Blockchain and other new financial technologies can help alleviate hunger, inequality, and poverty according to a new report from the United Nations.
By disrupting the existing financial and banking system, new digital FinTech firms have the ability to help the UN achieve its 17 Sustainable Development Goals (SDGs), said a September 26 report by the United Nations Development Programme. The UNDP wants to achieve these goals, which include no poverty, zero hunger, and clean water, by 2030.
Many UN agencies have been experimenting with blockchain technology in the past few years. The UN World Food Programme (WFP) used it to provide Syrian refugees with financial aide in 2017. And last year, UNICEF funded a platform for tracking school attendance in South Africa.
Giving more financial control to ordinary people is a key method to meeting the SDGs, recommended the authors of “Harnessing Digitalization in Financing the Sustainable Development Goals,” in a press release.
“[T]he Task Force is not concerned with digital innovation for its own sake, but in how it can empower people in making payments, borrowing, saving, lending and investing, and in how they can hold those accountable who manage and spend money on their behalf,” said Maria Ramos, the task force’s co-chair, in the report. “Empowering people is ultimately how digitalization will help to finance the SDGs.”
It won’t be easy, added Ramos, who recently retired as CEO of South African financial services firm Absa Group Limited.
The “digital revolution” driving FinTech has made it “harder even to define what is ‘a bank’ much less to regulate it,” she said. “The need for smart financial policies, regulations, and standards has never been greater.”
Banking on blockchain
Among the blockchain-oriented FinTech solutions singled out by the report are digital wallets and mobile money. They can fight poverty by providing a quick and inexpensive way of receiving remittances, building savings without a bank account, paying for services, and accepting public assistance.
There are, of course, FinTech companies already doing so. For example, global payment firm Ripple is helping cut the time it takes to send remittances to developing countries from days to seconds, and reducing the cost from as high as 10% to fractions of a penny. And recently, Facebook has touted its contentious Libra cryptocurrency as a tool to help the 1.7 billion people too poor to have bank accounts.
Beyond that, blockchain firms like Green Assets Wallet are singled out for assisting with climate action by enabling green investments, while Brooklyn Microgrid is letting people with solar panels sell affordable and clean energy directly to neighbors on a peer-to-peer platform. Municipal governments in Ghana and Honduras are using blockchain platforms to track payments and administration in land investment, helping build sustainable cities and communities. Cryptocurrency initial coin offerings (ICO) are being used to fund industry, innovation and infrastructure projects.
However, the report warns that turning the potential of blockchain and other FinTech tools like artificial intelligence (AI) and big data into reality will take more than just investments.
“[F]or all its enormous potential, digitalization will not automatically empower citizens in financing decisions,” said Ramos. “The outcome will depend on international leadership with a clear sense of shared purpose.”