Blockchain and food aid — making humanitarian assistance more efficient
How distributed ledger technology helps the UN to provide quicker and safer options for refugees to obtain food
Earlier this month, the World Food Programme (WFP) of the United Nations was awarded the 2020 Nobel Peace Prize for its work in fighting hunger and improving conditions for peace in conflict-affected areas. One of the ways that the WFP provides aid for refugees is to enable them to buy food at local grocery stores using blockchain technology.
Overcoming the challenges of providing food aid
Organizations providing food assistance for refugees have faced several difficulties. To give recipients a choice of food or grocery items (rather than uniform food parcels), cash or vouchers need to be distributed — but there are often long queues for collection. Where bank transfers can be arranged, there are typically long waits and high transaction costs involved. In addition, the identity information of aid recipients is vulnerable, and the risk of corruption and theft is high.
The WFP has been rolling out blockchain technology to overcome these challenges. In 2016, it launched a pilot project called Building Blocks for Syrian refugees in camps in Jordan. The project works as follows:
- Refugees register for food assistance using their biometric data, which is encrypted for security.
- Food vouchers are allocated to linked accounts at grocery stores.
- The recipients choose items at the grocery store, and proceed to the cash register.
- An iris scanner reads their biometric data, enabling them to access and spend the food vouchers.
What are the benefits of using blockchain?
Blockchain technology stores transactional records in a public database in the form of a digital ledger.
Each transaction in this ledger is authorized and authenticated by the digital signature of the owner, which makes it a more secure system. In addition, personal data are encrypted for security.
The fact that the database is decentralized also contributes to reducing the risk of fraud, theft and corruption. This is made possible due to the following factors:
- Each transaction is subject to scrutiny by multiple users because data are stored globally on multiple servers, and everyone on the network can see entries made in real time
- Hacking of the system or retrospective changing of data is difficult because of distributed duplicate records, and because entries are time-stamped and immutable
The use of blockchain has had significant cost benefits in the Building Blocks Project. The WFP estimates that transaction costs have been almost totally eliminated, with a reduction of 98 percent of bank transaction costs. Using open source code also contributes to reduced costs of running the system.
The project has resulted in the following benefits for improved efficiency:
- The instant transfer of vouchers has eliminated waiting periods for bank transfers as well as queues for cash or voucher collection.
- The allocation and spending of vouchers are also more efficient since blockchain technology automatically progresses the process without any need for paperwork.
- The database keeps track of each step of the process, with tracking and tracing to easily identify and investigate problems.
- Since all data are recorded digitally, the database can also be used to identify trends and for forecasting future funding needs.
What next for technology and food security?
One of the shortcomings of food assistance programmes has been the fact that many recipients struggle to end dependence on these after a crisis (e.g. war, drought or flooding) has been resolved.
Advances in technology provide many opportunities to find more sustainable solutions to end hunger, and make poorer or vulnerable communities independent of humanitarian aid. The livelihoods of refugee communities can be improved in the long-term by introducing innovative methods of growing food in constrained spaces, for example, by using hydroponic farming techniques.
Blockchain can be used more extensively in food supply chains to reduce corruption, and to ensure that smallholder farmers receive the proceeds to which they are entitled from the sale of produce. This has already been implemented in several food supply chains throughout the world, from coffee in Brazil to bourbon vanilla in Madagascar.
Solutions may also be found by using existing and accessible technological tools like mobile phones. For example, the WFP provided seed funding to prototype and pilot the Virtual Farmers Market mobile app platform to enable smallholder rural farmers in Zambia to sell their produce, thereby increasing the income of these farmers and helping them to build relationships with buyers.
While food assistance programmes do invaluable work, we need to find long-term solutions to provide sustainable food security. For this to happen, innovative disruption is required in agriculture and food supply chains.
“Innovations that are guided by smallholder farmers, adapted to local circumstances, and sustainable for the economy and the environment will be necessary to ensure food security in the future.” — Bill Gates