Still on conditional cash transfer programme: How blockchain can help

By Muhammed Moshood

In July, the Federal Government of Nigeria abandoned its plan to transfer N8000 (approx $10) in palliative for six months under a Conditional Cash Transfer (CCT) targeted at the most vulnerable households. It was to request a $800 Million World Bank loan to fund the exercise, the same way the immediate past administration of General Muhammadu Buhari reportedly spent N1.3 trillion between 2016 and 2022 on National Social Investment Programmes.

While empirical and independent evidence of the impact of social investment programmes such as CCT in Nigeria is limited, if not non-existent, the new concerns about beneficiary eligibility and selection process are timeous but inadequate. Assessing the current system design and programme execution are other vital considerations.

Plus, as the effects of many years of economic challenges and policies bite harder, it is time to examine how CCT programmes can achieve better results by leveraging blockchain technology. In recent years, Blockchain, a decentralised digital ledger system that records transactions across a network of computers, has shown promise in addressing core problems associated with the CCT.

This article, therefore, explores how Blockchain can address perennial issues peculiar to Nigeria’s cash transfer programmes and highlight other best practices from around the world where necessary.

The lack of transparency and accountability in the public management of resources has led to mismanagement and corruption, potentially in the CCT programme, depriving recipients of their entitled benefits. The central and sub-national governments reportedly adopt state-generated cash registers or community-targeting approaches. Either of these is likely subjective and susceptible to manipulation.

A stable and (de)centralised national register is vital. Blockchain technology can provide an immutable and transparent record of beneficiaries. At the same time, every step in the cash transfer process becomes visible. This level of transparency will foster trust and accountability in the programme.

In Brazil, for example, the Bolsa Família (Family Allowance) Cash Transfer Programme is transparency-personified as it allows citizens to use debit cards to withdraw their benefits across the country. The project also publishes the list of beneficiaries on the programme’s portal (with the amount of benefits); this undoubtedly enhances accountability and reduces fraud. Project administrators and beneficiaries can access data, ensuring funds reach the intended recipients.

Having examined the various methods adopted by federal and state governments in Nigeria in administering the existing social intervention programmes, there is a need to improve their efficiency and transparency whilst cutting potential delays in disbursements, like pension payments. This culture permeates every strata of our national life.

Blockchain-based smart contract streamlines the CCT process, reducing delays and administrative costs associated with manual verification and payment processing. The Kenyan Red Cross once adopted Blockchain to distribute cash aid to disaster-stricken regions. The technology enabled quick and direct transfers to beneficiaries, eliminating intermediaries and ensuring swift disbursements during emergencies.
Earlier in the year, Othalia Doe-Bruce, a United Nations representative at Consensus2023 – A Global Blockchain Conference – held in Austin, Texas, United States, confirmed the organisation’s commitment to adopting the distributed ledger system to drive humanitarian causes during a private conversation.
Sadly, some eligible beneficiaries in Nigeria, particularly in remote and underserved areas, are likely to be excluded from CCT due to limited access to identification, politics and financial infrastructure. Leveraging Blockchain’s identity management system can enable secure and accessible verification of beneficiaries without the usual long-form, paper-based and yet windy documentation processes, thus expanding the programme’s reach to marginalised populations. Also, the current system of identity card presentation before payment is susceptible to racketeering.

The Indian government’s Aadhaar programme employed biometric identification to provide over a billion citizens with unique identities, allowing previously excluded individuals access to various government services and benefits, including CCTs. The programme has become a subject of multiple examinations globally across top academic and policy institutions.

Furthermore, the existing cash transfer programme in Nigeria and most countries may expose beneficiaries’ personal information, leading to potential privacy breaches and security risks. However, Blockchain’s cryptographic security architecture offers enhanced data protection, safeguarding beneficiaries’ sensitive information. The United Arab Emirates government blockchain-based Smart Dubai initiative forms the fulcrum of a solid data protection and privacy management strategy, ensuring citizens’ data are securely stored and accessible only to authorised entities.

Someone somewhere would argue that a ‘simple tech solution’ could potentially resolve some of the issues raised, but being a Nigerian for three decades has shown that a sturdy, corruption-proof solution that cannot be subjected to the whims and caprices of bureaucrats and their allies in professional politics, is ideal and perhaps even better. A system compromise on the Blockchain is only possible by at least 51% manipulation of the computational power, otherwise known as the hash rate.

Blockchain technology holds a more significant potential to enhance the CCT in a way that genuinely cushions the endemic socio-economic and political challenges, not only because of its transparency but also its distributed consensus nature, which would prevent malicious attacks typical with popular biometric systems adopted by India and Brazil. Further to the preceding, adopting this technology could reduce the bloated expenses associated with implementing similar projects in Nigeria.

Since its conception by the Late President Umar Musa Yar’adua’s Administration fourteen (14) years ago, an uncompromising, statistically relevant and fair administration of CCT and other identical programmes is long overdue.

The political will that birthed the social protection programme must move towards adopting technology and processes that effectively work for the country’s most vulnerable without recourse to ethnic, social, cultural and political biases.

In fact, with more than 133 million Nigerians in poverty per the National Bureau of Statistics (November 2022), Nigerian leaders must ensure that transparency does not take a backseat in the governance of the people… And Blockchain can surely help.
So, let there be blockchain adoption!

Muhammed is a marketing leader at SureGroup, Africa’s pioneer company in blockchain-based remittances and retail digital payment solutions. He holds a Fintech & Business postgraduate degree from the University of Westminster, London.

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