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A series of reports exploring the likely changes in the aid world over the next decade.

Analysis: What future for private sector involvement in humanitarianism?

DUBAI, 26 August 2013 (IRIN) - The private sector's involvement in humanitarian action has risen steadily in the last decade and is likely to play an even larger role in the post-2015 development agenda.

"In the face of diminishing resources and increasing disasters and crises… it is imperative to bring in innovative resources," said Mamissa Mboob of the newly created Private Sector Section at the UN Office for Coordination of Humanitarian Affairs (OCHA). "It's almost as if we have no choice... The humanitarian system is stretched to its capacity… It's becoming more clear that no single entity can solve a lot of these world problems."

But too often, researchers and practitioners say, aid agencies and corporations have entered into partnerships without a clear idea of goals, shared and diverging values, and each side's comparative advantage, leading to one-off ventures that have little lasting impact. If the hype around the private sector is to translate into a sustained and positive impact, experts say, both aid agencies and corporations must take a step back to assess the impact of such partnerships and establish best practices.

Growth

While public-private partnerships have been part of development work for decades, they are a much newer phenomenon in humanitarian aid. Private sector involvement in the humanitarian sector began in the 1990s, but has grown in earnest in the last 15 years or so, picking up after the Indian Ocean tsunami in 2004.

According to research published by Development Initiatives in 2012, private funding as a share of the total humanitarian response grew from 17 percent in 2006 to 32 percent in 2010 (and totalled US$5.8 billion that year).

Large UN agencies like the World Food Programme (WFP), the UN Children's Fund (UNICEF) and the UN Refugee Agency (UNHCR) have in recent years created well-staffed units dedicated to engaging the private sector. The Central Emergency Response Fund, managed by OCHA, has seen the number of private donors rise from two to 22 between 2006 and 2010.

Since a strategy was put in place at WFP in 2008, the private sector has become its seventh largest donor. It remains a "drop in the bucket" compared to funding from governments, but WFP aims to garner $1 billion in commitments per year from the private sector within 5-10 years, according to Ashraf Hamouda, who heads WFP's partnerships and business development work in the Middle East, North Africa, Eastern Europe and Central Asia.

[IRIN has put together a list of public-private partnerships in humanitarianism. Click here for examples.]

But overall, humanitarians have largely failed to leverage the private sector. In a 2011 report, the Humanitarian Futures Programme (HFP) at King's College, London described commercial contributions as a "niche phenomenon" that is still largely ad-hoc and opportunistic.

While Development Initiatives found that in 2010, 56 percent of NGO income came from private donors, just 8 percent of UN humanitarian agencies' budgets were funded through private money. In addition, more than three quarters of private funding came from individuals, meaning private companies and foundations remained largely untapped.

"The idea in basic economics is that every group has a comparative advantage and the private sector's has not been maximized," said Lucy Pearson, programme officer at Humanitarian Futures Programme.

Blockages

There remains a lack of understanding, a large degree of mistrust and what some experts have termed a "culture clash" between the humanitarian and private sector.

"Humanitarians are very nervous about the private sector," former Emergency Relief Coordinator John Holmes, now co-chair of the International Rescue Committee UK, said at an event earlier this year. "The humanitarian system and private sector do not know how to talk to each other."


NGOs often see corporations as the "bad guys" who are part of the problem, not the solution; while beneficiaries can be sceptical of aid delivered by commercial entities.

But interest is growing from both sides: humanitarians are eager for diverse sources of funding and innovative approaches, skills and technologies; while companies are looking to improve their corporate image, motivate and retain employees, and break into new markets. Increasingly, rather than just wanting to look good, private companies also see investment in disaster risk reduction as essential for business continuity; and in many cases, it is the private sector - not the humanitarians - taking the first step.

So if such partnerships are the way of the future, what are some lessons that should be taken into account?

Not just a cash cow

One of the main takeaways has been to treat the private sector as more than a cash cow.

"It’s less about money, and it’s more about skill and capacity," UN Under-Secretary-General for Humanitarian Affairs Valerie Amos told IRIN.

There has already been a shift from cash assistance and in-kind donations to sharing technical expertise and other core competencies.

Of 33 partnerships between OCHA and private companies or individuals, the most successful have seen Ericcson set up telecommunications systems in emergencies; DHL organize cargo coming into airports during a disaster; and the singer Beyoncé raise awareness about humanitarian needs.

One often-touted success story comes from Tanzania, where in some remote areas where you could not find paracetamol, you could find Coca-Cola. In partnership with the Global Fund to Fight AIDS, Tuberculosis and Malaria, the soft drinks company helped the Ministry of Health improve its supply chain.

The private sector is also increasingly being considered for a more direct role in service delivery. While aid agencies have partnered with companies like Orange or Mastercard to enable cash transfers to people affected by disasters and conflict, humanitarian actors are now realizing the private sector could also be involved in, for example, designing the debit cards or surveying the beneficiaries.

Strategic partnerships

"We need to look at the partnership not only in terms of the amount of money, but how strategic it is in achieving our goals," says WFP’s Hamouda.

He has seen many aid agencies fail by going to the private sector with a wish-list they want fulfilled.

"This is the wrong approach completely," he says. Instead, he recommends tailoring each partnership to the skills and corporate social responsibility programmes of that corporation.

"The money is there. The will is there. The intention by the private sector is there. We just need to properly design a special package that fits each corporation. It's not one-size-fits-all."

In addition, rather than look to the private sector for help after a disaster strikes, partnerships should be struck in advance, HFP’s Pearson says, aimed at long-term investment in things like disaster preparedness.

Provide an entry point

For that, the private sector needs more of a framework through which to engage. One major constraint for the private sector, according to Mboob of OCHA, is a lack of awareness of how to get involved.

A partnership between OCHA and the World Economic Forum (WEF) has given top humanitarians a platform among the world's corporate leaders; and various forums - including Kofi Annan's Global Compact, the Geneva-based Business Humanitarian Forum, the UN's business portal, Global Impact, the World Economic Forum's Humanitarian Relief Initiative, and the Partnering Initiative - have attempted to make private sector involvement easier. But "there is no overall framework that engages the PS [private sector] in a systematic way," Pearson said.

In 2008, OCHA and WEF published guidelines for public-private collaboration in humanitarian action, and several aid agencies have adopted their own internal principles. But according to the Humanitarian Futures report, "these different guidelines and screening methods often generate more questions than answers about which standards or principles to implement, and how and where."

Governments have largely failed to take the private sector into account when drafting disaster management plans, Pearson said, often adding them in as an afterthought rather than engaging them as "equal partners" at the start of the process. The capacities of the local private sector, including small-scale businesses, have been especially ignored, she added.

Be flexible

Several private sector organizations have also told IRIN they found the humanitarian system too rigid to work with.

When the Egyptian Food Bank offered to help WFP with its school feeding programme, they were not able to strike a deal, said Moez Elshohdi, head of the bank, because he was offering free ready-cooked hot meals, while WFP's system was tailored towards high-energy items like date bars.

"If you want to work with the private sector as a humanitarian system, you have to be less risk-averse and as innovative as they are," Mboob said. "You have to be less rigid."


Fathi Buhazza, founder and CEO of a new organization called Care By Air, a collection of airlines offering empty space to humanitarian agencies at cost, told IRIN last year he was surprised at how little uptake he had seen from aid agencies, who spend a lot of money chartering flights during a disaster.

"[UN agencies] have been doing the same routine for a long time," he said. "They end up saying: 'What's in it for you?'"

What's the added value?

That lack of mutual understanding is part of the problem, linked to an overall dearth of research in this area, not only on the scale of private donorship, but also on the motives behind it.

The few studies that do exist have found that to be successful, both partners must spend time to understand each other; identify a specific need; discuss shared goals and red lines; outline the added value each side is bringing to the table; and continuously review the impact of their partnership.

According to Gilles Carbonnier, a professor at the Graduate Institute of International and Development Studies in Geneva and former head of private sector relations at the Directorate General of the International Committee of the Red Cross, this rarely happens.

"There are no reports on… the specific impact of business-humanitarian partnerships in terms of saving lives, abdicating suffering and protecting human dignity," he told an aid conference in Dubai earlier this year. "This is certainly a weak point."

No silver bullet

Ongoing review becomes all the more important as aid agencies expand their scope of partnerships.

Whereas a few years ago, the "untouchaeables" - namely companies that profit from arms, alcohol, tobacco or gambling - included the banking sector and extractive industries, improved governance structures adopted after the 2008 financial crisis and greater pressure on companies to be environmentally friendly could open the door to "responsible" partnerships in these two latter sectors, Hamouda said.

The private sector is also likely to get involved in areas beyond disaster relief, including recovery and disaster risk reduction.

But at the end of the day, there are limits to what partnerships can accomplish.

"Partnership is not necessarily the answer to all known global ills," a World Vision study on NGO-business partnerships found in 2008. "The transaction costs involved in partnering can be high and can be out of proportion to the benefits to those involved in the partnering approach. Sometimes a partnership is just too unwieldy a response to a situation that simply requires direct action by one sector."

"The private sector poses much more of an opportunity than a threat"
Partnerships with commercial entities have faced resistance from many parties. After the launch of the Global Compact, which invites companies to partner with the UN and adopt its principles, NGOs accused Annan of risking the UN's reputation by “blue-washing” companies with the colour of the UN flag and, to all intents and purposes, its seal of approval. Critics have expressed fears that too much involvement by the private sector would solidify donor control over operations and affect the impartiality of aid delivery.

But Pearson insists: So long as each party recognizes and respects the other's comparative advantage, "the private sector poses much more of an opportunity than a threat."

ha/cb


Interested in more on this?

Since Valerie Amos took up the top post, OCHA has prioritized partnerships. You can find several examples of OCHA's partnerships with the private sector in this 2010
memo.

The
guiding principles it developed with the World Economic Forum outline the importance of partnerships being needs based, predictable and transparent, among other things. The UN Global Compact's Ten Principles are also a source of guidance.

Gilles Carbonnier, professor at the Graduate Institute of International and Development Studies in Geneva and former head of private sector relations at the International Committee of the Red Cross, has written several journal articles on the subject, including
this one on the relations between the business and humanitarian worlds; this one on outsourcing in wartime; and a forthcoming piece in the journal Globalization on what he calls legitimation strategies of such partnerships. Here is a full list of his publications.

The Humanitarian Futures Programme at King's College has produced several reports, including studies of
current trends, existing platforms for engagement and corporate interventions in the Horn of Africa.

Development Initiatives has attempted the difficult job of trying to track the
scale of private sector funding in humanitarian aid delivery.

The Overseas Development Institute's Humanitarian Policy Group's
latest report on the subject is several years old, but HPG is planning a research project in this area later this year.

The Office for Humanitarian Action of the Spanish Agency for International Development recently commissioned a study to help design a set of guidelines for partnership with the private sector. The
study, conducted by the Center for Innovation in Technology for Human Development, based at the Universidad Politecnica de Madrid, recommended moving from "philanthropic, occasional collaborations" to long-term sustainable partnerships in which engagement, interaction and trust between both parties is high.

A
2008 report of the Cross Sector Partnership Project, part of World Vision's strategy to engage the private sector, looks at the potential for NGO-business partnerships in 11 countries.

There is a whole other (and much larger) body of research on public-private partnerships in international development. In a
research paper on partnerships for sustainable development for the German Institute for International and Security Affairs; academic Marianne Beisheim argues that institutional design is key. Replicating and scaling up pilot projects often ends up being harder and more expensive than expected, she argues, and many partnerships prove unsustainable when funding runs out.

Another worthwhile read:
United Nations-Business Partnerships: Good Intentions and Contradictory Agendas.


Theme (s): Aid Policy,

[This report does not necessarily reflect the views of the United Nations]

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