Blockchain Technology and Refugee Affairs

Apart from many other troubles, refugees are regularly subject to two crucial, interconnected problems. One is financial exclusion, the other issues of identification. Those fleeing from agony regularly have no official documents or dispose of them for various reasons. Firstly, in the hands of the wrong entity, the passport can reveal information that may lead to increased suffering for the passport holder, for instance considering vast areas in sub-Saharan Africa and their fight with Boko Haram. Boko Haram, who conduct terrorist attacks either against non-Muslims, people with a modern belief system or simply for strategic reasons, are a threat to anyone who can be easily classified as their enemy.

Secondly, amidst the terrors of persecution and conflict, many must flee without time for preparations, such as approaching the authorities to obtain or renew a passport. Others are unfortunate enough to lose big parts of their possessions during those dreadful times, rendering them dependent on the host country’s willingness to adhere to the 1954 United Nations Convention relating to the Status of Stateless Persons which entered into force in 1960 and to issue them official travel documents. Thirdly, occasionally, institutional design offers structural incentives for refugees without documents proving their identification. Therefore, discarding these can improve the odds to receive asylum or even create them in the first place.

Against this backdrop, the question arises how to manage one’s finances when there is no possibility of opening a bank account, and consequently no access to financial inclusion due to a lack of documentation. Advocates of the blockchain technology argue that it has the potential to solve – or tackle – both the financial inclusion and identification challenge. As explained in previous articles, blockchain code enables transmission businesses - such as banks, retailers, law firms, online payment services, etc - , and other entities to incentivise specialised IT companies to mathematically verify data that is fed to the blockchain system. The more participants are involved in this process, the more decentralised and efficient it becomes.

Here, their calculation machines are programmed to gather and scan through as much data as possible to confirm the correctness of the service a certain business conducts. The successful confirmation manifests itself as a “block”, is sealed with a time stamp and subsequently attached to the previous blocks, where it remains immutable and indelible. The successful IT company is paid for their computational power generally in a cryptocurrency, for instance Bitcoin, as agreed on before. The block chain consequently serves as a digital, extendable ledger with the capacity to reduce costs by bypassing middlemen like banks that charge additional transaction fees and lowering the chance of data mismanagement by a single institution.

In a humanitarian context, such a project has been launched by the World Food Programme, a branch of the UN, under the name of WFP Building Blocks. After six months 10,500 people in Azraq Refugee Camp near Amman, Jordan, were part of an Ethereum-based Blockchain – as of October 2018 this number rose to over 100,000, transcending the camp’s boarders. Houman Haddad, regional financial advisor to the WFP, asserts planned expenses for the financial service providers have been reduced by 98 percent, as the WFP

“… now just pay[s] the funds transfer to the retailer ... we're not paying additional services for creating all these virtual accounts, paying them, producing reports and so on and so forth, that's all being done on the Blockchain.”

The camp’s inhabitants store their financial and identificational details therefore on it and need not rely on physical documents. However, a critical aspect Haddad also mentions is that at first the number of participants contributing to the verification process of their block chain was 1, a single node. This rendered the WFP block chain effectively a data base – with reduced costs, but the same dangers of data mismanagement. As of late 2018, this number has grown to four, a slow but positive development.

From an innovation perspective, exposure of this technology and its implications may certainly have positive spill-over effects on the camp’s population. As they will ideally be able to return home in the near future, knowledge of and experience in the application of this emerging global technology surely will be beneficial to the development of their country.

Author: Patrick Lehner