Fast Company

A NEW FOOD CHAIN

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

- 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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