Overcoming the Challenges of Cash Programs for Refugees on the Block Chain
As you read this, thousands of refugees are just making for land on the island of Lesbos on the Aegean Sea off the coast of Greece. And the image of a young Syrian man rhythmically leading protests at the Budapest train station is still firmly etched in my mind. The stories of refugees in the media have been mostly ones of tragedy. It seems, however, that there may also be an opportunity for developing cash transfer solutions in the midst of such human tragedy. This is in part to the work of ELAN, or the Electronic Cash Transfer Learning Action Network.
ELAN, which is convened by Mercy Corps, recently published a 16-page report that sheds light on how cash transfer can be enabled for refugees. Thanks in part to the growing use of technology, money transfer for refugee populations has been growing. The report mentions the World Food Program who have seen their cash and voucher program grow from US$ 10 million to US$ 837 million in the five years since 2009.
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ELAN proposes that the alliance between technology and the private sector can be brought together to make cash and voucher programs much more effective in post-disaster and conflict areas. The ELAN report itself was the result of a workshop held early in 2015 in London. The workshop identified eight challenges that need to be addressed for cash and voucher programs to really work globally. The eight challenges identified in the report include collecting market information, assessing financial service providers, labor intensive systems, lack of training on technology, data collection, sharability of data, data protection and merchant management.
Several or all of these challenges can be easily solved through using block chain as the underlying technology. The following is a brief description of how block chain technology can solve each of the challenges above.
Data Collection, Analysis and Protection
It is now established that one can record most types of data on the block chain. And due to the block chain’s distributed nature, it is quite possible to have different humanitarian agencies being able to collect the data on the same network. This approach also makes it much easier to verify information about an area or even a group of people.
One advantage of this approach is that it eliminates many of the information silos that can and do exist across many organizations. The agencies could even develop a proprietary block chain that would be configured to conform more closely to the needs of humanitarian agencies.
Tokens could then be generated from such a block chain and be used as the basis for a cash and voucher system. The other practical advantage is that by using a distributed block chain, the need to spend heavily on data security is reduced since responsibility for security is distributed among all the participating nodes in the network.
Block chain and the Challenge of Financial Services
Perhaps one of the greatest inventions of the block chain is the ability to create virtual currency. Bitcoin, will perhaps come to mind. There are many other types of virtual currencies that could be used to set up a cash and voucher system as well.
Through such a system, humanitarian agencies would be able to rapidly deploy a financial system that would be able to move funds much faster than would be possible through the conventional banking system. Such a system would enable participating agencies to be able to coordinate their efforts better, and avoid duplication of effort.
Financial arrangements on the block chain would also be crucial in managing merchants. Often humanitarian agencies have to manage the expectations of small merchants that they have to do business with. Block chain can provide a form of smart contracts that enable organizations topay their obligations in a more timely manner.
And lastly, most of the training requirements for operationalising block chains would mostly comprise showing office staff how to do basic operations such as data entry, or how to use client apps that would then interface with the block chain. The more technical aspects could easily be managed from an agency’s head office.
Until some long term solution is found, migration due to conflict and natural disasters will continue to be a part of human existence. However, with the advent of the block chain, it is possible to mitigate their effects to some degree. That way the refugees arriving in Greece or protesting at the Budapest Railway Station would have some assurance that their lives would not become too miserable.
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