The costs to society of government corruption and low accountability are staggering. Countries on every continent struggle with entrenched corruption and opaque government processes, from graft and diversion of public funds to non-competitive procurement bidding processes. For several countries, public corruption is their single-largest challenge,
costing loss of funds, loss of opportunity, and even loss of life. Corruption in public procurement alone is estimated to cost roughly $2 trillion annually in global taxpayer funds, equivalent to about 2% of global GDP.
Often, lack of transparency is at the center of corruption. Processes such as public procurement and public funds management are opaque, providing opportunity for mismanagement. Until transparency is addressed and citizens have greater access to information, public corruption and mismanagement in regions around the world are unlikely to improve markedly.
Blockchain and distributed ledger technologies (DLT) can potentially provide transparency to certain government processes where corruption is rife. Blockchain technologies allow records to be published in a publicly visible and censorship-resistant manner.
In partnership with the Inter-American Development Bank (IDB)and Colombian Inspector General’s office, the Forum is engaging a multi-stakeholder community to investigate and pilot the use of blockchain technology for public procurement and other high-risk processes.
Over the course of the project, the Forum will explore whether and how blockchain technology can be used to enhance transparency within various government processes,
providing conclusions as to whether it can be a tool to reduce corruption and enhance accountability.
The project will create a set of frameworks to guide the investigation of blockchain technology for various government processes. Jurisdictions from around the world can then employ these frameworks to investigate the use of DLT to increase citizens’ access to reliable information about various processes where corruption may be present. The project will ultimately opine on the most high-potential scenarios where blockchain technology can be used.
To pilot the aforementioned frameworks, the Forum is designing a prototype with blockchain technology alongside the IDB and Inspector General’s office that attempts to address corruption in public procurement. The project community will iterate and develop the solution design, and test it in a specific jurisdiction. The outcome of this pilot will inform whether, by providing access to reliable information, blockchain technology can increase accountability and reduce corruption in public procurement.
The project community will determine various key performance indicators to measure the success of the technology. After the initial pilot, the Forum will iterate its policy framework and pilot approach. It will then employ the framework to investigate additional high-potential use cases within the Colombian Inspector General’s jurisdiction. The ultimate output is a knowledge product consisting of a widely applicable framework to guide decision making and a set of conclusions and guidance as to whether and how DLT can effectively increase transparency in government processes to meaningfully enhance accountability and reduce corruption.