A NEW FOOD CHAIN

How the United Na­tions is us­ing blockchain to bring sta­bil­ity to the lives of refugees

Fast Company - - Next World-changing Idea - By Ben Payn­ter Il­lus­tra­tions by Francesco Cic­colella

The fu­ture of world food aid ar­rived, in early May, un­no­ticed by its first re­cip­i­ents: the gro­cery shop­pers in­side a su­per­mar­ket at the Azraq camp in Jor­dan, home to 36,000 Syr­ian refugees. To be fair, their buy­ing process al­ready looked pretty high-tech, espe­cially for a store with a dirt park­ing lot in the mid­dle of the desert. Be­fore pay­ing, each shopper peered into a black, rec­tan­gu­lar iris scan­ner mounted at eye-level, which con­firms users’ iden­ti­ties with the camp’s or­ga­niz­ing group, the United Na­tions High Com­mis­sioner for Refugees, and al­lows them to ac­cess a food stipend from the United Na­tions’ World Food Pro­gramme (WFP).

That’s a spiffy au­then­ti­ca­tion process, but it had been there for months. What the shop­pers didn’t see was the new back-end pro­ce­dure. In­stead of re­ceiv­ing WFP funds via a third party, such as a bank, the gro­cery store was rec­on­cil­ing each pur­chase di­rectly with the aid group through a se­cure plat­form called Build­ing Blocks, based on blockchain tech­nol­ogy. In­side the store, Houman Had­dad, a fi­nance of­fi­cer for the WFP and the founder of Build­ing Blocks, watched as each eye scan led to a cashier’s tablet flash­ing a green check mark, sig­nal­ing a com­pleted trans­ac­tion. “It was the mo­ment when I knew this was tech­ni­cally pos­si­ble,” he says.

The tech­nol­ogy be­hind cryp­tocur­ren­cies such as bit­coin and ethereum, blockchain is es­sen­tially a shared dig­i­tal ledger sys­tem: a de­cen­tral­ized data­base that al­lows in­for­ma­tion to be ex­changed among sev­eral par­ties but not al­tered. Trans­ac­tions be­come blocks of data that are chained to­gether, mak­ing ev­ery­thing trans­par­ent and easy to re­view. The con­cept arose in 2008 as a way to se­curely track and trans­fer bit­coins. To­day, blockchain is be­ing ap­plied to ev­ery­thing from en­ergy trad­ing to le­gal con­tracts, and is poised to trans­form how we store and share per­sonal in­for­ma­tion. But one of its most pro­found uses, say ad­vo­cates, may be in in­ter­na­tional aid, where doc­u­men­ta­tion is scarce and op­er­at­ing bud­gets are low. By elim­i­nat­ing in­ter­me­di­aries, blockchain tech­nol­ogy cre­ates faster, safer, and, ul­ti­mately, cheaper ways of do­ing business.

Or­ga­ni­za­tions work­ing in in­ter­na­tional re­lief can lose up to 3.5% of each aid trans­ac­tion to var­i­ous fees and costs. What’s more, across

the in­dus­try, an es­ti­mated 30% of all de­vel­op­ment funds don’t reach their in­tended re­cip­i­ents be­cause of third-party theft or mis­man­age­ment. In Jor­dan, the WFP can use Build­ing Blocks to au­dit each ben­e­fi­ciary’s spend­ing in near-real time. And by pay­ing ven­dors di­rectly, Build­ing Blocks has re­duced money-man­age­ment costs by 98%, ac­cord­ing to Had­dad. For an aid or­ga­ni­za­tion spend­ing $6 bil­lion an­nu­ally across 80 coun­tries, that adds up to tens of mil­lions of dol­lars in sav­ings. Bern­hard Kowatsch, who heads the WFP’S In­no­va­tion Ac­cel­er­a­tor, which in­cu­bated Build­ing Blocks, sees more value: “[Build­ing Blocks] pro­vides even higher as­sur­ance to in­di­vid­ual donors that if you give to the World Food Pro­gramme, that money ac­tu­ally reaches the peo­ple it’s in­tended for.”

Had­dad, who has worked for the WFP for seven years, ap­proached his em­ployer in mid-2016 about de­vel­op­ing a blockchain-based business through its ac­cel­er­a­tor. The WFP in­cu­ba­tor of­fers in­ten­sive coach­ing and up to $100,000 to so­cial en­trepreneurs who share its goal of erad­i­cat­ing global hunger. Once in the pro­gram, Had­dad joined forces with Alexan­dra Alden, a Sil­i­con Val­ley–based men­tor, re­fined the con­cept dur­ing a boot camp run through Cal­i­for­nia’s Sin­gu­lar­ity Univer­sity, and, in Jan­uary of this year, be­gan test­ing a pro­to­type in the Sindh prov­ince of Pak­istan, whose ru­ral in­hab­i­tants are de­pen­dent on food en­ti­tle­ments and di­rect cash dis­tri­bu­tions. (This trial didn’t in­volve fancy iris scan­ners, re­ly­ing in­stead on text-based mo­bile voucher codes.)

The WFP ini­tially sched­uled just a one-month trial of Had­dad’s tech­nol­ogy in Azraq, but the pro­gram was sur­pris­ingly suc­cess­ful. The or­ga­ni­za­tion has asked Build­ing Blocks to stay—and ex­pand to other camps later this year, reach­ing a to­tal of 100,000 peo­ple. An even wider roll­out to the coun­try’s half mil­lion refugees scat­tered through­out dif­fer­ent host com­mu­ni­ties will fol­low. Had­dad ex­pects the sys­tem to be avail­able in other coun­tries some­time in 2018, along with the abil­ity for re­cip­i­ents to re­view their balances and item­ized lists of pur­chases.

Be­cause the de­sign for Build­ing Blocks is largely open sourced—its ethereum-based op­er­at­ing sys­tem al­lows for cus­tom­iz­a­ble ap­pli­ca­tions—had­dad en­vi­sions the tech­nol­ogy be­ing used well be­yond gro­cery stores. For in­stance, the WFP’S re­cip­i­ent rolls could be teth­ered to health data from the World Health Or­ga­ni­za­tion, or ed­u­ca­tional in­for­ma­tion from UNICEF. That would give aid groups a bet­ter un­der­stand­ing of their re­cip­i­ents, and refugees a bet­ter way to man­age their af­fairs. And the tech­nol­ogy would be eas­ily trans­fer­able across bor­ders. “That’s when [it] starts get­ting pretty in­ter­est­ing and pow­er­ful,” says Had­dad’s men­tor, Alden.

Ben Siegel, an im­pact pol­icy man­ager at Con­sen­sys, an ethereum de­vel­op­ment com­pany that has helped form the Blockchain for So­cial Im­pact Coali­tion, con­sid­ers Build­ing Blocks a “su­perb” first step, and sev­eral UN or­ga­ni­za­tions are ex­plor­ing how to take it fur­ther. The ul­ti­mate goal, Had­dad says, is to give up­rooted peo­ple “as much con­trol as pos­si­ble” over their own lives.

By elim­i­nat­ing in­ter­me­di­aries, blockchain tech­nol­ogy cre­ates faster, safer, and, ul­ti­mately, cheaper ways of do­ing business.

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