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Speech about cash and risk in humanitarian operations

Speech about cash and risk in humanitarian operations, Copenhagen 6th. December 2012

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Dear colleagues, representatives of multilateral humanitarian organizations, bilateral development cooperations and NGOs.

It is a great pleasure for me to participate in the seminar on “Cash and Risk in Humanitarian Operations” organized by the Danish Red Cross and Dan Church Aid.

I would like to thank the Danish hosts for organizing this seminar but also the “Cash Learning Partnership”, who has been instrumental in improving the quality of emergency cash transfer and voucher programming across the humanitarian sector.
There is no doubt that historically mistakes have been made in the provision of humanitarian assistance. Food aid have been tied to domestic companies and supplies – before 1995 a significant part of Danish food aid was cheese spread and canned ham for obvious, but not very good, domestic reasons. This was ended in 1995, in favour of supplying split peas and wheat flour – a change that meant that 10 times more people could be fed - but not without discussion. At a turbulent meeting here in this building a representative from the Danish slaugtheries emotionally argued that it was a much larger culinariy experience to open a can of ham than it was to open a bag of split peas.

Food aid has been tied to agricultural surplus production – leading to changes in diets and culture, implicit dumping of food supplies and with distortive effects on local food markets in receiving countries. Again progress have been made with more restrictive international rules and changes in agricultural policies. This has let to increased use of triangular operations and purchase-4-progress programmes like the ones promoted by World Food Programme in 21 countries from Afghanistan to Uganda and El Salvador. Here food commodities are bought from local organisations, small and medium size traders and local traders in an attempt to increase opportunities for smallholder farmers. The basic idea being to combine humanitarian emergency relief with agricultural development – supporting farmers, building warehouses, storage, infrastructure, markets. This is also promising direction.

And yet another promising development is now the increasing use of case transfers, which I believe have an important role to play in combating poverty and hunger. It goes for development programmes. I am inspired by and supportive of the broad based cash-based social protection schemes that are now being developed in multiple countries: Bolsa Familia in Brazil. Opportunidades in Mexico, Productive Safety Net Programme (PSNP) in Ethiopia and in South Africa, with cash transfers to different target groups (children, elderly, orphans etc). These programmes provide a floor of protection for the poorest part of the population and does it while minimizing distortive effects on markets, and, too a larger extent, preserving the independence and dignity of the individual.

And cash-transfers are now, as you have discussed, increasingly being used in humanitarian operations even in very risky and difficult areas. I believe Cash Transfer Programmes in emergencies and during recovery are key to improving the effectiveness of humanitarian assistance. Effectiveness in relation to the delivery of the acute humanitarian assistance, but also in terms of building bridge to the recovery phase.

The current food crisis in the Horn of Africa illustrates only too well my point. Thirteen million people are now dependent on humanitarian assistance. Food security and enhanced resilience must be given high priority and cash based transfers is one of the instruments that we must put to work. The cost of inaction would be catastrophic – food security is also about global security.

And it is not only an ethical question of saving lives. It is also a good investment. Studies show that 1 Euro invested in preparedness and disaster risk reduction yields at least 5 Euros in return.

My hope is that we can create multiple win-outcomes if we at one hand use case-based food aid programmes and on the other hand invest in initiatives that promote a sustainable and climate-adapted food production. We will support small scale farming in arid and semiarid areas, including in the Horn of Africa, with a special emphasis on Disaster Risk Reduction as a tool in building resilience and promoting Climate Change Adaptation, protecting vulnerable groups and promoting a strengthened role for women in agriculture. We must invest in local livelihoods and in both the local and the global food system, in security. And we will work together in the EU to address the political issues and the root causes of the man-made crisis in for example Somalia. This is vital to ensure that the positive synergy between increased supply for food, via agricultural development, and demand for food, via cash/voucher programmes, can provide the necessary benefits.

Support via civil society – Danish and local – is important not only in terms of advocating for people’s rights and holding governments accountable – also in term of providing life saving humanitarian assistance where the state is either too weak to provide those services, or is part of a conflict, which affects its willingness to protect and assist people. Many NGOs have been central in reaching some of the most vulnerable groups during natural disasters, protracted crisis or complex emergencies. Cash Transfer Programmes in humanitarian action is one area, where the civil society has been innovative and has taken a lead role.

The interest in cash based interventions in food assistance has increased significantly in recent years. The use of cash and vouchers instead of in-kind food assistance give the beneficiaries a certain freedom of choice in what products they need most dearly for themselves and their families. There is a – some would say far-fetched - analogy to the use of budget support to governments. Budget support allows governments – those who are ready and well-functioning – a freedom of choice in what policies they want to pursue for their country and their citizens and have shown to provide better results in terms of getting children to schools and building health systems. Similarly cash-based interventions to individuals in food assistance can give more appropriate choices and better outcomes for the individual family.

Evidence, which you have seen during the seminar, also shows that cash can play a role after emergencies and during recovery, where it can support access to food, help to protect or invest in livelihood activities and help refugees to return. Cash can potentially meet a variety of needs and empower people by reducing their vulnerability and helping them to recover from emergencies and crisis if cash is invested in productive assets.

I fully support the increased use of cash and vouchers as one of the tools in a response to an emergency or during a recovery and stabilisation phase. The choice of the most appropriate intervention – be it cash and vouchers or in-kind assistance – must be based on a context specific choice. Therefore, a “one size fits all” approach to cash does not work.

Danida supports the European Commission’s Food Assistance Policy, including the guidelines on Cash Transfer Programmes. Bilaterally, we increasingly finance Cash Transfer Programmes through the civil society such as the Danish Refugee Council and DanChurchAid, and through multilaterals such as UNHCR and WFP. We support WFP’s prudent approach “Cash for Change” where the increased use of cash goes hand in hand with development of an adequate institutional framework and capacity development of staff and partners. It also includes an increased focus on risk assessments and results.

Last week, the importance of development results was highlighted again and again at the 4th High Level Forum on Aid Effectiveness in Busan, South Korea. I am very satisfied that the outcome document stressed that increased risk willingness and improved risk management is key to achieve results.

Denmark stands ready to pursue this post-Busan together with other willing partners. It is clear from the discussions in Busan that we need to pursue a new approach to risk management for results. We need to work jointly to explain the need to engage and accept certain risks. We should be smart risk takers, who weigh risks against desired outcomes, and against the risk of not engaging. This issue is certainly relevant for Cash Transfer Programmes where donors and implementing partners – as it should be – will be held accountable by tax payers and target groups if Cash Transfer Programmes fail. Denmark is willing to assume this risk, and we want to be open about it to increase transparency.

The project in Somalia “Food Assistance for Vulnerable Households” , implemented by the Danish Refugee Council, is a good example on risk willingness. Despite challenges in relation to security and selection of beneficiaries, Danish Refugee Council has shown that Cash Transfer Programmes can be an effective instrument in addressing the needs of Internally Displaced People in conflict situations. The initiative is not easy and not without risks, but I am willing to assume those risks considering the alternative of not supporting some of the most vulnerable groups in need of humanitarian assistance in Somalia.

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Denmark is committed to do what it takes to improve the efficiency of humanitarian aid – not only to ensure that we get value for money, but more important to make a difference for the people in need. Risks needs to be calculated and consciously managed – and to be communicated to the public. Only this way can I continue to have a constructive dialogue with the public and the political backing for our engagement in fragile states to promote development and alleviate human suffering.

Therefore, I hope that this seminar has helped you to openly share lessons learned, and that it has generated useful discussions on institutional design, risk assessments and cash in conflict settings. Only by sharing knowledge and by being honest about the success and failures will we improve the effectiveness of our humanitarian assistance to the benefit of the millions of people in need.

This is indeed challenging times for humanitarian assistance – we face a financial crisis and increased demands, but it is also times of great opportunity. Opportunity to do better and to do so together through a coordinated approach to humanitarian assistance. I certainly do not have all the answers. And therefore I value initiatives like this one, where we can be inspired and get new insight together.

Thank you for your attention