Blockchain aims to cut fraud in school meals procurement

30 June 2020

A trial is under way in Colombia to see if blockchain technology can reduce corruption in the procurement of school meals.

The trial uses blockchain to select and monitor vendors for Colombia’s school meals programme for low-income youth.

The Programa de Alimentación Escolar has been the centre of several corruption scandals involving soaring prices and non-delivery of tens of millions of meals.

The World Economic Forum (WEF) partnered with the Colombian Inspector General’s Office, the National University of Colombia and the Inter-American Development Bank to create an Ethereum-based blockchain public procurement system.

The WEF said governments worldwide spent an estimated $9.5tn each year on public procurement – money which often “tends to line the pockets of corrupt government officials, corporate executives and others who are involved in the procurement process”.

It cited UN and OECD figures that estimate 10-30% of a public contract’s overall value is often lost to corruption and said “curtailing procurement corruption may represent one of the most effective economic development programmes that a country can adopt.”

“Blockchain-based procurement offers governments the potential to disinfect – or de-corrupt – their procurement processes through ‘technologically induced sunlight’,” said a report.

It said blockchain enables permanent and tamper-evident record keeping by making it more difficult to remove records of bids and public comments or to alter bid or tender offers once submitted.

Buyers and vendors are able to conduct bidding and evaluation processes on the Ethereum platform, while journalists and citizens can monitor and flag risky activity.

The software includes features such as minimum bids, public comment periods and automatic red flags to alert the authorities to potentially corrupt activity.

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