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A new business model for humanitarian assistance?

Date
Time (GMT +00) 13:00 14:30

Speakers:

Dan Smith - Secretary General, International Alert

Simon Maxwell - Senior Research Associate, ODI and Chair, GAC on Humanitarian Affairs

Chair:

Alison Evans - Director, ODI

1. At this meeting Simon Maxwell and Dan Smith presented a challenge paper on A new business model for humanitarian assistance, published by International Alert on behalf of the Global Agenda Council on Humanitarian Assistance of the World Economic Forum.

2. Simon Maxwell opened his presentation by explaining the background of this paper. One of the many activities related to the World Economic Forum in 2008 was the Global Agenda Council on Humanitarian Assistance. Members are business leaders, academics, leaders from international and non-governmental organisations, amongst them Simon and Dan. This research resulted from the discussions in this council. Previously, the World Economic Forum has developed brokerage facilities for private-public partnerships and published guidelines for private-public partnerships for the specific case of humanitarian disasters.

3. Simon emphasized the humanitarian imperative; around 200 million people required humanitarian assistance in 2008 and the caseload is rising. While armed conflicts were a major cause in the past, climate change and population density are becoming more important causes of humanitarian disasters.

4. Simon described two extreme cases of how countries reacted to a fairly similar shock. Haiti, when experiencing the recent earthquake, displayed a high level of vulnerability, low government capacity and was highly dependent on external help. China on the other hand, also experienced a severe earthquake in 2008, but reacted with a strong national response and a low need for international help. The important question is how to move countries from the Haiti column to the China column.

5. Simon described the new business model for humanitarian assistance, which should essentially change countries from being Haiti to becoming China. The new business model is more focused on prevention and involves the following 6-step plan:

  1. Understanding the specific risks countries face better and acting on that e.g. Mexican building codes that deal with earthquake risk
  2. Rebalance spending between response, prevention & recovery
  3. Invest in national and local capacity
  4. Engage more with the private sector
  5. Linking humanitarian challenges to broader economic and social development
  6. More regional and international involvement as many of these challenges are cross-border

The most important question is how to make this happen.

6. Dan Smith argued that the Global Economic Crisis has led to acceptance of change. He also pointed out that the crisis and climate change (disasters, as well as slow onset change) are likely to lead to an increasing caseload of humanitarian assistance in the coming years. Dan emphasized the importance of countries buildingresilience/ narrowing vulnerabilities. This is especially important at the local level because that’s where information will be given, plans can be made and where people will listen, but it will need national backing and a regional framework of activity. Haiti did not engage in preparation and capacity, despite highly visible risks and was consequently very vulnerable. In the UK on the other hand, clear plans were made for rising floods which narrowed vulnerabilities and it also had the capacity to deal with these narrowed vulnerabilities.

7. Dan pointed out 3 sets of actors that have different skills.

                    i.            Governments bring networks, legitimacy and access to resources.

                  ii.            The private sector brings in deep knowledge and expertise that can be mobilised quickly.

                iii.            NGOs bring capacity, own networks and local knowledge and participation. They can also bring legitimacy.

8. Dan gives South East Asia as a candidate area of where the new business model should be applied. South East Asia is on the frontline of risk, has strong businesses and government at different levels, including regional.

9. Points raised in the discussion included:

  • Whether UN disaster preparedness work is a waste of time. Simon responded that not enough is happening, but that one should engage with the initiative, while not relying on it.
  • How much would it cost to build local capacity in disaster preparedness. Dan replied that it’s more important to emphasize the importance of building local capacity (how), than how much it would cost.
  • Should consider geopolitical factors in explaining humanitarian assistance. Dan agrees that the burden of history (e.g. US/ Haiti) is an obstacle to the business model.
  • 1) Most humanitarian cases/ spending are in proractcted emergencies, like Somalia. It doesn’t make business sense for private companies to engage there. 2) Do businesses only engage if there’s a long term profit to be gained. Simon and Dan don’t agree. Apart from philanthropic motives, businesses may become engaged because it’s good for their employee relations or for their licence to operate. They do agree that there are also unpopular emergencies and that engagement is higher in the short-term when media attention is high. Therefore tax breaks should be used to encourage sustained engagement.
  • What are the opportunities and challenges of the insurance industry. There are regional insurance mechanisms, but for a high payout premiums are very expensive. Need to invest in fit for purpose strategies decided upon on a case-by-case basis e.g. emergency food reserves.
  • 1) How can we better support national and local capacity (current mechanisms: UNDP, WB etc and others). 2) What ways in working with partnership are already out there. Simon responds that it depends on where you are. You can’t do everything, but you can do something in difficult countries, e.g. working with multinationalss in risky countries. Dan responded that a lot of deals happen in the gaps of local power and that it’s important to talk to multinationals and to see what they can do. UN and NGO agencies are technically competent, but the problems lie with the fact that there is a jungle of humanitarian agencies out there, but there are also political issues.
  • Local business might be hurt by food aid. Simon pointed out Paul Harvey’s work that looks at cash transfers in an emergency, which might help to encourage rebuilding of the economy.
  • The Haiti/ China typology doesn’t fit all cases. Simon and Dan agreed with this. The model would not have worked for Sir Lanka last year during the civil war, but now it can start to work.
  • What other global governance level initiatives you might see being developed to manage the international, national or local response. The local context is essential; everything is political. Simon says that coordination of humanitarian action is getting better. Furthermore we need to encourage people to get down to the local level and just do it.
  • Based on Haiti, would you support a stronger right to protect approach and substitute national sovereignty. Yes, according to Dan, if humanitarian disaster related to failure of government to fulfil its responsibilities. But there are few cases this extreme.

10. Dan raised a finishing point. One of the questions they asked themselves in the council is about humanitarian space. By promoting a new business model, were we doing something wrong to the humanitarian space? No, in a changing world (with a rising caseload) we can support the humanitarian space by increasing the range of actors on a systematic basis.

Description

This meeting provided an opportunity to discuss the proposals of the Global Agenda Council on Humanitarian Assistance, for a New Business Model of Humanitarian Assistance. The speakers were Simon Maxwell, Council Chair, and Dan Smith, a member of the Council.

Through conflict and natural disaster, millions are affected by humanitarian crisis each year - and the number is rising. The current crisis in Haiti has highlighted how the lack of national capacity can exacerbate a situation and increase the suffering of victims. Can we do better?

The Global Agenda Council on Humanitarian Assistance, set up under the auspices of the World Economic Forum, has sought to answer this question, proposing a new business model which lays more emphasis on risk management and disaster prevention and preparedness, and which also describes a new role for the private sector.