Using Blockchain for Cash Distribution: A UNICEF Nepal Pilot
A comprehensive pilot project in Jaleshwor, Madhesh Pradesh, Nepal, demonstrating how Rahat's blockchain platform revolutionizes humanitarian aid distribution through transparency, efficiency, and financial inclusion.
Project Overview
This case study details a blockchain-based digital cash and voucher pilot project implemented in Jaleshwor, Madhesh Pradesh, Nepal, in collaboration with UNICEF Office of Innovation, UNICEF Nepal, and the Rumsan team. The project utilized Rahat, a blockchain solution developed by Rumsan, to strengthen humanitarian aid efforts by promoting financial inclusion, accountability, and transparency throughout the cash transfer process.
The pilot targeted 1,900 beneficiaries in vulnerable households with children under five years, focusing on landless families, daily wage earners, and households with disabled family members in the flood-prone Mahottari district.
Key Innovation
Rahat facilitates the issuance, management, and monitoring of cash distribution via secure, blockchain-based digital tokens. Beneficiaries can easily redeem these tokens using feature phones (via SMS) or unique QR code cards, regardless of their banking status.
Project Objectives
Determine if Rahat enables faster disbursement of digital cash to beneficiaries and minimizes overhead for implementers.
Assess if the platform positively impacts banked and unbanked beneficiaries and improves fund movement accountability.
Evaluate if the technology has the capability to scale for wider adoption across different contexts.
Process Flow and Mechanism
Project Initiation and Budget Transfer
UNICEF Nepal digitally initiated the project, onboarding Jaleshwor Palika to the Rahat dashboard. Budget was transferred to Palika's bank account with each transaction recorded on blockchain using multi-signature trigger mechanisms.
Beneficiary Enrollment and Categorization
Social mobilizers used Kobo Toolbox to enroll beneficiaries into four categories:
Token Assignment and Approval
Palika and ward authorities validated beneficiary lists, assigning digital tokens via Rahat dashboard. Multi-signature triggers from both Palika and UNICEF Nepal initiated fund transfers, all recorded on blockchain.
Communication and Redemption
Beneficiaries received SMS and IVR notifications in local language (Maithili). Tokens were redeemed for cash from ward offices or participating vendors using OTP verification or QR cards.
Real-time Monitoring and Reconciliation
The pilot achieved heightened transparency through real-time monitoring and automated reconciliation processes via the Rahat dashboard, enabling immediate and precise financial updates.
Key Findings
Efficiency Results
Effectiveness Results
Scalability Insights
The platform demonstrated scalability through open-source tools integration, offline functionality for network-limited areas, and user-friendly dashboards that stakeholders recommended for other municipalities.
Lessons Learned and Recommendations
API Integration with Banks
Lack of banking system integration led to manual reconciliation. Future projects should partner with banks for API integration to ensure real-time verification of bank transactions on blockchain.
Flexible and Modular Design
Mobile network challenges necessitated offline modules. Rahat should be designed to be simple, flexible, and modular for easy adaptation, especially in low-bandwidth regions.
Accurate Beneficiary Data
Data validation challenges arose. Prioritize timely sign-off of endorsed data from municipalities and consider third-party validation services for accuracy.
Stakeholder Engagement
Delays occurred due to local stakeholder management gaps. Budget for dedicated local resources or consultants with incentive mechanisms for accurate and timely data delivery.
Education and Awareness
As blockchain is novel technology, educating primary stakeholders on its value (immutability and transparency) is crucial for Rahat platform adoption.