REAL INNOVATION

The UN is using ethereum’s technology to fund food for thousands of refugees

Obsession
Future of Finance
Obsession
Future of Finance

Cancún, Mexico

The United Nations agency in charge of food aid—often billed as the largest aid organization in the world—is betting that an ethereum-based blockchain technology could be the key to delivering aid efficiently to refugees while slashing the costs of doing so.

The agency, known as the World Food Programme (WFP), is the rare example of an organization that has delivered tangible results from its blockchain experiments—unlike the big banks that have experimented with the technology for years.

The WFP says it has transferred $1.4 million in food vouchers to 10,500 Syrian refugees in Jordan since May, and it plans to expand. “We need to bring the project from the current capacity to many, many, more,” says Houman Haddad, the WFP executive leading the project. “By that I mean 1 million transactions per day.”

Haddad, in Mexico to speak at the Ethereum Foundation’s annual developer conference, hopes to expand the UN project, called Building Blocks, from providing payment vouchers for one camp to providing vouchers for four camps, covering 100,000 people, by next January. He hopes to attract developers and partners to the UN project from his conference appearance, organized by the foundation, which acts as a steward for the technical development of the ethereum protocol.

The WFP currently distributes food vouchers within Jordan’s refugee camps via supermarkets located in the camps. The cashiers are equipped not with cash registers, but with iris scanners, which both identify the customer and settle their entitlement payments by verifying the data with various UN databases. Building Blocks replaced the payment part with a ledger that records the transactions on a private version of ethereum that it developed. “For the beneficiary, nothing has changed,” Haddad says.

The major benefit to the food program so far is a large drop in payments to financial services firms, the usual middlemen for transactions. Such fees have dropped “significantly,” according to Haddad. There are other benefits, like increased privacy for beneficiaries, and quicker reconciliation of accounts because the agency now operates its own payment network instead of waiting for periodic reports from payments firms. The project has been relatively cheap to run, underwritten by a $100,000 grant from the WFP’s startup incubator. “Now we’re doing the payments ourselves and the accounting ourselves,” Haddad says.

The WFP solution is designed to scale. It uses a “fork”of the ethereum codebase that’s been modified by the engineering firm Parity to be private so transactions aren’t exposed. It also means ethereum miners—the people who add new supply of the cryptocurrency—aren’t required to validate those transactions, removing a bottleneck to transaction capacity. The WFP operates the chain itself, although it simulates a scenario where four parties are working together, for future expansion. As a result, the solution can be used by as many beneficiaries and merchants as Haddad can sign on.

Haddad envisions a future where refugees control their own cryptographic keys to access their funds (or “entitlements,” in aid worker jargon). This element may be crucial to making aid more easily and widely available because the keys would unlock data that’s currently stuck in different aid agencies, including medical records from the World Health Organisation, educational certificates at UNICEF, and nutritional data from WFP. “This profile starts to become enriched to become an identity that’s controlled by the beneficiary, which has never happened before,” Haddad says.

One catch: None of the other UN agencies or aid organizations want to play ball so far, Haddad says, thanks to the internecine bureaucracy at the UN and the desire of managers to guard their own turf. “If it’s just WFP, we’re not using the full power of blockchains,” he says.”But if someone wants to come in, we can just let them in.”

The problem of internal bureaucratic warfare, of course, isn’t limited to the UN. Paul Currion, who co-founded Disberse, another blockchain-based aid delivery platform, lauds the speediness of the WFP effort. “It’s fantastic for proving this can work in the field,” he says. But “we’ve found that the hard work is integrating blockchain technology into existing organizational processes—we can’t just hand people a ticket and expect them to get on the high-speed blockchain train; we also need to drive with them to the station,” he says.

Haddad, in the meantime, is building up internal support to expand the Building Blocks project. He has organized a blockchain steering committee at the WFP, and he’s drawing up plans for further expansion. By the second quarter of next year, the system could cover the entire Syrian refugee population of Jordan, or 500,000 people, which would include people who don’t live in camps. He’s hopeful he’ll make a connection in Cancún that will see more organizations join the WFP’ blockchain effort. “I wish that somehow we would get somebody to accept our hand and shake it from the other end,” he says.

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