{"id":6830,"date":"2019-11-27T08:46:06","date_gmt":"2019-11-27T05:46:06","guid":{"rendered":"https:\/\/africasustainabilitymatters.com\/?p=6830"},"modified":"2026-01-11T05:30:43","modified_gmt":"2026-01-11T05:30:43","slug":"red-cross-boosts-disaster-prone-communities-with-blockchain-cash","status":"publish","type":"post","link":"https:\/\/rayscohosting.best\/ASM\/2019\/11\/27\/red-cross-boosts-disaster-prone-communities-with-blockchain-cash\/","title":{"rendered":"Red Cross Boosts Disaster-Prone Communities With Blockchain ‘Cash’"},"content":{"rendered":"\n

By Laurie Goering<\/strong><\/p>\n\n\n\n

In\nKenya’s poor rural and slum communities, residents have lots to sell – from\nhome-grown tomatoes to their labour hoeing fields or teaching children – but\nfew people have enough cash to buy the goods and services, reducing the\nincentive to produce more.<\/p>\n\n\n\n

Barter\nworks for some exchanges, but keeping track of who owes what is an inefficient\nprocess. The same goes for village savings and loans groups where transactions\nare commonly recorded on slips of paper and kept in a locked box.<\/p>\n\n\n\n

The\nRed Cross societies of Norway, Denmark and Kenya on Tuesday launched a two-year\neffort to help solve this lack of hard cash by deploying blockchain-backed\n“local currencies” to smooth trade in communities and spur economic\nactivity.<\/p>\n\n\n\n

The\nproject aims to improve the use of $1 billion a year in aid distributed as cash\nand vouchers by the Red Cross – the largest humanitarian donor after the United\nNations – to meet needs before and after disasters.<\/p>\n\n\n\n

The\nnew currencies use credits transferred by mobile phone and automatically\nrecorded with blockchain. They allow slum-dwellers or villagers to be paid for\ntheir labour and spend the credits they earn on local goods and services.<\/p>\n\n\n\n

The\nsystem works much like Kenya’s popular M-Pesa mobile money transfer system, but\nusers do not need to hold Kenyan shillings, said Adam Bornstein, who works on\nalternative financing for the Danish Red Cross.<\/p>\n\n\n\n

Tested\nin parts of Kenya and Ethiopia, it has boosted economies in poor communities by\nenabling credits created from work, sales or aid infusions to be traded\nmultiple times and spent locally, he said.<\/p>\n\n\n\n

The\nnew programme will expand in Kenya and could also be rolled out in Malawi,\nMyanmar, Zimbabwe, Cameroon and Papua New Guinea, aiming to reach 320,000 users\nin the next two years.<\/p>\n\n\n\n

Paula\nGil, a Geneva-based humanitarian consultant, said the technology could bring\nabout a revolution in aid delivery.<\/p>\n\n\n\n

“This\nis the future,” she told the Thomson Reuters Foundation, adding it was\n“probably the only true use of blockchain for good”.<\/p>\n\n\n\n

Will\nRuddick, founder of Grassroots Economics, a foundation that develops community\ncurrencies including for the Red Cross project, said the blockchain-backed\nexchange systems could reshape how spending for development and\nresilience-building was directed around the world.<\/p>\n\n\n\n

The\nsystem “lets 25 women with (simple) feature phones create their own credit\nand savings pool using totally automated systems”, he explained.<\/p>\n\n\n\n

It\nis also relatively cheap to run, at about $40,000 a year for servers and\nsupport to cover all of Kenya, following more than $1 million in initial\nstart-up funding from Norway and other donors, he said.<\/p>\n\n\n\n

‘RESILIENT\nLOOPS’<\/p>\n\n\n\n

But\nnot everyone has welcomed the idea. Some Kenyan banks fear the creation of more\nsophisticated community credit offerings could cut demand for their loans,\nBornstein said.<\/p>\n\n\n\n

And\nto assuage privacy concerns among users, data is held on secure servers,\nRuddick said.<\/p>\n\n\n\n

But\nusing blockchain to support a local credit system increases transparency, he\nsaid, with donors able to get a near real-time view of how well their aid is\nworking so they can adjust it as needed instead of waiting until a project\nends.<\/p>\n\n\n\n

Community\ncurrencies could also help plug a shortfall in credit needed by small and\nmedium businesses in the developing world, estimated by the World Bank at $2.6\ntrillion, he said.<\/p>\n\n\n\n

Economic\nexpansion in poor communities could bring benefits, from creating more jobs for\nyoung people to helping communities attract and retain teachers, the Red Cross\nexperts said.<\/p>\n\n\n\n

Paying\nteachers in local credit that they can use for rent and food creates a\n“resilient cycle”, Ruddick said.<\/p>\n\n\n\n

“Those\nkind of loops are what economies are built on. If they’re not there, you end up\nwith the chronic cycle of the Red Cross giving aid every three years because\nit’s not building communities up,” he said.<\/p>\n\n\n\n

Consultant\nGil urged more aid agencies to adopt the innovation to make their work more\neffective and sustainable.<\/p>\n\n\n\n

It\ntook 15 years for organisations “not to be scared of giving people\nmoney” instead of food or other aid items to cope with disasters, she\nsaid.<\/p>\n\n\n\n

“I\nhope it doesn’t take another 15 years to understand we need to support local\neconomies instead of giving people cash,” she added.<\/p>\n\n\n\n

Read Original Article<\/a> on\nThomson Reuters<\/a>. <\/p>\n","protected":false},"excerpt":{"rendered":"

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