German bank KfW trials blockchain technology for public finance management in Burkina Faso

KfW, a German state-owned bank, has announced that it is testing a blockchain application for use in public financial management in Burkina Faso, CoinTelegraph reported.

The bank said that the six-month pilot phase will explore blockchain potential in enhancing the transparency in development cooperation and simplifying controlling public funds in Africa. It will involve testing TruBudget – an open-source software developed by KfW which “makes it possible to reproduce all work and approval steps in a comprehensible manner.”

“These include, for example, contract design or tendering and payout processes in the implementation of a project, such as in the field of water supply. Through the platform, all parties can view all processes and changes in real time. Elaborate manual processes to ensure the correct use of funds can be eliminated,” the release said (via online translation).

The trial is being supported by Burkina Faso’s Ministry of Finance. Global consulting companies Accenture and BearingPoint will advise on project planning and implementation.

In addition, KfW said that its close cooperation partner in this innovative project is the French Development Agency.

The bank said that it would usually set up an office in a partnering country in order to deal with risks, but added that transaction costs are high for both sides. Blockchain technology would allow overseeing the processes at a distance, Joachim Nagel, member of the executive board at KfW, said.

“With TruBudget, we create transparency for the benefit of all parties involved, and we enable donors to use funds safely, even using the structures of the partner country directly,” Nagel added.