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How Blockchain Could Make Refugee Programs More Transparent

The advent of Blockchain technology is disrupting various industries, including international aid. Solon Ardittis, managing director of Eurasylum, argues that Blockchain could bring greater transparency and accountability to refugee and migration programs.

Written by Solon Ardittis Published on Read time Approx. 4 minutes
Giant letters at the blockchain centre in Lithuania's capital Vilnius, February 2018.PETRAS MALUKAS/AFP/Getty Images

Since the late 2000s, Blockchain has emerged as one of the most disruptive technologies in the global digitized transactions market. Launched initially in 2008 to support the creation and trading of Bitcoins and other cryptocurrencies during the financial crisis, Blockchain has gradually expanded into a number of other sectors and industries.

Broadly defined, Blockchain is a software platform, known as a distributed ledger technology, that enables the transfer and verification of virtually any digitized document, whether a currency or any other non-monetary asset.

One of its key merits is that every record created in the Blockchain is indelible and its authenticity can be verified by the entire community authorized to use the platform, instead of a single centralized authority. The system is therefore designed to enhance transparency and accountability at each stage of any digitized transaction.

The Next Big Development Disruptor?

According to a recent report published by CB Insights, there are today at least 36 major industries that are likely to benefit from the use of Blockchain technology, ranging from voting procedures and critical infrastructure security to education and healthcare.

In the international aid sector, a number of experiments are currently being conducted to distribute aid funding through the use of Blockchain and thus to improve the tracing of the ways in which aid is disbursed.

Among several other examples, the Start Network, which consists of 42 aid agencies across five continents, ranging from large international organizations to national NGOs, has launched a Blockchain-based project that enables the organization both to speed up the distribution of aid funding and to facilitate the tracing of every single payment, from the original donor to each individual assisted.

As Katherine Purvis of the Guardian noted, “Blockchain enthusiasts are hopeful it could be the next big development disruptor. In providing a transparent, instantaneous and indisputable record of transactions, its potential to remove corruption and provide transparency and accountability is one area of intrigue.”

Piloting Blockchain for Refugees

In the field of international migration and refugee affairs, however, Blockchain technology is still in its infancy.

One of the few notable examples is the launch by the U.N. World Food Programme (WFP) in May 2017 of a project in the Azraq Refugee Camp in Jordan. Through the use of Blockchain technology, WFP creates virtual accounts for refugees and uploads monthly entitlements that can be spent in the camp’s supermarket by using an authorization code. According to WFP, the program has contributed to a reduction by 98 percent of the bank costs entailed by the use of a financial service provider.

This is a noteworthy achievement, considering that international relief organizations can lose up to 3.5 percent of each aid transaction to various fees and costs, and that an estimated 30 percent of all development funds do not reach their intended recipients because of third-party theft or mismanagement.

At least six other U.N. agencies, including the U.N. refugee agency and the U.N. Development Programme, are now considering Blockchain applications that could help support international assistance, particularly supply chain management tools, self-auditing of payments, identity management and data storage.

At the European Union level, a Blockchain task force has been established by the European Parliament to assess the ways in which the technology could be used to provide digital identities to refugees. The European Commission has also recently launched a call for project proposals to examine the potential of Blockchain in a range of sectors.

Increased Transparency of Migration Funds

Yet little focus has been placed so far on E.U. assistance in the field of migration and asylum, both within the E.U. and in third countries with which the E.U. has negotiated migration partnership agreements.

This is despite the fact that the use of Blockchain could help improve the cost efficiency and, as importantly, the transparency and accountability of major program interventions. This comes at a time when media and civil society organizations are exercising increased scrutiny over the quality and ethical standards of such interventions.

In Europe, for example, Blockchain could help administer the E.U. Asylum, Migration and Integration Fund, both in transferring funds from the European Commission to NGOs in member states, and for project managers reporting back on spending. This would help alleviate many of the challenges NGOs face managing funds in line with stringent E.U. regulations.

As crucially, Blockchain has the potential to increase transparency and accountability in channeling and spending E.U. funds in third countries, particularly under the Partnership Framework and other recent schemes to prevent irregular migration to Europe.

A case in point is the administration of E.U. aid in response to the refugee emergency in Greece. There continues to be insufficient oversight of the commitments and outcomes of large E.U.-funded investments, particularly in the housing sector. The use of Blockchain would make every single financial transaction and its direct beneficiary accessible to every authorized user of the platform.

The potential of Blockchain is not confined to the administration of funds. Blockchain creates indelible and verifiable digitized records for almost any major non-financial activity entailed in a given project cycle. The technology can therefore help trace and report on all stages of migration and asylum policy interventions, including asylum procedures, missing migrants, remittances and the administration of major databases such as the European Asylum Dactyloscopy, the Schengen Information System and the Visa Information System.

Blockchain should not be considered a panacea, just as existing data collection systems are just one of several preconditions to successful policy formation and implementation. In particular, there are significant initial investment costs to establishing any dedicated Blockchain platform.

Yet such a disruptive and adaptive technology can herald some potentially fascinating benefits to migration and refugee programs in the medium and long run, in terms of cost-efficiency, transparency and accountability.

This story is an edited and shortened version of an article on the IOM Migration Data Portal. You can read the original article here.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Refugees Deeply.

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