Of BRIOT Julien
To participate in reassuring not only civil society but also and above all donors and investors, the establishment of a blockchain system could be a convincing technological solution.
Some countries like Comoros, Ghana, Sierra Leone and Burkina Faso have fully understood this and are currently experimenting with it. Its effect is more than positive.
A solution that allows for greater transparency and better management of funds
The blockchain is an unalterable digital ledger, built on the basis of a consensus among the participants in all phases or sequences of an operation. Thus, as regards loans and donations to States to finance clearly identified projects, a blockchain would be able to identify for each project, the amounts lent or data, and their use “euro for euro”, from the date of disposition of the funds up to that of the last expense.
All the subjects involved in the use of the funds contribute to the enrichment of the database (each block corresponds to the financing phases) and check the correct management of these funds.
To guarantee the reliability and integrity of the data, the blockchain makes use of “miners”, chosen from among its stakeholders (participants in the funded project, contributors or readers) who, according to predefined rules (conditions of use of the funds), validate the information before registering it (forever) on the blockchain. The blocks of information, timestamps and added to the chain, can no longer be changed and become an electronic proof of the correct use of funds (subject of complex proof in this matter of encrypted information).
Implementing blockchain to help build trust in funding allocation, including in the context of development aid
Plus de dix-neuf ans après the adoption de la convention de Merida (dont l’objectif est de lutter contre la corruption et œuvrer pour une coopération internationale dans la lutte contre la corruption, que ce soit de façon directe ou indirectecte, c ‘ est-à-dire dans les domaines qui sont la conséquence directe des pratiques de corruption, telles que le blanchiment d’argent), la mise en œuvre effective du principe de restitution aux populations des avoirs publics détournés n’est pas forcément au rendez- you.
The results of a study commissioned by the World Bank on February 18, 2020 show that on average 7.5% of the institution’s disbursements to the benefit of developing countries are diverted to offshore financial centers.
If blockchain had been in place for these disbursements, out of $ 100 million, probably up to about $ 7.5 million would not have been embezzled. At each stage of the decision, the various participants would have to approve the decision of the other participants, check each stage of the operations and thus allow any fraudulent act to be avoided. With the blockchain, all stakeholders are therefore contributors to the database but also, at the same time, controllers of the correct management of funds.
All lenders and donors, as well as civil society, will thus be able to regain confidence in the correct use of funds lent or donated to finance projects, particularly in the area of development aid.
The blockchain can be a tool or even the tool at the service of everyone to participate in ensuring the best possible governance in monitoring certain financial flows with the continent and therefore its development for the benefit of all.
Julien BRIOT is a compliance expert who has worked in various activities (in energy in the management of Total E&P, in the financing of infrastructure projects, in a French state investment vehicle, in the banking sector at BNP Paribas, Edmond De Rothschild and BMCE Bank ) and internationally (France, Maghreb, Luxembourg and Senegal).