The U.S. government is researching the use of blockchain technology to increase transparency and accountability in international humanitarian assistance. The U.S. Agency for International Development (USAID) is preparing to re-develop itself into the U.S. International Humanitarian Assistance (IHA). To further illustrate this transition, the new organization plans to start a new pilot initiative using blockchain technology. This initiative seeks to learn how blockchain technology can improve tracking. It would help accomplish its own stated goal of cutting improper payments, which were at an astounding $240 billion in FY23. As you can see, both governments and enterprises are enthusiastically welcoming blockchain technology. This pilot project is a big step forward for the U.S. government as it taps into this exciting technology for humanitarian purposes.
The move to integrate blockchain technology comes as USAID transitions into IHA, a new entity designed to streamline and improve international aid efforts. The pilot project will serve as a crucial test of blockchain's capabilities within IHA, assessing its potential to provide real-time accountability and enhanced tracking of financial transactions. F mint USAID is a prominent government agency looking at how they might apply blockchain. The integration is still very much in its infancy, and the pilot project won’t have an immediate, sweeping effect. If all goes well with the long-term effects of successful blockchain implementation, it could change the way humanitarian assistance is administered and delivered entirely.
Blockchain for Accountability
One of the primary drivers behind the adoption of blockchain technology is its potential to address the issue of improper payments. In fiscal year 2023, the federal government flagged almost $240 billion in improper payments. These blunders stemmed from bad math, double entry accounting and the like. Blockchain technology provides us with a different kind of solution, one with a transparent, immutable ledger that allows us to trace each step in a transaction.
Blockchain technology provides an immutable record of each unique purchase order, signature, and legal modification on a shared ledger system. Producing this tamper-proof auditable trail builds in transparency and accountability. This level of transparency makes it easier to identify and rectify errors, reduce fraud, and ensure that funds are used for their intended purposes. The ability to track who signed documents, who edited them, and when all of this happened increases accountability. This proactive approach goes a long way in greatly reducing the potential for financial mismanagement.
With blockchain technology, IHA could drastically reduce improper payments. By focusing on addressing unmet needs, this approach ensures that aid reaches those who require it the most. As a pilot project, the goal will be to determine how best to incorporate blockchain’s capabilities into existing systems and processes. This collaborative effort lays the groundwork for widespread adoption across other federal agencies.
Pilot Project Objectives
The IHA recently introduced a new pilot project to leverage blockchain technology. The goal of this effort is to determine whether blockchain can be used to meaningfully improve transparency and accountability in humanitarian assistance. The overarching goal of the project will be to achieve the following specific aims. It will enforce fund tracking, confirm that goods and services are delivered and comply with procurement rules. The pilot project aims to capture each transaction on a shared, distributed ledger. This method enables a safe, tangible, and transparent history of actions to be built, allowing for clear tracking and auditing of how funds are used.
An additional aim of the pilot project is to evaluate the scalability and interoperability of blockchain technology. The pilot will research methods to leverage blockchain technology alongside current systems and procedures. Finally, it will test blockchain’s ability to handle the volume and complexity of transactions that come into play among various actors involved in international humanitarian assistance. The specific focus of the pilot project will be to explore the legal and regulatory implications of implementing blockchain technology. It will help ensure rigorous adherence to all applicable statutes, rules, and regulations.
We look forward to seeing the valuable insights provided by the pilot project. These learnings will inform future decisions on the wider adoption of blockchain technology within IHA and other government agencies. After all, the federal pilot project is unlikely to provide immediate and transformative results. It is an important step in determining how blockchain technology can be leveraged to make humanitarian assistance work harder and smarter.
Challenges and Future Outlook
While the expected improvements from implementing blockchain technology are great, there are challenges that will need to be worked out as well. One of the key obstacles is the difficulty of implementing blockchain solutions, which requires specialized knowledge and resources. In fact, blockchain networks are under enormous scrutiny for their scalability and security. There’s an urgent need for these networks to easily integrate with current systems.
Despite these challenges, the U.S. government's exploration of blockchain technology signals a growing recognition of its potential to transform various sectors, including humanitarian assistance. Both governments and enterprises around the world are in active experimentation with blockchain technology. Much as they do, we can hope it grow and mature, becoming more user friendly and implementable.
Looking ahead, the success of the IHA's blockchain integration pilot project could pave the way for broader adoption of blockchain technology across other government agencies and international organizations. The pilot project is a stand-out example of how blockchain technology can increase transparency, accountability and efficiency. More importantly, this demonstration could usher in even more innovation and investment in this groundbreaking technology.
