Implementing Blockchain in Public Sector – the Governance Challenge.

Implementing Blockchain in Public Sector – the Governance Challenge.
jwalubengo@mmu.ac.ke @jwalu

It is almost impossible to believe that Blockchain Technology or Distributed
Ledger Technology (DLT) has been around for ten years now – courtesy of its
most famous and first use-case known as Bitcoin crypto currency.

There are many online resources that break down and define what Blockchain is
but this site from the Center for International Governance provides an easy
introduction and appreciation for the newcomers.

However, one key Blockchain property that is has transformative promise within
the context of public sector is its irreversibility or tamper-proof property. Once
transactions or records are validated and entered into the blockchain database,
they remain permanently inscribed and cannot be altered thereafter.

This provides obvious Blockchain application in diverse sectors including but not
limited to lands, health, elections, customs and others where notorious officials
are known to tweak records in order to facilitate fraudulent activities.

Imagine a situation where a land transaction or a title deed cannot be falsified or
simultaneously sold to multiple parties as is common in many jurisdictions
across Africa.

Health insurance is another use-case begging to be ‘Blockchained’. Many a times,
health providers and insurers have conspired and manipulated a single claim
form in order to have it fraudulently paid several times

All these corrupt activities can be greatly minimized if the current systems can
be moved onto the Blockchain platforms.

In the education sector, we have instances where candidates for political office
or professional practice claim to have graduated from various universities and it
becomes difficult to ascertain their credentials.

Blockchain technology can make it easy for employers or recruitment agencies to
easily ascertain the validity of educational credentials of candidates without
violating the privacy of the candidates.

Willing universities, graduates and prospective employees would simply be
signed onto a secure Blockchain platform that allows graduates to share their
credentials to whoever they so wish while at the same time restricting access to
the rest.

We cannot fail to cite the famous ‘Farm-to-Fork’ Blockchain applications in
Agriculture where the origin or source of particular food items can be traced
with accuracy all the way back to a particular farm – courtesy of a Blockchain
Supply Chain Ecosystem.

In the event of a food related epidemic like the mad-cow disease in UK several
years ago, one can quickly trace and arrest the spread within minutes rather
than several weeks, as was previously the case.

Unfortunately, despite all these opportunities, Blockchain use in both the private
and the public sector remains quite limited. The reasons are many and varied
but one key one is about the governance of the Blockchain ecosystem.

Distributed control is what gives Blockchain the much-celebrated tamper-proof
property. However, this property is precisely its the biggest challenge for
traditional organizations that are by design, practice and law very centralized
and hierarchical.

For example, for an effective Blockchain implementation in the ministry of lands,
the lands processes must be re-engineered to allow for additional actors to
operate independent Blockchain Nodes that would participate in the validation
process.

Typically, beyond the ministry Node, one would expect other key stakeholders
such as the Lands commission, the Law society of Kenya, the County
Governments and others to own and run a Node as part of the validation process.

In other words, the 100% Operational Control that is currently held by the
Ministry would need to be de-constructed and shared across all the above
players in an effort to make lands transactions more transparent and less
vulnerable to abuse.

Operational control would therefore move from one centralized actor to multiple
decentralized actors as prescribed within the rules of the Blockchain technology.

The role of the Ministry will therefore have to radically shift in order to
accommodate this new governance paradigm that looks at the two layers of
Governance – the Strategic Governance of the Blockchain and the Operational
Governance by the Blockchain as shown below.

Source: (Ølnes, Ubacht, & Janssen, 2017)

It would require massive political will and capacity building for ministry officials
to appreciate their new role as being in the Strategic development of the rules
that govern the Blockchain ecosystem, while simultaneously ceding or delegating
their Operation control to the Blockchain technology.

This challenge is not limited to the public sector but would also apply to any
private sector players coming together as a consortium to implement Blockchain
systems.

Blockchain technology is therefore a disruptive technology at both the process as
well as at the governance layers.

The economies that will be quick to adapt to this new mode of engagement will
reap the benefit, while those that grapple and resist the new governance models
and technology will continue to hold onto a past that is likely to be overtaken by
the new paradigm.

==ends==
Mr. J. Walubengo is a Member of the KE National Taskforce on Blockchain & AI

Implementing Blockchain in Public Sector – the Governance Challenge.

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Implementing Blockchain in Public Sector – the Governance Challenge.