On July 20, 2018. Nis City Mayor Darko Bulatovic and Steliana Nedera, acting Resident Representative of the UNDP Office in Serbia signed a Memorandum of Understanding between the United Nations Development Program (UNDP) and the City of Nis on the implementation of the pilot project Blockchain-based diaspora remittances in the City of Nis. The Project is carried out with the support of the Government of Serbia and its institutions, particularly the National Bank of Serbia.

UNDP Serbia designed this project with the goal to link the Serbian diaspora and their families back home, and will test how this type of advanced technology can be of use to the national and local governments, while making the financial transfer services cheaper, more transparent and tailored to citizens’ needs.  

The pilot project focuses on the transfer of money through the use of blockchain technology, from individuals abroad to individuals in Serbia, i.e. in Nis, chosen because of its close and strong connections with the diaspora, as well as the openness of the city administration for the application of new technologies. From the very beginning the City and UNDP established close cooperation and a special team was formed, together with the Local Economic Development Office, to ensure smooth implementation of the joint project. 

The pilot involves participation of up to 200 recipients and senders of remittances, who have been selected through a public call to voluntarily take part in this initiative. The recipients will get digital voucher ID cards, and they will be able to use the funds that they receive to pay for utilities and purchase groceries in three transparently chosen local retail stores in Nis. The expected value of all the participant transactions is estimated at $20,000.

All the data collected for testing will be used with the consent of the participants, as well as the City of Nis local authorities, while taking into consideration the Law on Personal Data Protection.

The use of open-source blockchain platform, provided pro-bono by  AID:Tech Ltd, is expected to bring several benefits, for a number of beneficiaries:

• Ensure traceability and transparency of the inflows of diaspora remittances into Serbia; 
• Channel diaspora remittances towards socially responsible purchases; 
• Enable easier and cheaper money transfer for the remittance senders, by avoiding the intermediaries. The goal is for the transaction costs to be less than 3% in average, compared to the existing, much higher costs paid via traditional banking sector and/or financial service companies; 
• Secure the privacy of individuals, since personally identifiable information is held off-chain in accordance with the GDPR, while individuals are identified on the blockchain through unique digital identifiers; 

The total value of the whole pilot project will be up to $85,000, while the value of individual transfers should be up to 100 EUR, i.e. $100, depending on the country from where the funds are sent.

The Pilot project ends in October 2018, and UNDP, equipped with the knowledge gained through this innovative initiative, will further explore how to speed up the achievement of global Sustainable Development Goals.  More information on how blockchain technology links Serbian diaspora and their families at countries of origin, you may find HERE.

When we talk about remittances we refer to financial contributions diaspora make to ensure the wellbeing of their families back home. This income also greatly contributes to the economic development of countries with large diaspora, such as Serbia, where almost 800,000 people receives money from abroad. The estimated value of remittances, sent every year via official and unofficial channels, is approximately €4.5 billion. Annually, remittances make up close to 9% of the GDP, compared, for example, to direct foreign investments, which were 5.4% of annual GDP in 2016.