Decentralized
Development Finance
Development Aid is in crisis. A re-start is needed.
For those from software development, I am speaking of Development Aid or International Development which is the industry that uses vast amounts of government money for projects in so-called developing countries to improve living conditions there, but more often also to leverage those funds in political contexts.
I can talk for hours about the faults and drawbacks of the industry. And it's not only me that found so much of what I saw myself very disturbing. There is e.g. Nobel Laureate Angus Deaton, saying: Development aid is cynical in the way it is done currently as it undermines the development of local capacities. And underutilizes the creative capacities, I would like to add.
Unfortunately, in the past, it was not easy to design an alternative.
But now technology and designs are here to organize people, knowledge and finance in a fundamentally new way. Transformation will happen where concerns, mindsets and technology meet.
But what is the design we have to overcome? The current practice of development cooperation is stuck in problems stemming from its post-colonial mindset and centralist-bureaucratic planning attitudes. Tyranny of experts, it is called by Easterly. The industry is trapped in traditional structures and procedures, interests and power structures make change difficult.
So this is where I think some sort of Decentralized Development Finance (DeDevFi) has to come in.
Technically, that means providing funding for economic and social development projects on a non-commercial basis in a decentralized way. That already is a major change in how this could be done, but in the end this would be a flavour of DeFi basically.
To do DeDevFi right, in my view communities and the transformational entrepreneurs in the communities willing to take a lead have to be put in a driver seat, designing systems that involve them in the decision-making and prioritization.
So to design this in a decentralized way, this in my view is right at the core of what the TEC is building for safe digital economies that protect & support public goods. Experimenting with augmented bonding curve and retroactive public goods funding, recently discussed by Vitalik.
So what it needs for a Decentralized Development Finance (DeDevFi)?
To overcome the failed legacy structures in a complex social environment, experimentation is the way to go.
Who is interested to tinker in this field? It not only addresses a relevant challenge in creating a conducive environment for improving, but also the legacy structures of an industry that still stands in the way, hindering decentralized and localized approaches that have the potential to trigger lasting transformation. That makes this even more challenging, but even more interesting in my view.