The World Economic Forum (WEF) is working with the Colombian government to see if blockchain-based transparency can help prevent a hotspot for corruption, which happens in the process of bidding for high-value contracts to provide public goods and services.
WEF partnered with the Inter-American Development Bank (IDB) and the Office of the Inspector General of Colombia to develop a proof-of-concept (PoC) using the Ethereum public blockchain.
The aim of the project is to apply a high level of transparency to the procurement corruption use case in the context of the country’s system of government contracting. The PoC will be piloted in a live procurement auction for goods and services supplied to Colombia’s national university later this year.
Public procurement invites corruption because it involves close, repeated interaction between government officials and the private sector, and vast sums of money. According to the Organization for Economic Co-operation and Development (OECD), governments collectively spend approximately $9.5 trillion on procurement contracts worldwide, and up to 30% of that is lost due to corruption.
“Originally, we were very open in terms of which division of the IG [Office of the Inspector General of Colombia] we would be working directly with,” said Sheila Warren, the WEF’s head of blockchain and data policy. “Most of the feedback we got from within the country after workshops that we ran there was that procurement would be the most conducive system to having a blockchain within it.”
These days, most countries operate e-procurement platforms, so the process of making tenders to build roads or schools, followed by the registration of vendors to bid for these contracts, is already digital. It also often involves some level of encryption so that the auction process is blinded to prevent collusion.
So what does a blockchain bring to the table?
The most conc...