Blockchain technology, best known for powering cryptocurrencies, is now being tested in international aid and welfare systems. By offering a secure, decentralized way to record and track transactions, this technology has the potential to address one of the biggest challenges in aid: ensuring that funds reach their intended recipients. Pilot projects in countries like Ghana, Uganda and Ukraine show both the promise and the limitations of this approach.
Blockchain and Transparency in Aid
Traditional aid distribution often suffers from inefficiencies, lack of oversight and corruption. Intermediaries and opaque financial systems can make it difficult to know whether funds actually reach local communities. Blockchain, a distributed ledger technology, records transactions in a tamper-proof system, allowing donors, governments and recipients to track disbursements in real time.
This transparency reduces opportunities for fraud while building trust among stakeholders. For example, aid distributed via blockchain can be monitored at each transfer stage, from donor pledges to household-level disbursement.
Pilot Projects in Ghana, Uganda and Ukraine
- Ghana: Blockchain technology has been explored as a tool for poverty alleviation. For example, initiatives have used it to improve the land registry systems, reducing disputes and corruption related to property rights. Additionally, this technology is being integrated into the cocoa supply chain, enabling smallholder farmers to trace their products, connect directly with international markets and secure fairer incomes.
- Uganda: Startups have partnered with nongovernmental organizations (NGOs) to pilot blockchain-based land registries, helping reduce disputes and corruption around property ownership, a major factor in long-term poverty reduction.
- Ukraine: In response to wartime displacement, blockchain systems have been explored to deliver direct cash aid and track humanitarian funds with greater accountability. It has helped prevent more than $200M of overlapping assistance since 2022.
Benefits and Transparency Gains
Blockchain projects have demonstrated several advantages:
- Fraud Reduction: Tamper-resistant ledgers minimize opportunities for embezzlement or double-spending.
- Efficiency: Smart contracts automate transactions, cutting costs by reducing reliance on intermediaries.
- Trust-Building: Donors and recipients can access real-time, auditable records showing exactly where funds go.
These improvements could reshape donor confidence in international aid and encourage more consistent funding.
Challenges and Scalability
Despite its promise, blockchain in aid faces major obstacles:
- Technical Barriers: Many communities lack reliable internet and electricity to support blockchain systems.
- Regulation: Blockchain-based aid risks data misuse and uneven adoption without clear legal frameworks.
- Scalability: Pilot projects often succeed on a small scale but require massive infrastructure and oversight to expand nationally.
These challenges show that blockchain is not a “silver bullet” but a tool that requires careful and thoughtful integration.
Looking Ahead
To responsibly integrate blockchain into poverty-alleviation funding, governments and NGOs must build regulatory frameworks that safeguard privacy, ensure inclusivity and maintain accountability. Partnerships with local communities are also crucial to avoid imposing solutions that fail to address real needs.
Blockchain can improve transparency, but only if implemented carefully and ethically. The technology offers a new way to fight inefficiency and corruption in aid. However, its true impact will depend on whether it can be scaled responsibly in the world’s most vulnerable regions.
– De’Marlo Gray
De’Marlo is based in Long Beach, CA, USA and focuses on Business and Technology for The Borgen Project.
Photo: Unsplash
