German Bank Tests Blockchain For Development In Africa

A new blockchain trial aims to solve transparency and infrastructural challenges related to international development.

  • KfW Bankengruppe, Germany’s publicly owned development bank is testing an application of blockchain for public finance management in Burkina Faso. It’s all part of a program to improve economic development cooperation when giving money to other countries for development projects.

    On behalf of Germany’s Federal Ministry for Economic Cooperation and Development (BMZ), Kfw will carry out a six-month pilot in the poverty-stricken country to explore the potential of blockchain.

    BMZ has worked to improve economic development in Germany and around the world for decades, cooperating with the International Monetary Fund, World Bank, and United Nations. It is responsible for the “Marshall Plan with Africa,” an initiative between Africa and Europe designed to improve the economic capacity of African countries.

    For its part, KfW has financed nearly $8 million worth of water and sanitation improvements in Burkina Faso. KfW will now trial its TruBudget blockchain software for processes like contract design, tendering, and payment on projects like water supply improvements. The platform should allow stakeholders to view such processes – and changes to them – in real time to “ensure the correct use of funds.”

    The blockchain pilot will be implemented with the Burkinabe Ministry of Finance and the support of project partners and consultancy firms Accenture and BearingPoint.

    The new blockchain platform could replace costly infrastructure deployments, created by international donors when funding projects to compensate for risk and lack of existing infrastructure in recipient countries.

    Professor Joachim Nagel, a member of KfW Bankengruppe’s executive board, says a blockchain-based system will be better for the independent development of a country and enable “donors to use funds safely, even directly via the structures of the partner country.” (Translated using Google).

    Karsten Ebersbach, managing director at Accenture, underlines the potential of blockchain to solve an ongoing burr in the side of international aid, that of the clarity of fund use: “Together with KfW, we have designed, tested and implemented a solution that creates much-needed transparency in development cooperation.”

    The blockchain project’s open-source protocol will be made available to others without cost and could be an example of “best practices” for other African countries. If this use case is successful in providing transparency, it could encourage the giving of future aid while minimizing infrastructural hurdles to beginning development projects.

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