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April 11, 2019

How the World Food Programme uses blockchain to better serve refugees

By Angela Smith, ITU News

The United Nations World Food Programme (WFP) is often one of the first on the scene in emergencies worldwide, providing critical food assistance to the millions of people impacted each year by war, civil conflict, drought, floods, earthquakes, hurricanes, crop failures and natural disasters.

When the emergency subsides, WFP helps communities rebuild shattered lives and livelihoods.

Over the past two years, WFP has been using innovative technologies, notably blockchain, to enhance its ability to provide effective, efficient food assistance to the people it serves. WFP’s efforts to use the latest technologies to better provide refugees with food are a good example of how tech can help accelerate progress on the UN’s 17 Sustainable Development Goals (SDGs), notably – SDG 1: No Poverty and SDG 2: Zero Hunger.

So what prompted the organization to take this important step?

An alternative to bulk food deliveries

Ms Hanisha Vaswani Jagtiani from the WFP Innovation Accelerator, speaking at a WSIS Forum 2019 session this week on harnessing technology for refugees, noted that transporting food is expensive. It can also lead to complications.

“If we go into some places with food, we actually skew the prices of the food already on the market,” Vaswani Jagtiani says.

“We need to transfer money to a lot of people whose identity we are not entirely sure of at all times. We also need those transactions to be secure and at a lower cost.” — Hanisha Vaswani Jagtiani, WFP.

An alternative to delivering bulk food to the vulnerable are traditional money transfers, which enable beneficiaries to buy their own food. But the practice of money transfers comes with its own challenges, explained Vaswani Jagtiani:

  • The process is slow.
  • It is costly: Moving money from a bank account to 14 million people around the world results in bank fees.
  • There is a financial risk: In some developing countries, the bank could be unstable.
  • There is a privacy risk: A bank account would need to be opened at a bank for every beneficiary. There could be a danger in giving over all the private information of a refugee to a local bank.
  • There is an identity problem. You cannot always be sure that the beneficiary is who they say they are.
  • The issue of reconciliation: When the money is released, account reconciliation with the vendor can be problematic.
‘Blockchain for Zero Hunger’

“In 2016 we asked ourselves, how exactly are we going to solve all these issues? We need to transfer money to a lot of people whose identity we are not entirely sure of at all times. We also need those transactions to be secure and at a lower cost,” said Vaswani Jagtiani. “And one of our colleagues in the finance department suggested that we try blockchain.”

This led to the creation of the Building Blocks project for zero hunger.

“Blockchain is a distributed ledger technology used as a trusted way to track the ownership of assets without the need for a central authority, which speeds up the processing and settlement of transactions while lowering the chance of fraud or data mismanagement,” according to WFP. “Crucially, its peer-to-peer nature removes the need for the involvement of costly intermediaries such as banks or other institutions. By harnessing the power of blockchain, WFP also aims to better protect beneficiary data, control financial risks, improve the cost efficiency by reducing fees to financial service providers, and set up assistance operations more rapidly in the wake of emergencies.”

Building Blocks “runs on a private, permissioned blockchain using the Parity Ethereum client with a Proof-of-Authority (PoA) consensus algorithm,” notes WFP.

For the first part of the testing stage in January 2017, WFP went to Pakistan with mobile satellite phones to test the blockchain solution with 100 people.

Later that year, WFP went big with blockchain, and delivered money to 10,000 refugees in Jordan.

How does it work?

Two technologies are being used for the transactions, blockchain and the UN High Commissioner for Refugees’ biometric identity management system.

There is the creation of a virtual wallet on the blockchain, and a virtual bank account identity is made for every beneficiary.

The beneficiary then simply goes to a supermarket. They identify themselves with their biometric iris scan (read about the refugee biometric verification exercise), and once verified, the beneficiary can buy the items that they have selected.

The blockchain provides a record of the amount of money owed to a refugee by WFP. When a refugee makes a purchase, the blockchain records the amount of money that WFP now owes to a vendor.

“Earlier, it was: bank to 100,000 wallets. We sent a bulk of cash to a bank, which sent it on to the wallets,” she says. “In this case, it is just us to wallet – wallet to merchant – and we settle with the merchants at the end of the month.”

“Every single transaction is stored in a form that cannot be altered. Blockchain gives that security,” says Vaswani Jagtiani. “There is no need to verify ‒ it is a real-time transaction.”

What are the benefits of blockchain transfers for refugees?

There are significant benefits of this type of money transfer for both the WFP and their beneficiaries:

  • The beneficiary is empowered to feed themselves and their family.
  • No money is sent upfront to potentially unstable entities.
  • WFP holds the data of the beneficiaries.
  • There are savings on local banking fees.
  • There is real-time reconciliation of accounts.

“The WFP currently transfers about USD 3 million in cash per month to over 100,000 beneficiaries across two refugee camps in Jordan,” says Vaswani Jagtiani. “The total number of beneficiaries are 500 000, and we hope to reach them all by the end of this year.”

Building Blocks is an example of how financial assistance and emerging digital opportunities can actually empower refugee households to meet their essential needs according to their priorities.

Next steps

Beyond money transfers, WFP is also interested in exploring using the application of blockchain technology in areas such as supply chain operations and digital identity management.

In addition, given that a neutral blockchain collaboration platform could be beneficial for the entire humanitarian community, WFP invites other United Nations agencies and humanitarian actors to collaborate on a neutral blockchain network to better optimize and harmonize their respective operations and collective work with the ultimate goal of further empowering the people it serves.

Check out the agenda of this week’s WSIS Forum 2019 to learn more about how information and communication technologies (ICTs) are being used to help achieve the SDGs.

Photo credit: WFP/Claire Nevill
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How the World Food Programme uses blockchain to better serve refugees

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