Can Blockchain Help the Financial Inclusion for Refugees

Volunteers of an NGO direct refugees and migrants arriving in a dinghy from Turkey to the coast of Mytilini, on the island of Lesvos, Greece, 17 February 2016.

Can Blockchain Help the Financial Inclusion for Refugees

Around 1 million people, including many refugees from war zones in the Middle East and Central Asia, passed through Greece and along the Balkan route in 2015, most of them in the latter half of the year.
The ongoing conflict in Syria and influx of refugees flooding the EU’s borders has constantly been in the media spotlight for the past few years. With the majority of the European nations still reeling from the economic aftershocks of the 2008 credit crisis, many of the EU nations are ill prepared to deal with the refugee problem. Traditionally due to stereotyping myths about refugees, this group of people have often been seen as a transitory population which cause a drain on a country’s economic resources.

Myth 1: A Transitory Population

Refugees are often regarded as a transitory population because it is often assumed that most of them stay in a refugee camp for a year or two before being relocated to a third country. This assumption cannot be further away from the truth. Based on the statistics quoted by CNN and The Huffington Post, most refugees are stuck in the camps for an average duration of 17 years. While there are debates about the accuracy of these statistics, it is almost certain that their stays are longer than what most people tend to imagine. 

Far longer than what you would expect for a transitory population.

Myth 2: An Economic Drain

Another popular myth about refugees is that they do not contribute to a country’s economy and present a drain on economic resources. What most people fail to consider is that despite the fact that the number of forcibly displaced people has never been higher since the Second World War. There has not been any concerted efforts to provide economic opportunities for refugees to let them become financially independent.

There is no doubt that if this group of people was to be given the opportunities, they would be able to contribute positively to the economy of their host countries. Studies have shown that refugees come from a diverse range of backgrounds and often engage in productive economic activities in their country of origin. If the host countries were to leverage this ready pool of skilled and experienced labor force, the economic benefits generated could be significant for the host countries.

Lack of Formal Identity

However, refugees face a major hurdle when trying to integrate into the global financial infrastructure. A channel which can give them access to financial products and services that many of us take for granted. Refugees when fleeing a conflict zone are often ill prepared. They frequently have to leave behind their assets and identity. With a lack of formal identification documents and access to the formal financial system, they often have to resort to the black or gray markets to meet their financial needs leaving them vulnerable to exploitation.

Leveraging Blockchain Technologies to Expand Financial Inclusion to Refugees

Fortunately, there are talented entrepreneurs who are investing in emerging technologies to look for solutions to tackle the problem of financial exclusion among refugees. One of the technologies which has shown tremendous potential is the blockchain technology.

The blockchain technology is simply a public ledger that is distributed over a large computing network without the involvement of a central authority. The distributed ledger is essentially tamperproof making it an ideal tool for storing data such as a person’s identity.

Blockchain Powered Economic Identity

Hence by utilizing blockchain, refugees can receive a new digital identity which they can use for receiving aid directly and for integrating into the host nation’s financial infrastructure. The digital identity will also assist the host nation in tracking the welfare of the refugees. Examples of blockchain powered identity initiatives include those used by Bitnation to help Syrian refugees obtain an emergency ID which the authorities can use to verify a refugee’s identity as well as the relationship to other family members.

Screenshot of website Bitnation

Screenshot of website Bitnation

Another initiative which uses blockchain based technology for identification is Onename.

The service acts as a bridge between a person’s physical and digital identity. To compound trust in the identity, the service utilizes verification of a person’s multiple social media accounts such as Facebook and Twitter. Once the digital identity is created, it can be linked to a person’s social security number, passport, driving license and even insurance.

The above mentioned are just some of the potential benefits of the blockchain technology to expand financial inclusion among refugees. As more investments are being poured into this new technology, there is no doubt that developers will come up with new and creative ways to utilize this technology to further support the unbanked and underbanked.

Powered by Humaniq

Launched in 2016, Humaniq aims to provide mobile finance to the 2 billion unbanked population through its mobile app for good, that uses biometric authentication to replace traditional methods of ID and security. Humaniq’s open source stack and API will be available for startups and other businesses to build services on its core technology, making it easy to adapt their service and plug it into Humaniq’s network to reach a huge, untapped audience.