Unlocking Financial Inclusion: Funding Solutions for Refugee Aid - Bangkok 2024

[Music] so we're going to have a super interesting panel discussion now and I remember back in 2020 we were like spearheading this D summer back in polygon right and I bought this uh D5 for all ens domain and the ideals of D was so different right it was about banking the unbanked it was about financial inclusion inclusion def was all about taking defi to the masses right and now in 2024 it's become this like centralized D thing where everyone's just building things for banks and D5 for banks and everyone's getting excited about uh onchain treasuries and and I'm like what happened to banking the unbanked right what happened to how we started all of this defi ideals on right and that's why I feel this panel is a perfect segue to disc discuss that and we're going to discuss how Funding Solutions can be used for Refugee Aid and to discuss this we want to welcome this amazing set of panelists first we have with more than 10 years of tremendous experience with financial policy please welcome Anna with indas from the Stella Foundation next we have a real amazing person who's making localization a reality please welcome melan mck from Kap and we have the CPO of an amazing organization we learned a lot from in our uh FTC residency days we actually had yor from the team amazing guy I love him you know so let's give it up and welcome the CPO of ref unite who has more than 1 million users supporting refugees uh please welcome ailia Bartels from the refu night team and finally to moderate this in interesting panel discussion our very own David please welcome David all right uh really excited about this panel because it brings together um a lot of things that I've been passionate about for over a decade maybe 15 years and also the way that um I got into crypto in let's see 2013 which was to figure out kind of Last Mile Solutions in the global South specifically in Central America just figuring out how to get uh money into remote locations where um Financial infrastructure was basically absent or non-functional or ate up 50% of the money that I was sending um so yeah I guess first wanted to um set a bit of context uh at funding the commons we think there is is a really interesting real world use case here um using blockchain technology for um Refugee humanitarian Aid and also um empowerment and uh kind of local uh entrepreneurial empowerment and kind of um getting less dependent on Aid actually uh and there's a few interesting kind of use cases that I think come together one is very basic Financial inclusion um access to the financial system which is um very ult often for refugees who are unable to pass traditional banking kyc um and that brings identity which you heard a little bit about identity earlier um today in the mesot area of Thailand where um there's a lot of uh issues with kind of identity and and documentation of uh immigrants um the safe storage and transport of value so often refugees are um on the move and uh Crossing Borders and um fleeing conflict and it's important that um they're able to uh basically transport uh value and wealth um safely and invisibly um and then lastly a basic income and the ability to access uh money so uh we heard Also earlier today that um a large number of the global population lives on $2 a day or less um and in crypto there are actually uh billions of dollars a year distributed in public goods funding um retroactive public goods funding campaigns airdrops all sorts of things and so once um there are a number of refugees around the world that have uh crypto wallets um they can access a part of this funds which I think um can become uh some significant percentage of the total amount of refugee Aid um over time so this is like some things we're exciting about and um without further Ado I'll let each of the speakers introduce themselves and what they're working on thank you Fila all right thank you David so hi uh I'm Fila Bartel I'm the chief product officer of refu knite uh refu knite is refugees United it's very clear um so refun knite basically is a tech nonprofit organization and um we uh provide financial and also educational assistance to refugees victims of Crisis and also uh remote community mostly in a very hardto reach uh areas uh we already develop uh or this organization since 2008 we managed to have 100,000 uh Community leaders working in our Network then they support 100 million uh community members so we're I'm really happy to able to find David and find funding the commment because we have the community and David have the the network and we're really hoping that meeting all of these um um Network could actually uh be part of our uh partnership and support the the people that uh we support so that's it from my side um I'm melen McKay I am one of the co-founders of koip we work with some of the largest International nonprofits uh organizations like save the children like Norwegian Refugee Council to enable them to actually be able to transact on public blockchains um so for the most part we're focused on helping those organizations to work more efficiently and more equitably with large local organizations that are able to access more remote populations that are going to remain sustainably in those communities providing Aid and support um and to do that in ways that doesn't put them at greater risk because they're operating in what we would call a non-permissive environment so some place like Myanmar where the uh military is actually monitoring Financial transactions through the banking system in order to Target humanitarian Aid workers hey guys um now okay um hey everybody I'm it's really loud W okay um I'm Anna Woodson Diaz uh I work at the Stellar development foundation so I'm sure a lot of you have seen my colleague Ana around or a booth out there um but Stellar is a blockchain where we're really um interested in providing equal access to the Global Financial system so people that are traditionally excluded from the financial system are able to use blockchain to kind of participate so this is a lot of what uh David was talking about in terms of serving the unbanked or the underbanked um so our blockchain you know it's it's really optimized for digital payments and that's for a lot of reasons but um you know sending a transaction on our blockchain basically costs 01 Cent I think something like this so you can send about 10,000 don't quote me it's like 10 or 1,000 some amount of thousand transactions for 1ent right so what this means is that we're able to really um support a lot of financial inclusion use cases um and also um Refugee Aid uh Aid in humanitarian settings as well so a few years ago we actually approached by the un uh unhcr which is the UN Refugee agency um to help them develop a product that could use blockchain to send um Aid to uh refugees uh people in you know displacement situations humanitarian situations so we've developed uh an open- Source tool to send bulk cash dispersements um to refugees in need um it's a bit use case agnostic where we have seen a lot of other interesting things happening with it I'm sure we can get into that later but um unhcr is currently our biggest partner in the space we've done over $5 million of Direct Cash dispersements to refugees um in in the Ukraine crisis and are scaling that up um we're also working with government partners with other un agencies and we're really looking in the next you know year or so to really scale much more with um organizations that are closer to the ground so local um subnational organizations Regional organizations um rather than just kind of concentrating on the big guys um and a lot of that perspective from my side also comes from spending about a decade at undp the UN development program so um really interested in this kind of like localization angle of how we um get more of these um local or you know subnational actors into into these discussions as well thank you all right so um to further set a little bit of context um refu KN and partnered with funding the commons to uh run uh our first pilot ever in Uganda and it's ongoing um we're working with a community um around kalala I believe yes cor um and we are funding a a music studio um and we hope to enable uh a Cadre of uh new creators to produce music that um we can share uh the stories of refugees with the world and um invite the global Community to uh make direct contributions and donations to support uh those creators and um here in uh Thailand and Myanmar we're um partnered with koip uh to do research around uh Stellar off RMS um in this area um specifically for the Burmese population and really excited to um get into that and share some results as they come out over the the coming months um so yeah this uh first question is for um you two and it's uh looking at how do we move funding from the larger uh International NOS uh more into the Grassroots where there's uh kind of NOS that are closer to the grounds like refu Knight um closer to the community um more efficient less less bureaucracy less overhead um more flexible faster um to deploy and uh yeah how how do we do that um I can just like a little bit of scene setting So within the international Aid sector there's been an agreement in place since about 2016 under something called the Grand bargain which was an acknowledgement of the fact that it is shameful that you know the vast majority of humanitarian International Aid actually ends up back in the pockets of consultants in Brussels or London and so how do we get more money to stay in communities and one of the pieces of that solution is that what we call the localization agenda um which means working with those local organizations to be able to reach populations but also more sustainably um leave resources and stronger governance systems in place one of the challenges is that the vast majority of international nonprofits are not actually structured to be fund managers essentially so they're being asked to manage $75 million for an education program in Pakistan um but they can't actually do direct implementation in order to meet that you know requirement so they're managing complex payments to potentially quite small organizations that might um not have some of the systems in place that are normally required to be able to report back to a donor about how they've managed that funding and the impact that they've had and so it's putting a lot of pressure on these International nonprofits to essentially be program managers rather than direct implementers and they don't always have the capacity or the experience to do that efficiently so there's a kind of a moment right now I would say and I'm curious to know what you think about this Anna having worked in one of the agencies um but um where there's a lot of pressure on on them they don't have the tools to do it yet and so you know with guip we're really focused on actually helping the non those large International nonprofits to be able to get that funding to those local Partners in a more efficient and Equitable way so it's not as paternalistic um the challenge is then you're essentially doing change management with these very large Global organizations so there's definitely a moment of opportunity but it's also providing large organizations with the tools that they need in a way that um feels familiar to them because they're quite change resistant uh and kind of we sell it as like we can make you make it easier for you to do the thing that's really hard for you to do but you're getting a lot of pressure to do um normally kind of coming at them and saying we're going to change your whole system and take all the the funding away from you and give it to local Partners is not like the strongest way to get them on board so you do have to do it a little bit like Trojan Horse style yeah uh melin stole everything I was about to say so thank you melen for that um yeah I definitely couldn't agree more I think uh working at UNP for like the better part of my career you see this very like kind of like top down narrative a lot of the time right so we're like deciding in New York or in Geneva about what we think people need in developing countries which is like definitely not the way that development should be done and I say undp is one of the ones that kind of recognizes that but doesn't always kind of like walk the talk right um so I think you know the grand bargain agreement that melen referenced um I think the commitment is 25% that International donors want to send 25% of their um Aid down to the local level right rather than routing it through through organizations like un agencies and things like that that often are very bureaucratic and have to kind of then disperse it to like a medium tier NGO and then down to the local level as well so this is like a lot of um a lot of cost bureaucratic cost and operational cost is kind of like skimmed off the top um it's SL slow process it's not very flexible right these kind of things so I think one of the things we were actually talking about through the past school days participating in the design Jam was like the need to flip this narrative kind of on its head right so rather than us trying to decide I I I live in New York myself so rather than us in New York trying to decide um what is needed in Sudan or what is needed in in Thailand for the refugee population um we should be working more closely with uh local um subnational organizations to decide what the needs are and and to Pilot things right in a kind of low-risk environment with small grants small funding um where we can take that success story and we can kind of roll it up to a save the children or a mercy Corp or a medium-sized NGO that can kind of incubate that right and help it grow and help prove it out in other in other locations so I think there's some scope to explore further and something I really want to do at Stellar leading the aid and humanitarian portfolio next year is like how we do more of this right how we incubate small projects prove they work take that narrative up to kind of the larger NOS that operate more flexibly than say like a un organization or some of these really really massive International organizations incubate it have a story about it um and they can help us scale it right or I think that's also something that they can use to fundraise from their donors because of course a save the children or a Mery Corps they have the same donors right they're they're hitting up um philanthropic organizations they're hitting up government donors all these things and they need that Narrative of of what works to be able to fundraise and help scale so I think my answer besides everything melin said that she stole from me um is really just about like flipping the narrative and and making sure that this is a bottomup approach rather than top down so yeah I want to um let's see con connect the bottom to the top and talking about like how do we um create and scale uh these small scale pilots and and bring them up uh to the larger organizations and um get funding to kind of bring them to more people around the world and in light of that I wanted to ask each of you starting with Fila how you approach uh impact metrics impact measurement and how uh maybe public blockchains enable that and make it easier for you to track um what's happening on the ground is it working now yes yeah so how do we measure impact so it's for us it's the combination of immediate uh relief impact and also the lasting change impact I think that's the key so we can measure from um the sustainable shift of um quality of life of the people that we help also the economic um stability and lastly uh how resilience the community after after we help so that's the the big umbrella of how we how we do it and blockchain help us a lot um we're because we're testing in a in a traditional way and usually it takes uh a lot of time for the funding to receive uh to be received by the beneficiaries it takes like 7 to 14 days in average so if we handle like um like a emergency response people already suffering and starving you know when the money reaches them uh so that's uh one of the um idea why we Tred to find alternative solution using blockchain and for the past 5 years especially during covid where most of the uh sadly the humanitarian agencies um they had to close the the offices in the remote areas and the communities basically struggling to get uh their resources because not all all organization able to also educate so some organization sending resources which is already very helpful for you know um get back to uh make the community get back on their feet but um how about the sustainability uh strategy right so that's uh one of the um blockchain um support that we we're trying to um get we we test it with uh for example Bitcoin uh because Bitcoin is the uh the the easiest that we can find at that at that moment we have a lot of Agents on the ground that can cash out so if someone send to whatever Bitcoin wallet like a wallet of Satoshi or moon or uh they heavily used in Africa because our main um area uh to support is Africa and Bitcoin Works uh ethereum also we we tested and we want to test more with uh funding the commons and uh I'm very curious about Stellar because philosophically speaking Stellar is really match with with what we do so yeah we we test it a lot with with with blockchain so I hope that answered the question um yeah similar metrics in terms of efficiency I guess are the primary things we're looking at um for instance we were running a a a program with Norwegian Refugee Council into Sudan supporting local Sudanese organizations um so we were looking at everything from the amount of time saved and actually getting funding uh from Oslo down on the ground in a context that has an enormous cash liquidity crisis um so we were looking both at the time saved and also on the amount saved so um in total we were able to save on that program more than 20% on those transactions that's crazy it's a crazy amount but it was also not even the most important piece because we asked them you know can you tell us how long it would normally take you to get money from Oslo down onto the ground in any of these areas into darur and they said we would tell you but we've never successfully done it so um yeah and I mean and also again when we talk about these large Aid organizations and where their costs come some of those overheads are spent on things like having someone sat to determine how and when a transaction happened so we worked out with one of our Ino users that just by having a kind of timestamp on a transaction we're saving them 30 minutes of somebody's time that would otherwise take a manual solution to identify when that transaction happened so it's I mean I think it's a place where the metrics actually almost sometimes feel to people like they're overly simp simplified but it's because it is such an important sort of improvement over very manual very like sort of slow systems that are currently in place um so it doesn't always have to be that you know in our program you know we're serving 33,000 people and things like that in Sudan um but actually it's like those little tiny efficiency gains are the things that are going to make those large inos and the agencies and their donors ultimately adopt the technology because that's the piece that they're really focused on okay melen stop stealing everything thank you again um but I couldn't agree more I think like I come very much from the traditional development financing space so the traditional way that donors um especially governments are giving money right and what they're really concerned about is transaction costs they're concerned about transparency because of course they're um they need to report to their donors back home their taxpayers right so um I think a lot of this is is very relevant still in the blockchain space right like they want to do it faster cheaper better um and I think what we've intended to do in this space in the past that hasn't been successful is just like replicate Fiat systems right because blockchain is a like a fancy new toy that everyone's interested in right um not even that new anymore but in the UN space when things like are 30 years behind um it's like very new for them um so I think um you know we need to find use cases where we can demonstrate that it is faster cheaper better more transparent all of these things right rather than just like replicating the Fiat systems that already exist um because when we do that it's not always readily apparent that like the time and effort to set up these systems was worth it um you know that we've seen that in the past right like maybe it wasn't worth it it was a lot of work to set up and really the results didn't bear out that um that this was something that was substantially better right so we've seen that happen in Pilot we did with IRC and Ukraine they they kind of were like listen this is like a great solution but it's not that much better than what we do with Fiat right so I think what we need to do is actually find these cases where we can demonstrate that like there was a need to use crypto um and like an example I could give is some work that we've just done with GIS which is the German government um so we're working with them in Northwest Syria um so for obvious reasons it's really difficult to work in Syria to move money across borders um because of sanctions because of all the liquidity issues all these things right so um the German government supports an NGO in Syria that's a hospital complex right so they have like a thousand people in this Hospital complex that they need to make payroll to every month right so this is doctors and surgeons and drivers and cleaning staff and everyone in the hospital system and when they were using Fiat systems they were waiting 3 to four months for each payroll period to get money into the country so what was happening in practice was that you get hired you get your first paycheck four months later right um because they were using the Turkish post to move fiat currency in into the um into the the country um likewise it was really difficult to actually cash the money out so when they would go to a liquidity point they would have to go on average nine times every month to actually get their money out right um so they could never really tell if there was going to be money there on the day so they would just kind of have to go and what ended up happening was that it also becomes unsafe at that point right because then I say oh hey Molin like you know hey David hey can I'll go pick up money for all of us right and then I'm walking around with a ton of cash which is like also not ideal um in in many situations where there's like conflict and fragility so by using our technology partnering with Stellar they were able to um basically send digital current currency directly to people's cell phones um so they instant payments in usdc and in stable coin um and then we were able to hook them up with an offer partner called digibank um which is a wallet that operates um in the region who has a network of haala Partners so these are like traditional um liquidity Point Partners um and they could see in their app right um like uh is there money in this Halala the day I want to go um and honestly I I've said this melen and I are like on a world tour we've like spoken on like four panels like in the last three weeks together um so she's heard this but um honestly one of the the people um from the CSO Network or the NGO Network that we were working with um that has to deal with these payments a lot literally said when he pressed the button to send the payments to people's cell phone that he had a tear in his eye because he was like a for me having to deal with this every month it's a nightmare so yay for me but also yay for the people who no longer have to go nine times to a liquidity point every month to get their payroll their salary or you know they don't have to wait four months for their first paycheck so like it's really revolutionary in in some of these cases where moving money cross border is like near impossible with Fiat system so that was a really long answer but I think yeah demonstrating where we can use crypto in cases that like improve the speed improve the transparency on the public blockchain improve the efficiency and really serve a need that we can't with Fiat I think that's really like where we need to be demonstrating value yeah I agree absolutely my mic working no okay I'll just speak really loudly so uh final question coming from uh starting uh from the ground and going uh up the up the chain um I want to talk and and hear a little bit from each of you on um how you each do due diligence on projects um like looking at like what are the blockers for uh once we identify these real use cases for for using public blockchains to distribute Aid um how do we scale them uh what are the blockers what are the fears of the larger funders um what is their risk tolerance how do we educate them on um like overcoming perceived risks uh how do we shift from the current Solutions where you've heard sometimes it takes 20% I've heard numbers like 40% of the funds are often eating up by banking fees transaction fees I don't know like armed security escorts like all sorts of things that you have to um use to get money to The Last Mile um and really like intermediaries like how do we eliminate intermediaries and get the funds to where they actually have um the highest impact and uh yeah really like uh how do we how do we unblock um what is preventing us from from scaling these Solutions and I I love to hear more about your like multisig solution where there's like a transparent view from yeah all the funders and the the beneficiaries that's the bomb so I think um to build the the trust when we send um support is really key here so uh the way we uh educate the community is we're not just sending um money directly that's the that's the um it's our first assessment we need to know that the community actually able to implement the project because for example if they request for oh I want to build a water system from the river to the to the Village it takes I don't know 10 kilometers and I'm not just going to send the money directly to them we're going to ask are you able to build it and and that's the that's the key right to be able to if you ask for $10,000 to build this are you able to build it and that's part of the due diligence to able to list down what are you going to do so it's part of our proposal to be very very specific on the the plan and once the The Proposal already well built we put the donors refu night and the community leaders including all the actors that will receive receive the money into a multii uh group and we use some of the web um tools as well uh our partner fedy uh is a community they call it Community super app it's really helpful for us to um to congregate this this actor inside the multic and the donor can approve the transaction that requested by the community so that's that's the key so let's say I want to ask for $10,000 to build a a water well and reunite asking for the doners hey there would be a a request and uh you want to approve or not here's the proposal and everyone can witness in that Multi Group uh it's not public but uh and it's also uh it's it's quite private because it's very um close loop but everyone that really need to witness the transaction is there basically so that part of the due diligence and also when the project already implemented it um uh we call it peer reviewer so that's also key because when we work with Community we need to know if they're trustworthy or not so we're kind of like sending the other community leaders that live in the proximity of that area to go like in a stealth mode asking the community members that hey is this leader actually implementing what they're supposed to do and we're not telling the leaders at all so we're like on the on the back asking asking questions so that really works that really works undercover undercover yeah so that's part of the the dent um yes so we basically mirror the large ino's due diligence processes so we kind of digitize what they would normally do through a series of like 46 emails to a poor Bellard local partner that's operating in a conflict Zone we take that process and we streamline it so they only have to kind of present put it all together for us and then we provide like essentially a secure data room um where they have control over who gets to actually see the documents that they put together so a donor has to request to view that so there is that sort of mutual consent piece which is really important for us um that includes something like a traditional kyc for organizations of the kind of top three you know people within that organization you have fiduciary duties um it also includes a liveness check in context where we're a little bit concerned about AI generated teams which is a problem that happened in Ukraine um but we also are doing a more traditional sort of organizational capacity assessment um and that's we are not the ones that are sort of deciding is this organization passing you know the requirements it's really the the person who would be sending them funding that that entity that's making that decision and for the most part we're only working with donor agencies that or with inos that would be you know operating if it's a context that has ofac or other sanctions they would be potentially um have a humanitarian waiver that would allow them to navigate that a little bit more sort of nimbly um and then we do have a sort of monitoring and evaluation process that we we can deploy later when needed um and actually this is a a sort of like plug for a talk that's happening tomorrow from our head of monitoring and evaluation who's going to be talking about how you actually build those systems out so it's really about establishing Trust on both sides of the transaction yeah so maybe I'll tackle a little bit different part of David's question which is about the blockers for donors um because that's something we come up a lot against when we're trying to kind of scale some of our open source technology that we're using um so I'd say the first thing with a lot of the big donors especially is that like they're a bit allergic to crypto in general um because of obviously we know you know the kind of challenges over the past few years and decade uh with with crypto um and some of the kind of bad WRA that it has so I think one thing and this is just like a a little narrative like ter terminology thing um because we're using stable coin only and our work with humanitarian um actress so we're using primarily usdc um because obviously when you're working with humanitarian actors you don't want to have challenges of like devaluation of currency or volatility these kind of things um and um in some cases time is up um in some cases um you know you have devaluation issues where like in Argentina you know you're saving uh with with um usdc you're saving quite a bit um in terms of the devaluation and anything but everyway anyway so we're using um we're using largely stable coin and so I think for us we say we're using digital currency at the end of the day right so it's these like small terminology things that actually make a big difference if we're saying okay we're using um digital currency these are digital currency Solutions right digital Payment Solutions is kind of how we're framing this with a lot of our large donors because that's a lot easier to sell um up the chain for them and politically for them and then it's only when you dig in that you're like oh this is actually a blockchain solution right and I think from the the side of the people that are using the technology like a lot of the time what we see is um they don't need to know how it works right like ideally like anyone can use our our um cell phone based like technology where we're using digital wallets to to send currency digital currency um in Ukraine and other places like we want an 80-year-old grandmother in Ukraine to be able to use it right um so we're not hiding the fact that it's on the blockchain but like that's not the primary thing that we're selling on both sides of the coin either to um the donors or to the people using the technology so it like becomes a lot more accessible and I think it takes away some of this like perceived risk as well and I know we're out of time but I just want to say one other thing I think a lot of the thing we also see with like large donors too is um even with large donors which makes it a little bit difficult to scale for smaller organizations even is that a lot of these Solutions obviously we have regulatory concerns in the different countries we work in so we need to always be sure that um digital currency is legal so that's like one blocker right that we can't influence as much as we would like to but of course we can Advocate all of these things but I think there's a role for blockchain foundations and for um other organizations to play in streamline in processes where there's like legal agreements in place like so for instance you know an organization working with us would need to have an agreement in place with um the offer an providers or the digital wallet right and if you're a small organization close to the ground that's really difficult to have like these legal agreements in place for every offramp you want to use or every digital wallet you want to use so I think um this is even challenging for large organizations when they want to scale like they want to use a different wallet in Ukraine than they want to use in Argentina right so that means another legal agreement and another legal agreement with the offer provider and these kind of things so I think this is another challenging space that we need to help them overcome in order to be able to actually scale these Solutions is like we need to support them in in um overcoming the legal environment these kind of challenges as well um to to enable not only the largest organizations in the world to kind of use this kind of Technology the end all right so thank you all right so yeah uh speaking of blockchain Foundations here we go no I think that was awesome like let's give it up for them once more you know uh that was an incredible panel and