Blockchain for refugees: great hopes, deep concerns

Posted:
24 January, 2018

Blockchain has been much in the news lately thanks to the speculative cryptocurrency market. It is increasingly being touted as something of a magic bullet in a whole range of disciplines, and has been put forward as an answer to ongoing challenges in the field of international development, humanitarian aid and refugee studies. Various pilot projects are starting to make use of blockchain to support refugees, and it is expected that technological improvements will enhance the services provided to people in vulnerable situations.

This post sets out some of the ways blockchain is currently being used for development objectives and aims to evaluate discourses around this new technology. Will it empower refugees, overcome poverty and help agencies to reach people in need while avoiding problems created by corruption and the use of intermediaries?

This post suggests that while blockchain may be used to support people in need, we have to bear in mind that these are not just technical issues – they are political questions too. Focusing solely on the technical side is unlikely to bring the promised progress – and might even have the opposite impact.

‘The greatest poverty killer’

In recent years, new partnership models bringing together technology companies and humanitarian NGOs have been promoted as a way of supporting refugees and displaced people – for example to facilitate payments and data protection and to support local businesses. A particular focus of such initiatives is the role of distributed ledger technology (DLT) to provide services rapidly and cheaply through cryptographic security without intermediaries, while also offering transparency and accountability. Margie Cheesman highlights some pilot projects:

‘DLT projects multiply around a variety of themes in socioeconomic development: from financial transactions (e.g. Disberse are tracking the distribution of aid; UN World Food Programme are providing blockchain-enabled emergency cash assistance in Jordan) to identity management (cf. ID2020; BanQu identities for refugees and the ‘unbanked’; Save the Children’s humanitarian passportDoctors Link’s medical passport) to grid-edge peer-to-peer energy exchange in East Africa (Edinburgh University/GSMA), ‘Blockchain For Good’ in business management (Surrey University) and healthcare records-making and audit (iRespond and Google DeepMind Health)’. 

To look more closely at one of these initiatives: in November 2017, ID2020 and the UNHCR convened a workshop on digital identity in Munich and participants representing governments, corporations and the UN agencies discussed the opportunities digital identity presents for refugees, forcibly displaced and stateless persons. The ID2020 report stated that over 1 billion people have no form of identity, but with the help of technology, multi-stakeholder collaboration might provide these people with digital identities that would allow them to access essential services, open a bank account and receive aid and social benefits. And as it is digital, the technology offers the necessary conditions for accountability and governance to improve the efficiency of the delivery of development aid.

The Executive Director of ID2020, Dakota Gruener, commented:

‘Those who advocate for using blockchain technology for identity management say the approach would have several advantages. First, it would likely be far more secure than even the best-protected central database. Second, it allows for individual records to be held outside of national databases, which is better suited to a world with nearly 60 million forcibly displaced individuals and another 10 million stateless. And third, it would place ownership of an individual’s data in their own hands rather than those of a potentially unreliable or untrustworthy government’.  

Another related initiative is being conducted by the GSMA, which represents the interests of mobile operators worldwide. The association runs two projects to address identity-related challenges in the humanitarian context: its ‘Mobile Money Programme’, which works to accelerate the development of the mobile money ecosystem for the ‘underserved’, and the ‘GSMA Digital Identity Programme’.

Jim Yong, the World Bank Group President, has described digital identity as ‘the greatest poverty killer app we’ve ever seen’. If such initiatives are successful, according to Mastercard Vice Chairman Walt Macnee, an additional 500 million new ‘consumers’ and 40 million ‘new merchants’ can be brought into the global economy from among the world’s 2 billion ‘unbanked’ people. ‘The firm believes that greater financial inclusion around the world is a path to long-term sustainable economic growth’.

The World Bank Group released a paper on the role of financial services in humanitarian crises in April 2017. The report argues that in order to integrate humanitarian programmes with a developmental approach, refugees and low-income-households in host societies should have access to quality financial services, so they can save, invest and receive loans. Donors may also inject liquidity into local financial markets to support market players.

Other voices have been less positive, however: Mercy Corps contributed to the report as follows: ‘delivering aid through e-transfers does not automatically lead to the uptake of new financial services by program participants. Instead, participants typically withdraw their full transfer when it becomes available and rarely use their new accounts after programs end. This holds true in both large government social safety net programs and humanitarian cash transfer programs’. This suggests that such proposals to support refugees do not necessarily have approval from the refugees themselves.

Such initiatives are not limited to digital identity. The United Nations World Food Programme (WFP) has introduced a pilot project called ‘Blockchain against Hunger’, deploying blockchain technology in Jordan’s Azraq camp to make cash-based transfers to 10,000 refugees. WFP relies on biometric registration data provided by the UNHCR and refugees can shop from local supermarkets using iris scans; the system confirms the identity of the refugee in this way, checks their account balance and confirms the purchase. The following quote is from the report:

‘Blockchain technology allows us to step up the fight against hunger,’ said WFP’s Director of Innovation and Change Management, Robert Opp. ‘Through blockchain, we aim to cut payment costs, better protect beneficiary data, control financial risks, and respond more rapidly in the wake of emergencies. Using blockchain can be a qualitative leap – not only for WFP, but for the entire humanitarian community’.

Positive and negative scenarios

However, we need to ask some more questions. Technological progress may help us to reach and track any person in need. It may offer them digital identities, mobile numbers, and bank accounts. But do all these mean that people are empowered? Does all this progress provide a solution to poverty? And what are the risks?

Firstly, we should not overstate the value of such technologies as emancipatory tools.

In the most positive scenario, this support would help some refugees to set up their own businesses or become waged employees (in countries where they are permitted to work). Thus a Syrian refugee living in one of the neighbourhoods of Istanbul or Amman, for example, would have similar financial and economic opportunities to his or her local neighbours. So they would compete in the same job market, earn similar wages – or have an equal probability of being unemployed.

And in fact the majority of refugees live in the global South and these host countries face serious socio-economic structural problems. Thus refugees would face the same obstacles as locals: high unemployment rates, instances of modern slavery, harsh working conditions, an abundance of cheap labour, and constraints on the right to organise and bargain collectively. And even in the countries of the global North, working conditions are increasingly precarious.

So even if blockchain technology allows refugees to obtain a digital ID and receive aid or loans from agencies securely, this would not automatically mean that they are empowered or able to overcome poverty.

Secondly, there is a risk of abuse.

Digital identities, bank accounts and mobile phones allow corporations, donors, international agencies and local-national authorities to track people’s choices and desires. Such control might allow authorities and corporations to increase surveillance over refugees. An authoritarian state could use such data collected from refugees against refugees – or nations of the global North which have no sympathy for the movements of refugees and immigrants towards their countries could use such information to keep refugees in neighbouring countries.

Even in institutionally democratic countries, there are debates about mass manipulation through fake news, interference in democratic elections, the use of search engine algorithms to offer people tailored search results or expose them to different advertisements based on their preferences and choices. Thus millions of people who are not classified as vulnerable can be manipulated and/or mobilised based on the power of corporations and their technological superiority. Therefore, it is also possible that this power could be used to mobilise refugees in a particular direction or discourage them from making certain decisions. Thus they could end up in a more vulnerable and dependent position.

Thirdly, we need to be aware of the motivations of the corporations involved.

As we have seen from the language used – ‘underserved’ customers, ‘merchants’ – corporations do not define their efforts as philanthropy and we can assume that they expect some profit from their investments. The debate on addressing the problems of 60 million refugees and displaced people may shift to discussions on those 2 billion people without bank accounts who are therefore potential customers. As refugees and displaced people live in other countries for decades, any project towards refugees requires investment in their host countries and an important portion of the population who are outside formal financial services live in those refugee-hosting countries. Therefore any investment to formalise refugees will help corporations to reach locals as well. Refugees may be seen as a good starting point for further business goals.

Conclusion

Proposals for using blockchain technology could address some of the basic challenges faced by refugees, displaced and stateless people. However, it seems rash to present such technological progress as a genuinely emancipatory tool.

As stated at the beginning, all such issues – conflicts, climate change, and the refugee question – are political questions and they cannot be resolved without political, social and economic solutions; technological answers alone are unlikely to be sufficient.

In addition, it is worth noting that these initiatives seem to offer a top-down solution: a group of people representing giant technology corporations, the UN agencies, humanitarian NGOs and governments,  meeting in Munich, Davos or California to empower ‘poor immigrants’. But as the Mercy Corp’s comment shows, the proposed solutions might not necessarily be accepted by refugees. So, there is a need to listen to and understand the real expectations and desires of people in need and on the move.

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About the author(s)
Emre Eren Korkmaz
Newton International Fellow