Summary:
- The UN has estimated that 274m people worldwide will need humanitarian assistance over the course of 2022, with the organization planning to spend $41 billion to help support 183 million people in 63 countries.
- In 2018, it was discovered that just 3.1% of global humanitarian aid went directly to an NGO or through only one intermediary.
- Aid agencies are turning to crypto as a means of delivering financial support more swiftly, efficiently, transparently and at lower cost. Crypto not only allows for near-immediate delivery of funds, but blockchain technology is playing an increasing role in disbursing aid.
Initial lifeline of funs
Crypto is offering a first responder-styled solution to the problem of getting financial aid to the authorities and vulnerable communities in the wake of a disaster or conflict. Instances are emerging where crypto has provided an important, initial lifeline of funds, perhaps most notably in the case in Ukraine, following Russia’s invasion in February. Crypto is also proving effective in offering solutions that work alongside the more traditional methods of disbursing humanitarian aid.
The humanitarian supply chain is complex. In 2018, it was discovered that just 3.1% of global humanitarian aid went directly to an NGO or through only one intermediary. Reflecting the numerous parties involved, the humanitarian supply chain can have inefficiencies, which create delays, cause bottlenecks and add to costs. Traceability is a problem, making monitoring difficult, and undermining a sense of accountability, which in turn, can lead to donor mistrust.
Crypto reduced delivery times by 96% and lowered distribution costs by 75% in comparison to traditional methods.
Increasingly, tech companies are creating automated tools that deliver assistance directly to the recipient and can be used by many organizations in different locations. One such example is Oxfam’s award-winning UnBlocked Cash program.
UnBlocked was rolled out in Vanuatu in 2019. Volcanic activity was already affecting the vital tourism industry when Cyclone Harold arrived, badly affecting parts of the archipelago.
UnBlocked consists of a single-payment online platform where Oxfam and other partners can disburse funds and monitor transactions. Beneficiaries receive a ‘tap and pay’ card, which they use to purchase goods, while vendors are given smartphones with a pre-installed app, through which they receive the payments. Initially focused on two communities of approximately 200 people using 33 vendors, UnBlocked now serves 35,000 people. Oxfam estimates that the scheme has reduced delivery times by 96% and lowered distribution costs by 75% in comparison to traditional methods.
One of the companies supporting aid agencies by developing these online payment platforms is Emerging Impact, which has been described as a ‘DeFi neobank for the Global South’. Using blockchain technology, Emerging Impact enables organizations like Oxfam to provide digital financial services to vulnerable communities.
Its Umoja Payments Suite is a blockchain-based payment program that distributes digital cash assistance. Users don’t need a smartphone or access to the internet to use it. Instead, they are given a payment card, which is pre-loaded with funds. They can then use this card to buy goods and health services from participating vendors. Cash can be distributed in seconds, linked back to a fiat currency as required and recorded on the blockchain.
Emerging Impact has also supported programs in Kenya and Ecuador. In the former it has underpinned moves to integrate DeFi tools into a cash reward program, while in Ecuador, Umoja forms the basis of a payment and electronic voucher program, supporting women who lack access to public services.
There is no sense that crypto solutions will replace the way in which aid is delivered, but the work is helping to digitize social protection, microfinance and micro-work programing, providing swifter, cheaper and transparent alternatives. In reality, it takes years to recover and rebuild from a disaster, both on the ground and in terms of reconstructing institutional capacity. Crypto doesn’t have to simply be a first or even second responder. But, it can help organizations think about ways to transition vulnerable communities from the situation where they are receiving money or goods and services for free to supporting wider recovery and building financial inclusion.
