaraki, S. (2019). Are Industries, Governments and UN Agencies Ready For 5th Machine Age Blockchain Adoption?. [online] Forbes.com. Available at: https://www.forbes.com/sites/cognitiveworld/2019/04/08/are-industries-go...

Juskalian, R. (2018). Inside the Jordan refugee camp that runs on blockchain. [online] MIT Technology Review. Available at: https://www.technologyreview.com/s/610806/inside-the-jordan-refugee-camp...

Lucsok, P. (2018). Fighting hunger with blockchain | Parity Technologies. [online] Blockchain Infrastructure for the Decentralised Web. Available at: https://www.parity.io/fighting-hunger-with-blockchain/

Munich Re Foundation (2018). From Knowledge to Action. 2018 Report. [online] p.4. Available at: https://www.munichre-foundation.org/dms/MRS/Documents/MRS_Report2018_R_W...

Seibert, M. (2019). Blockchain could change the future of humanitarian aid. [online] Food Tank. Available at: https://foodtank.com/news/2019/01/the-world-food-program-fighting-hunger... [Accessed 11 Aug. 2019].

Tholstrup Nielsen, K. (2018). Blockchain Technology and the Sustainable Development Goals. Aalborg University, p. 17

UNHCR (2019). Zaatari Refugee Camp - Factsheet, February 2019 - Jordan. [online] ReliefWeb. Available at: https://reliefweb.int/report/jordan/zaatari-refugee-camp-factsheet-febru... [Accessed 4 Jun. 2019]

WFP Innovation Accelerator (2017a). Building Blocks: The future of cash disbursements at the World Food Programme. [online] World Food Programme, p.10. Available at: https://unite.un.org/sites/unite.un.org/files/session_2_wfp_building_blo...

World Food Programme (2016). WFP Introduces Iris Scan Technology To Provide Food Assistance To Syrian Refugees In Zaatari. [online] Wfp.org. Available at: https://www.wfp.org/news/news-release/wfp-introduces-innovative-iris-sca...

World Food Programme (2018). Overview. [online] Www1.wfp.org. Available at: https://www1.wfp.org/overview [Accessed 16 Apr. 2019]

Social Protection Programmes: 
  • Social assistance
    • Social transfers
      • Cash transfers
Social Protection Topics: 
  • Benefits payment/delivery
  • Social protection systems
Cross-Cutting Areas: 
  • Consumption and expenditure
  • Disasters and crisis
  • Income generating activities and asset accumulation
  • Poverty
Countries: 
  • Jordan
  • Syria
Regions: 
  • Middle East & North Africa
The views presented here are the author's and not socialprotection.org's