With the arrival of the 4th industrial revolution, new technologies will increasingly enable citizens to engage with governments, voice their opinions and coordinate their efforts. Because of the increasingly changing world of today, governments, citizens and development actors alike need to quickly adapt, get a better understanding of advanced technologies, and learn how they can best be used for the benefit of the society as a whole.
The new UNDP’s strategic approach is relying on innovation and experimentation to ensure that key development actors are able to use new technologies to drive the progress towards the achievement of the Agenda 2030 and the global Sustainable Development Goals. To be able to do so and help the governments of the future, UNDP is now testing advanced technologies, such as blockchain, for development purposes.
The blockchain digital assets translate to the real-world entitlements, such as utilities and merchandize items, while they can be easily created and their movement from one person to another made traceable. At the same time, blockchain transactions allow participating individuals to maintain their privacy. UNDP is currently carrying out one pilot project called “Blockchain-based diaspora remittances in the city of Nis”, to test how this type of advanced technology can be of use to the government while making the financial transfer services cheaper, more transparent and tailored to citizens’ needs.
What role have the diaspora and the city officials of Nis played in the design of the project?
The city of Nis was selected due to its close and extensive links with the diaspora, and the openness of the City administration to the application of new technologies. The City has initiated the process of establishing a blockchain regional center with the following interested parties:
- City of Nis
- Faculty of Electronic Engineering, University of Nis
- Faculty of Economics, University of Nis
- NiCat cluster of advanced technologies Nis
- Young Ambassadors Nis
- Cofound.it Serbia
- Center for Innovative Youth Entrepreneurship Nis
Having in mind the potentials of blockchain technology, the above-mentioned organizations agreed on the following goals: a) Advocacy for regulations that will contribute to the development of blockchain technology and eco-system of digital entrepreneurship at the regional and national level; b) capacity building for the development of blockchain technology and c) initiation of a project with a high social, economic and environmental impact at the regional level, d) providing knowledge and conditions to existing IT companies and potential startup companies for project development using existing Blockchain platform.
Who has the UNDP partnered with to test the use of blockchain technology for transferring remittances to Serbia?
UNDP partnered with the AID:Tech Ltd., a private company from Ireland, well known and recognized for its innovative technological solutions for the humanitarian and development sector, and the U.S. company Stripe, specialized in safe online payments. Additionally, the national Komercijalna Bank is involved. All the partners ensure the controlled testing environment and adherence to strict UNDP’s rules and regulations governing financial transactions.
How does the testing look like in practice?
UNDP’s pilot involves participation of up to 200 recipients and senders of remittances, who have been selected through a public call to voluntarily take part in this initiative. The recipients will get digital voucher ID cards, and they will be able to use the funds that they receive to pay for utilities and purchase groceries in three transparently chosen local retail stores in Nis. The expected value of all the participant transactions is estimated at $20,000.
Why track and influence what the money will be used for?
Tracking what people buy is part of the testing so that in the future potential senders could automate money transfers to pay for utilities and merchandize directly. All the data gathered for the purpose of testing will be used with the consent of the participants and with the consent of the city of Nis local authorities, while taking into consideration the Law on Personal Data Protection. The pilot anticipates that it would be possible to track the type of items purchased, but not by whom they were purchased. Administrators will be able to view the aggregated data showing where the funds are being directed via blockchain digital assets, e.g. 50% of all the funds sent to Nis will be used to pay for utilities and 50% for the merchandize.
What are the expected benefits?
The use of open-source blockchain platform, provided pro-bono by AID:Tech Ltd, is expected to bring several benefits, for a number of beneficiaries:
- Ensure traceability and transparency of the inflows of diaspora remittances into Serbia
- Channel diaspora remittances towards socially responsible purchases
- Enable easier and cheaper money transfer for the remittance senders, by avoiding the intermediaries. The goal is for the transaction costs to be less than 3% in average, compared to the existing, much higher costs paid via traditional banking sector and/or financial service companies
- Secure the privacy of individuals, since personally identifiable information is held off-chain in accordance with the GDPR, while individuals are identified on the blockchain through unique digital identifiers.
- Enable creation of digital IDs that can be used for other money transfers (such as, for example, social welfare) and other purposes
The Pilot project ends in October 2018, and UNDP, equipped with the knowledge gained through this innovative initiative, will further explore venues and mechanisms that can speed up the achievement of Sustainable Development Goals.
Meet and share your experience with professionals engaged in harnessing the potential of Blockchain for international development at the first Blockchain for Development Forum to unfold in Southeastern Europe. The event is scheduled for November 7th, 2018, and is due to take place at Opera Plaza Hotel in Cluj, Romania.
Original source: UNDP
Published on 3 July 2018
