#10 Winter 2018

Using blockchain to stamp out development aid fraud

Rufaro Masiiwa

Participating in South Africa’s first-ever Blockchain Hackathon organised by Linum Labs and UCT, MBA student and Solution Space scholar Rufaro Masiiwa and her team designed a platform to reduce corruption and fraud in the development aid sector.

Though the claim that 70% of aid budgets are “stolen off the top” has been widely debunked, it is sadly undisputed that the loss of aid to theft and fraud is a cause for concern across the developing world. In a worst case scenario some 30% of aid is lost to corruption and fraud, then-UN secretary-general Ban-Ki Moon pointed out at a high-level social panel on accountability and transparency in 2012.

It was this figure that inspired Rufaro Masiiwa, a modular MBA student at the UCT Graduate School of Business (GSB), to work on developing a more secure solution to help donors transfer monetary aid to beneficiaries. Some of the MBA’s core learning goals include understanding the leadership challenges of diverse national and international environments, as well as sustainable development issues and the role of business in promoting these, so her concern dovetails with her work in the classroom. But Masiiwa really got to develop this idea when she was selected to participate in Africa’s largest BlockChain hackathon Unblock the Block, hosted by Linum Labs and UCT research institute the African Institute for Financial Markets and Risk Management (AIFMRM), earlier this year. The 10-day event was looking to surface relevant blockchain solutions with a positive application on the African continent and saw almost 80 participants from around the world attending.

Masiiwa’s team, Funds Aid, built a platform that would help solve the problem of transferring monetary aid from donors to beneficiaries. “Nearly a third of aid is lost to corruption and fraud. Furthermore, sending monetary transfers through traditional banking systems is associated with high transaction costs,” says Masiiwa. The solution, therefore, allows users to bypass traditional channels, instead depositing funds demarcated as aid into an escrow account of a partner bank.

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