Thursday April 16, 2020

The recent food stampede at Kibra makes one wonder how a very tech-savvy country like Kenya could not make basic use of its financial infrastructure to deliver food relief to the vulnerable groups.

There are already existing banking platforms that the government uses to disburse funds to vulnerable groups like the pensioners and other senior members of the Kenyan population.

Additionally, there is also the world-famous M-Pesa and other mobile money platform that can practically reach 90 per cent of Kenyans, wherever they are across the country.

Why couldn’t the politicians use any of these digital platforms to send relief to the vulnerable groups?

The obvious reason is that a politician’s donation needs to be loud and public to maximise returns. So a silent financial donation that slides into a mobile wallet of thousands of needy recipients is not worth their effort.

However, a more motivating reason for politicians to go manual as opposed to using digital platforms is that digital platforms tend to have more transparency  and accountability.

Digital platforms can keep a better audit trail in terms of how big the donated funds were, when and how much of that reached the intended recipient, among other bits of audit information.

That is not to say that existing digital platforms are devoid of corruption.

The current digital platforms work by the donating agencies sending funds to some selected bank for subsequent distribution to selected group of merchants or supermarkets who stock the food items.

The donor agency would then alert the recipient to go collect the food items from the supermarkets who then identify the recipient and deliver the items and later on file for cash reimbursements.


This current digital model experiences challenges at two key levels.

The first one is that the banking institutions often have high commission fees that deplete the donated funds by up to 30 per cent.

The middleman activities of receiving, identifying, verifying and accounting for funds between the donor, the merchants and the recipients is quite a costly overhead.

Another problem is that the donor has no direct control of how their money is spent once it is surrendered to the banking institutions. Cases exist where banking institutions deliberately conspire with merchants or supermarkets to defraud the recipients.

Between the two of them, they can agree to make fake book-entries that would indicate to the donors that a thousand recipients picked their food stamps and perhaps only fifty per cent may have done so.

Essentially, the donors face the risk of losing funds at two levels; in bank commissions as well as in corruption networks.

Technological advancements in the blockchain space has however made it possible for donors to donate directly to their intended recipients – without the need for middle men 

One can set up a blockchain-based ledger system where donors, merchants and recipients are registered.  Funds in form of ‘tokens’ or digital vouchers can then be sent  directly to recipient’s mobile phones, to be redeemed at the merchant stores for food items.

The recipient simply sends their mobile token into the merchants account and collects the food items.  This exchange is automatically recorded as a transaction on the blockchain ledger in an immutable form.

The immutability makes it impossible to change and provides the donors access to a transparent audit trail that is devoid of any corruption games that middlemen often play on transaction records.

It is high time we tokenised the human relief support systems to ensure transparency while cutting out the middlemen and their dirty tricks.