Using Blockchain to Disrupt Government Corruption in Uzbekistan
BY Matluba Umurzakova, Saidbek Djurabekov | March 7, 2019
The Uzbek government is concerned about how the public perceives corruption in the country, and with good reason. According to Transparency International’s Corruption Perceptions Index, which scores countries based on how corrupt their governments are believed to be, Uzbekistan ranked 157 out of 180. In 2018, the Uzbek General Prosecutor’s Office stated that 1,561 officials in the public sector were prosecuted on charges of corruption.
For the last two years, the government of Uzbekistan has been working non-stop to put an end to long-term corruption which pervades various sectors. An effort championed by President Mirziyoyev, corruption is a persistent national concern in Uzbekistan. In the words of Mirziyoyev, Uzbekistan is “far from such concepts as justice, honesty, responsibility, meeting the needs and serving the people.” The challenge that Uzbekistan faces in tackling well-ingrained corruption cannot be overstated, but the silver lining here is the case that we are building for using blockchain to combat corruption.
Addressing Old Problems with New Tech
According to a Presidential Decree signed July 2018, from 2021 blockchain will be incorporated into Uzbekistan’s government transactions to improve public services and ensure transparency and accountability. In response to this statement, we at the UN in Uzbekistan (namely, UNDP, UNICEF and UNODC) joined forces, with support from the UN Development Coordination Office, to explore how blockchain can limit corruption in national public and private sectors.
We took the cue from other regional efforts to combat corruption with blockchain. For example, Georgia recently used blockchain to counter land title fraud. In our case, we chose to pilot blockchain solutions in areas long impacted by corruption, with leaders committed to change, and with the technical readiness available to implement new technology. We chose two areas of focus:
School certificates: The current paper-based system makes it easy for workers in public school institutions to issue invalid school certificates. Since school certificates are kept in each school and there is no central digital database to check the validity of each certificate, it’s difficult to monitor and keep tabs on who’s issuing and who’s receiving invalid school certificates.
To help counter this problem, the UN team created a web service for the Ministry of Public Education (MPE) to create digital records of the issued certificates and a private blockchain to make sure that the records in the data based are not manipulated through the publicly accessible service for online certification. At the moment, the web service is integrated with the private blockchain deployed on the MPE servers and running preliminary tests within the agency itself. After testing this approach, we are going to make it available at public education departments and schools throughout the country.
Land cadastre: The way that Uzbekistan’s State Cadastre works makes it easy for committee inspectors to manipulate records in central digital databases by altering the stated real-estate size, lowering tax bills, and changing the legal status of properties before buying or selling takes place.
To test possible ways of detecting these fraudulent schemes, our team, along with the state cadaster committee, developed a demo blockchain application that prevents the unauthorized manipulation of the real estate data in the central government database. Citizens are also able to verify their property records online through a public portal making the agency’s activity more transparent. The blockchain app is being deployed in the committee’s servers and is undergoing internal tests. The next is to pilot the implementation of the blockchain system with real data.
To advance these applications beyond the pilot stage, our team is working with national partners to establish an enabling institutional and regulatory framework. We know that to effectively introduce blockchain systems in the public education space and land cadastre, we will need to see change happen at the agency-level administration as well in legislation to define the legal status of blockchain-stored data.
Are you working on a similar innovation? Talk to us!
Creating an impact investment culture in Armenia: Our way of doing it
BY Dmitry Mariyasin, Vahagn Voskanyan | August 22, 2018
According to some estimates, implementing the SDGs will cost a whopping 172.5 USD trillion by 2030, while current aid flows to developing countries sit at 350 USD billion annually. You might want to read the previous sentence again or let us summarize it for you: we have 350 USD billion per year, but we need around 172 USD trillion annually to reach the Sustainable Development Goals. Tricky, no?
I guess the quick answer is yes, it is tricky. However, we believe that this gap can be partly filled by something called impact investing. This is, in short, investments made into companies, organizations, and funds with the intention to generate social or environmental impact alongside a financial return.
At the UN in Armenia, we are testing impact investing and other new funding mechanisms to explore how they can be best used in middle-income countries to generate financing for the SDGs. Our UN team, led by UNDP Armenia, is experimenting around a set of initiatives that are already turning to be great learning experiences that we are proud to share in this blog.
Our impact venture accelerator
To support initiatives that put social or environmental issues at the core of their businesses, we created ImpactAIM: an impact venture accelerator. In short, ImpactAIM is a programme to support sustainable companies to scale up their impact. One of the criteria for ventures to be part of this initiative is that their business must reflect the mission and programme priorities of the United Nations in Armenia.
With this exciting idea in mind, last year we launched a call for proposals for companies to apply. We partnered with Catalyst Foundation and Impact Hub Yerevan, and received 96 applications from 25 countries! We were happily surprised with this great response and we moved quickly to select our candidates. After a detailed process which included almost 30 interviews, we selected seven ventures to be part of the programme: Dasaran, Armacad, Armath, WiCastr, Smart Kindergarten, Sylex and IoTLab.
These companies are currently enrolled in an intensive program which combines study sessions based on cutting-edge methodologies and hands-on experience in areas that are crucial for the start-up/business development world.
The selected ventures also receive intensive mentorship to help them strengthen their market base and increase their investment absorption capacity. We are also trying to leverage the existing expertise of different UN agencies into the programme. This is the case of UNICEF, currently mentoring ventures working on education issues, but we are working to better integrate the expertise of agencies across the UN system.
At the end of the programme, we will introduce the ventures to a network of impact venture capitals and angel investors to broke potential funding opportunities.
Impact Investment Catalyzing Facility
With the launch of the impact venture accelerator in December 2017, we realized that there is much more that we can do to support the expansion of impact ventures. In order to do that, and to stimulate the flow of private funds towards SDG targets, we are piloting an impact investment facility which will have two main elements:
To support the establishment of impact funds through partnerships with fund managers to attract financing into impact ventures.
To introduce impact-focused financial tools in Armenia. For example, long term loans, loans with subsidized interest rates and credit guarantees, that will encourage banking capital to fund impact ventures that target SDGs.
What this means is that UNDP is going to introduce available impact and SDG targeting funding opportunities to engage external financial facilities for further disbursements to impact-focused clients. Considering that this type of funding usually includes a grant component and technical assistance, banks will be incentivized to add impact and SDG targeting into existing structures.
Looking into social impact bonds
Here in Armenia we are also developing social impact bonds to respond to key SDG bottlenecks. A social impact bond is a multi-party agreement based on the idea of “pay for success”. The Government identifies a social problem that it has a) not been efficient in solving or b) lacking the necessary resources to solve it. The service providers who could efficiently solve the social problem are then identified, along with investors who are willing to pay the service providers upfront. The Government only pays the investors back when the pre-defined success indicators are reached or, in other words, pays only for success.
Currently we are working on the design of two social impact bonds:
Improving quality of agricultural education in cooperation with FAO Armenia.
Improving learning outcomes of the IT sector in cooperation with UNICEF Armenia.
Our short but strategic roadshow
During the last few months we have been spreading the word about impact investment. We participated in the Social Good Summit in Geneva and the Social Capital Markets (SOCAP2017) in San Francisco, where we met impact investors and made a strong pitch for partnerships with the private sector to achieve the SDGs. e now have a clear sense of what impact investors and key stakeholders outside the UN need and expect. We have also received feedback from key players in the industry and, together with INSEAD, organized Impact Investment for Development Summit in Yerevan in March 2017, which was the first time a dialogue on the role of impact investment took place in Armenia.
Landing impact investments to the day-to-day reality
Moving forward, we are looking into setting a legal framework that will allow the UN, private sector and other partners to make investments to support ventures promoting sustainable development. The fancy word for it is “impact investment platform”. The Impact Bonds, the Accelerator and the Catalyzing Facility are all specific and practical way to facilitate these investments, and help solve development challenges on the ground in Armenia and beyond.
Working with the Armenian Government
The Office of the Prime Minister in Armenia is eager to help accelerate SDGs. Our goal is to support Government to figure out ways of bringing academia and government together to engage citizens around the SDGs.
We also hope to engage social entrepreneurs to identify funding. Since its inception four years ago, the lab continues to evolve, from a social venture incubator to an accelerator. The accelerator takes the profitable business and scales globally.
We also set up, together with the Government of Armenia, the National SDG Innovation Lab to ensure that both public and private partners work in a coherent way. The Lab brings together contributors from the public and private sectors to experiment and create to unlock Armenia’s development potential.
For each new project that we work on, including this one pertaining to impact investments, we always ask ourselves three questions:
Are we building a user (citizen)-driven intervention?
Are we helping advance innovative approaches that help leapfrog to SDG achievement?
Are we using the potential of private initiative and capital to achieve our objectives?
Will this work? Stay posted and follow us on Medium to find out!