August 15, 2017; Knowledge at Wharton
For over 50 years, Shell and other fossil fuel companies created oil spills as they drilled in the kingdom of the Ogoni people who live in the southeastern section of Nigeria, which sits on the Gulf of Guinea. Approximately 390 square acres remain severely damaged 40 years after a major spill. The area includes wetlands, creeks and mangroves, fishing waters, and wells for drinking.
According to a 2011 UN report, it’ll take several decades to ameliorate the damage. The economy, based in farming and fishing, has been devastated. Above-ground oil pipelines continue to leak, having been ruptured by citizens to access the fuel. Repairs and pollution remediation have hit roadblocks, abetted by the corruption of local leaders.
The California-based nonprofit Sustainability International, which has a mission to relieve poverty in Africa, has been working on reversing the damage on the Niger Delta. The founder and CEO, Chinyere Nnadi, has family from Nigeria; he is well aware of the difficulties involved in the project.
“From the outside,” Nnandi said in an interview with Knowledge@Wharton, “it looks like it’s something as simple as solving an environmental problem. But then when you look into the society, you realize [the root of the problem is] systemic corruption and the lack of transparency within the actual community…Because that system is sick, and the actors don’t trust each other, no work is able to be done.”
Nnadi has turned to the invisible to solve visible problems. Blockchain is a decentralized virtual ledger that cannot be changed, can be viewed by anyone, and has entries that are verifiable and trustworthy.
On a blockchain, transactions are recorded chronologically, forming an immutable chain, and can be more or less private or anonymous depending on how the technology is implemented. The ledger is distributed across many participants in the network—it doesn’t exist in one place. Instead, copies exist and are simultaneously updated with every fully participating node in the ecosystem. A block could represent transactions and data of many types—currency, digital rights, intellectual property, identity, or property titles, to name a few.
Sustainability International is partnering with the software company ConsenSys on an initiative, Blockchain for Social Impact Coalition. The ConsenSys impact policy manager said it simply: “The reason that the blockchain is really important is because people don’t need to trust each other, they need to trust the tool.”
Blockchain still has issues to work out, such as access to private financial records, but these bugs are being worked out. The EU, in a May 2017 report, said that blockchain is being put to use in hundreds of solutions, like voting and the tracking and verification of raw materials.
Nnadi’s goal is to solve accountability problems. He has spent four years identifying those who can be trusted amid the longstanding corruption, gathering nonprofits and local people who can take on the job.
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“Our thesis is that because the centralized institutional nodes of accountability have been compromised, distributed accountability could be the way to serve the interest of all of the community stakeholders: citizens, government, and businesses. Through this mechanism, we hope to engineer economic inclusion and community engagement.” Nnadi said.
The blockchain software will ensure that funds set aside for cleanup, such as those from Shell, are paid on verification of project completion, rather than contractors just withdrawing funds.
“You’re engineering accountability,” Nnadi continues. “Suddenly, you’re introducing new skillsets to the community where they’re able to monitor projects at international sustainability standards.”
The community also benefits from all of the capital being put to use. Shell wins as well since it could monitor from afar and “know what’s happening deep in the jungle in the Delta.” His nonprofit is working on delivering access to the blockchain via mobile phones. (Eight in 10 Nigerians have them, according to BI Intelligence.)
Nnadi hopes to use feature-phones to “create a communication channel [between] the villager and our platform so that there’s an ability for the villager to be a 24/7 monitor.” That’s not just for spills, but also for acts of terrorism, like the bombing of pipelines and illegal refineries.
Several pilot programs will start next year. Media for Justice will have environmental monitors in each village to assist the reporting, using smartphones to photograph and report new oil spills. (No direct line exists yet.)
It’s not wise to see blockchain as a panacea. Kevin Werbach, a Wharton professor of legal studies and business ethics, says there’s been an “explosion of blockchain-based applications and systems. It’s still very early. It’s still not as solid and reliable as where they need to be, but it is clearly where we’re going to see more activity.”
He notes that blockchain has been used in various social impact efforts. The United Nation’s World Food Programme directed a pilot in May that provided 10,000 Syrian refugees based in Jordan with cryptocurrency vouchers to trade at selected markets. (Blockchain is a key element of alternate currencies like Bitcoin.)
“It certainly has potential for social impact applications as well as commercial applications,” Werbach says. “The danger is people think it’s a magic bullet. If the problem is getting accurate information into the blockchain in the first place, the blockchain can’t solve that problem. If there’s a massive power imbalance, the blockchain can’t automatically solve that. Certainly, it has a lot of potential in the social impact context. But we have to be careful about what the technology can and cannot do.”—Marian Conway