Mercy Corps Ventures says it has partnered with three organizations to launch a new pilot to test the use of blockchain-powered smart contracts to deliver anticipatory cash transfers to pastoralist communities in two Kenyan counties:
- Laikipia
- Kajiado
Pastoralists, people who depend primarily on livestock or livestock products for income and food, are over 50 million people across sub-Saharan Africa, but changing weather patterns are threatening the livelihoods of these people in the eastern Horn of Africa.
The three technical partners are:
- Fortune Credit, a micro-finance institution in Kenya
- Shamba Network, the developer of an oracle that enables the collection, analytics, and use of ecological data on-chain
- DIVA Technologies, the developer of DIVA Donate, a conditional donation platform that allows users to donate to ongoing campaigns in a transparent, trustless, and cost-effective manner
Central to this initiative is a smart contract, which acts as an intermediary, holding donated funds in escrow. It releases these funds to enrolled pastoralists exclusively when the pasture conditions are assessed as distressing for them.
The smart contract assesses pasture conditions using an indicator called NDVI (Normalized Difference Vegetation Index).
“NDVI is a widely-used metric for quantifying the health and density of vegetation using sensor data; it has successfully been used by the International Livestock Insurance Institute (ILRI) as the “index” for their index-based livestock insurance products (IBLI) targeted at pastoralists.”
According to the pilot participants, the hope is to demonstrate how blockchain-based solutions can be used to scale anticipatory humanitarian interventions resulting in faster response times and limiting the impacts of climate shocks on vulnerable communities.
Through the use of self-executing smart contracts, the idea is to test a new way to shorten the response time for humanitarian aid providers.
“Our mission is to provide products that enhance financial inclusion but we found that some of our target customers such as pastoralists could not afford to pay the insurance premiums we charged,” says Fortune Credit Founder and CEO, Janet Kuteli.
“So we decided to seek out partners such as DIVA and Shamba that could enable us to expand our reach to offer solutions to vulnerable populations that are largely ignored by traditional financial institutions.”
Additionally, by fully automating the disbursement process, the pilot aims to highlight how blockchain-based solutions can eliminate many of the administrative challenges and delays associated with manual distribution.
Expanding the scope of this pilot program has the potential to accelerate the distribution of humanitarian assistance to communities susceptible to climate-related challenges. Moreover, it can enhance transparency in tracking the flow of funds allocated for these purposes.
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