Pilot Insights | Anticipatory Action Leveraging Blockchain For Drought-Impact Pastoralists in the Horn of Africa
Pastoralism is a way of life for 50 million people across sub-Saharan Africa, who depend on their livestock for income and subsistence. Climate change is threatening the way of life of pastoralists in the Horn of Africa with increases in prolonged and lengthy droughts. Moreover, 99% of humanitarian aid delivery comes after the worst effects of the droughts have already been experienced, making recovery more difficult.
In September 2023, Mercy Corps Ventures partnered with Fortune Credit, Shamba Network, and DIVA Technologies to launch a pilot testing the use of blockchain-powered smart contracts to deliver anticipatory cash transfers to pastoralist communities in two Kenyan counties: Laikipia and Kajiado. At the core of this pilot was a smart contract which held donated funds in escrow and was programmed to only disburse the funds if pasture conditions were deemed distressful for pastoralists. A total of 11,271 USDT was disbursed to 262 pastoralists in this initial proof of concept.
Insights in Brief
The pilot resulted in a 75% reduction in transaction costs as compared to traditional transfers. DIVA’s blockchain tech stack reduced the cost to transfer funds end-to-end to recipients to 2.5% of the transaction value, compared to the 10–35% in fees and operational costs of traditional transfer methods.
The pilot resulted in a 90% reduction in time for the delivery of donation funds from release to beneficiary. Pastoralists in the pilot received disbursements through M-PESA 14.5 hours after release from the smart contract. In comparison, cash payments made through similar non-blockchain programs take approximately 7 to 10 days to reach beneficiaries.
Pilot participants reported financial improvements consistent with the payouts received. 53% reported an improvement in their ability to meet a major unexpected expense exceeding 10,000 KES.
This report is the second of a two-part series. The first blog outlined the pilot launch, our learning questions, and the hypotheses we set out to prove. This final report provides an in-depth study of the market need, the impact of the solution, and the key insights and learnings from the pilot. If you’re short on time, have the TL;DR here.
Written by Njeri Muhia, Pilot Manager, Mercy Corps Ventures, and Timothy Asiimwe, Innovation Project Manager, Mercy Corps Ventures.
