An estimated 140 billion USD of developmental and foreign aid was provided by donors and nation states in 2016. With such a huge figure being distributed around the globe, it's almost inevitable that funds will go missing, either due to poor management or malicious theft, and the fact that these funds are often managed by only a few - less than transparent - organisations, it's incredibly difficult for outside observers to accurately know which funds have arrived at their intended destination, and which have not.
Now, a Dublin-based financial tech company, Aid:Tech, wants to harness the power of blockchain to clean up the developmental aid system.
Aid:Tech aims to provide recipients of foreign aid, such as refugees, with a digital identity through which they can receive funds. A distributed ledger of transactions, built on the blockchain, is then established to ensure the funds allocated to each individual are received. The decentralised nature of the blockchain means misallocation of funds, either through mismanagement or corruption, is much harder to carry out.
Aid:Tech first trialled their system in 2015 with Syrian refugees housed in Lebanese camps. Aid:Tech distributed 500 'intelligent vouchers' - which featured a QR code linked to an associated blockchain wallet address - to individual refugees in three camps in Lebanon.
Each voucher was loaded with 20 USD of donated funds which could be redeemed for goods in the participating stores. The cashier simply had to scan the QR code, check the funds available and complete the transaction. The donor of the cash would also receive a text message telling them when and how the cash had been used, while the transactions were additionally monitored by the Irish Red Cross.
The trial proved a huge success, with all 500 vouchers redeemed for goods. There were only twenty attempts to created fraudulent vouchers, all of which failed at the point of the sale. It was the first time in history that blockchain technology had been used to distribute aid to refugees, although that is far from being the first example of blockchain being applied to ensure inclusivity and fairness. Elsewhere, we have seen blockchain used to provide homeless individuals with a digital identity, as well as in an attempt to tackle extremism.
The Next Step
Aid:Tech is now looking to roll out the system further with their own platform. Importantly, they hope to partner with trustworthy institutions which already have the ability to administer and verify their end users. The digital identity component of Aid:Tech can then be added to pre-existing identification cards and passports – reducing the complexity of the system.
The system is not just limited to foreign or developmental aid either. Aid:Tech's services also be used for domestic welfare distribution, international remittances and healthcare, with Aid:Tech trialling the latter with an initiative called the CoT project that monitors healthcare provision for pregnant women in Tanzania. And they're also set to launch TraceDonate, a blockchain donation app with complete end-to-end transparency, in August 2018.
According to their website, in 2018 Aid:Tech became the world's first blockchain company to receive capital from two government backed initiatives and funds.