Transforming the Deeply Flawed International Aid and Development Models with Blockchain

When Governments, Charities, and NGOs fail, what's left?

There are fundamental flaws with current models of providing international aid to developing countries. Problems include a lack of transparency, mismanagement of funds, corruption, and greed (to name a few).

Trust in these mechanisms has decreased, leaving well-intentioned organization scrambling for donations and for solutions to large-scale problems in foreign countries. International organs such as the United Nations, have a duty to provide assistance to countries who do not have the domestic resources to realise efforts against poverty, and other socio-economic troubles.

The international obligations of UN Members is laid out in Article 2(1) of the International Covenant on Economic, Social, and Cultural Rights (ICESR) imposes an obligation upon each of the Member States to the Covenant to:

take steps, individually and through international assistance and cooperation, especially economic and technical, to the maximum of its available resources, with the view to achieving progressively the full realisation of the rights...

However, the UN is not exempt from criticisms. In the past, UN Aid programs have been wrought with countless cases of fraud, red tape, hefty administrative fees and mismanagement of funds. In 2018, the Ugandan Government, in conjunction with the United Nations High Commissioner for Refugees (UNHCR), and the World Food Programme (WFP) were accused of collusion, and inflated refugee figures. Officials created fake names in refugee settlements to swindle money and as a result, millions of dollars in aid were lost as a result.

These officials were also accused of stealing relief meant for refugees, appropriating government land meant for refugees, trafficking young girls and married women, and interfering with the election of community leaders. Charities and NGOs are not exempt from accusations of corruptions and mismanagement of funds either. Haiti, for example is infamously known as a "Republic of NGOs" because there are currently over 20,000 independent NGOs and charities in Haiti, causing the local government to weaken.

According to Vijaya Ramachandran:

"Because of the limited capacity of the Haitian government and weak national institutions, NGOs have risen to play a very prominent role, one equivalent to a quasi-privatization of the state."

The worst part about the NGO situation in Haiti, is that poverty continues to persist.

In the aftermath of the devastating 7.0 magnitude earthquake in Haiti in 2010, international responses and donations were overwhelming. Ramachandran further states that all of the assistance provided to Haiti managed to bypass the government, leaving it even less capable than before. Margot Patterson's article, Are NGOs in Haiti doing more harm than good? states that of those international donations, only a small fraction of the outside aid pledged to Haiti after the 2010 earthquake actually reached the Haitian people.

Allegedly, donors circumvented the Haitian government completely due to concerns of mistrust and corruption.

The sad thing is, Haiti isn't the only country where this is happening. More and more people are distrusting government initiatives, charities, and NGOs, and questioning why can't they take matters into their own hands?

There is some hope though! Innovation and technological solutions can be a way of mitigating the fundamental flaws of international aid.

Enter Blockchain

I've covered extensively how Blockchain could improve Governance mechanisms in my previous article. People should be able to trusts their governments (even if only to a small degree) to ensure that services that protect, guarantee their security and uphold the rule of law are readily available.

Technology can be an answer, but only if critical issues can be addressed first.

It is technically possible for blockchain to transform the field of philanthropy and international aid by both creating new fundraising methods for charities to start. Blockchain offers possibilities to disintermediate the transfer of money in the donation process, improve trust between parties, and ensure that the most amount of monetary aid actually reaches those that need it the most.

A more direct and secure payment route for donors could not only increase the financial amount that the beneficiaries receive, it could also convince more people to donate. Blockchain technology could also facilitate the registration of charitable organizations, by removing the need for regulators and third-party verifications.

The real benefit of blockchain in the philanthropic sector is the potential for decentralization. When there is no central authority to handle funds, there is the possibility that mismanagement of funds can be directly reduced, with hopes of eliminating it altogether in the future.

The BitGive Foundation is the first bitcoin and blockchain non-profit charity which was founded in 2013. BitGive uses blockchain technology to allow donors to trace transactions on a public platform in real-time. Donors can see how funds are spent and ensure they reach their final destination. As a way of upholding transparency, project results are shared for direct engagement with donors.

Previous projects with BitGive include: a Children’s relief fund to stop Ebola Campaign with Save the Children, providing cellphones to the Nepal Division of Medic Mobile to strengthen health system post-earthquakes, supporting abandoned and mentally disabled children in Mexico, and building homes in Brazil’s favela communities, to name a few.

Although there is no mention of BitGive working in tandem with governments and creating strategies which benefit both parties, they are ensuring that the maximum amount of funds arrive to their destination.
According to Carlos Santiso, Blockchain's ability to track transactions can also especially be useful when tracking high risk governmental and inter-governmental transactions.

Santiso believes that blockchain mitigates the risk of fraud and leakage in the flow of funds.

Haiti's situation is one that has an incredible amount of nuance, and there is no one right answer to solve the problems of a weakened government and the rising powers of NGOs.

Ramachandran believes Haiti should focus on governance reform, improvements in security, civil service, core infrastructure, legal and regulatory reforms, and public financial management. That is no small task and will require a large number of inter-governmental, international, and domestic collaborations to make it happen.

If (and this is a big IF) NGOs, UN organs, and governments work together to first address issues of the digital divide and work to reduce it, blockchain could be a wonderful start to improving the state of their governments, improving relations between its people and governments, and ensuring that people who need the most help, receive what they need to thrive.

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Laura Marissa Cullell is an MA Graduate of the UN University of Peace in International Law and Human Rights. She wrote her thesis on Blockchain and the Sustainable Development Goals: Utilizing Disruptive Technologies to Promote Human Rights, Peace, and Good Governance. She loves puns, cookie dough, glitter, and reading an obscene amount of books at the speed of light.

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