UNDP expands Stellar blockchain payments programme

The United Nations Development Programme (UNDP) has announced a new agreement with the Stellar Development Foundation to use the Stellar blockchain for aid payments. This agreement will see the blockchain used as a standard tool across all UNDP country offices, after almost 2 years of trials.

The deal extends a partnership that has been running for more than 16 months. The two organizations did multiple evaluations regarding blockchain payment systems across 17 countries and completed initial pilots in Haiti, Syria, Kenya, Guatemala, and the Gambia. Working prototypes were also built for Colombia and Papua New Guinea.

Information from the experimental pilots

UNDP says the field tests delivered tangible and measurable results, and not just abstract proofs of concept.

In Aleppo, Syria, a Cash for Work programme that used the blockchain to log its payments saw distribution costs go from an initial 10% via conventional banking methods to only 2% after blockchain usage, with every participant receiving their payments satisfactorily. The Haiti pilot saw payments processed at a 100% success rate.

The trials also produced an permanent record on the blockchain of where all programme funds went, a transparency feature which the UNDP emphasized on as a major part of the appeal with donor-funded work.

UNDP infrastructure created from experimental info

The new phase will be a move from experimental trials and pilots to actual infrastructure for wider use built on the knowledge acquired from these trials. The UNDP and Stellar initiative will continue till 2027 and is coordinated via UNDP’s Alternative Finance Lab at its Istanbul Regional Hub.

Based on the agreement, the UNDP plans to set up a structure for governance and onboarding, while also integrating existing payment tools into each country’s programmes. The plan also looks to increase blockchain payments across multiple facets of humanitarian work. The Stellar Development Foundation will supply technical advice and coordinate with ecosystem developers, while UNDP keeps responsibility for running the programmes.

Wider public push for blockchain usage

UNDP’s move fits a recent trend of more interest in the use of stablecoins and blockchain payments in places where banking access is thin and fees are high. Ripple recently took an equity stake in African fintech Flutterwave to widen the use of its RLUSD stablecoin and the XRP Ledger, and more Latin American payment systems in Argentina, Bolivia, Colombia, and Venezuela have become targets for stablecoin issuers.

Former UN under-secretary-general Vera Songwe made the case for blockchain payments and stablecoins bluntly at the World Economic Forum in January. Stablecoins are becoming “more important than aid” in some developing economies, she told attendees, because they reach people that banks do not. “650 million people don’t have access to a bank account in Africa,” Songwe said. “With a smartphone, you have access to stablecoins, so you can save in a currency that is not exposed to fluctuations of inflation.”

By the time the agreement ends in 2027, UNDP and the Stellar Development Foundation aim to have created a well developed governance framework, modes of implementation, and operational guidance so blockchain payments become a standard capability across UNDP’s global programmes.

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