Executive summary

This submission to the International Development Committee’s inquiry into Extreme Poverty and the Sustainable Development Goals focuses on the areas where British Red Cross (BRC) has specific experience and insights, as an auxiliary to the UK government in the humanitarian field as well as part of the world's largest humanitarian network, the International Red Cross and Red Crescent Movement (Movement). Internationally, the British Red Cross through its Movement partners focuses on supporting those who are food insecure, forcibly displaced, and feeling the worst impacts of climate change. The communities experiencing, and most vulnerable to, these crises are often also the same as those currently in, or at risk of, extreme poverty.

This submission answers the following question of the inquiry: How might the FCDO’s strategy, policies and programmes need to change as the number of people in extreme poverty grows due to the global pandemic or the effects of climate change?

Through this submission, BRC intends to focus on two areas. Firstly, to outline how BRC believes aid can be delivered more effectively and efficiently, to respond to the nexus of increasing poverty and decreasing resources available to address it. Both BRC and the Foreign, Commonwealth and Development Office (FCDO) are dedicated to improving the effectiveness of humanitarian aid, both in our work as well as pioneering change within the wider multilateral system. Although this submission summarises the key learnings from our operational experience, this is not intended to be an exhaustive analysis of the best practices for delivering humanitarian aid. Rather, it outlines which changes we believe will make the most substantive improvements to the design and implementation of strategies, policies and programmes that address extreme poverty. This includes:

         Channelling more aid through local actors, in line with Grand Bargain commitments, particularly more core, flexible, predictable and long-term funding

         Providing aid in the form of Cash and Voucher Assistance, wherever possible

The second area of our submission will focus on the benefit of early action, to protect people from falling into extreme poverty due to a crisis, for example extreme weather, severe food insecurity or famine, or conflict. This includes:

         Investing in locally-led adaptation, resilience and preparedness against crises which threaten to increase vulnerabilities and worsen extreme poverty

         Transforming funding mechanisms to enable anticipatory action and early warning to reduce humanitarian impacts

Fundamentally, BRC believes humanitarian strategies, policies and programmes that also help to address poverty reduction should be underpinned by humanitarian principles including: humanity, neutrality, impartiality, and independence.

How might the FCDO’s strategy, policies and programmes need to change as the number of people in extreme poverty grows due to the global pandemic or the effects of climate change?

Introduction

1.            Covid-19 has exacerbated vulnerabilities in humanitarian contexts already most in need after years of conflict, poverty and the impacts of climate change. The number of people in extreme poverty is rising globally, whilst resources to address it have reduced. There has never been a greater need for strategies, policies and programmes that effectively and efficiently target reducing poverty and vulnerabilities.

Part 1 – More effective use of aid to meet the needs of increased levels of extreme poverty

Localised humanitarian action

2.            BRC believes that locally led action, supported by international action where necessary, is the most appropriate and sustainable model of humanitarian action. Local actors have unrivalled and deeply embedded access to communities, community trust, and an understanding of local contexts, including needs, perceptions, sensitivities and capacities.

3.            Effective humanitarian responses identify and innovatively align the comparative advantages of local, national and international actors, all of which have important roles and strengths that can achieve a truly appropriate, efficient, and principled humanitarian response. The Movement provides a model for such complementarity 1, with 192 National Societies, their local knowledge and flexibility of expansive volunteer networks, and the expertise of the International Federation of Red Cross and Red Crescent Societies (IFRC) and the International Committee of the Red Cross (ICRC). The IFRC and ICRC are also signatories to the Grand Bargain. 

4.            Empowering locally led action requires efforts to shift the distribution of funding, resources and decision-making power towards enabling local solutions, capacities and leadership to design, coordinate, implement, and monitor local humanitarian responses. We believe this method of delivering humanitarian assistance should become standard, as it is contextually responsive to the nuanced needs of affected populations.

5.            For example, the Afghan Red Crescent Society (ARCS) has played an important role in addressing the country’s humanitarian issues, both historically and recently. Years of conflict, poverty and the disruption caused by the pandemic were already taking their toll on the people of Afghanistan. The recent conflict and change of government, coupled with the worst drought in 27 years, have tipped the country over the edge. Economic collapse has sent food prices soaring. ARCS has been supporting the most vulnerable in the country for over 30 years, through its 40,000 volunteers across all 34 of the country’s provinces. Crucial to the National Society’s effective approach has been its decentralised structure of local volunteer networks, giving it some of the most embedded access to the country’s most vulnerable and hard to reach communities. ARCS has some 140 health teams, 70 of them mobile and in 2021 provided primary healthcare services to around 1 million Afghans, including in these otherwise cut off areas which are simultaneously those with the highest needs. Thus, the localised approach to aid has enabled ARCS to be at the forefront of the response to the country’s humanitarian crisis.

6.            Furthermore, the COVID-19 pandemic has spotlighted the effectiveness of having local actors at the forefront of designing and delivering humanitarian assistance. Our recent report, Is Aid Really Changing,[1] found that responses led by local responders were successful because they already had trusted access to local communities and key stakeholders and understood local dynamics. Therefore, we believe that nuanced and culturally appropriate humanitarian and broader poverty eradication strategies, policies and programmes, designed and delivered by local actors, will also yield more effective and sustainable outcomes.

7.            The UK is a signatory to The Grand Bargain, which included a commitment for 25% of humanitarian funding to be channelled through local actors, who have traditionally been excluded from humanitarian decision making spaces. More progress is needed on this commitment; one positive example involved the FCDO opening a new rapid funding channel for Covid-19 responses that required international agencies to pass on a fair share of the overhead costs to local and national actors.[2]

8.            However, the report Is Aid Really Changing? found that, whilst greater locally led action was established as a reaction to the circumstances of the pandemic, there has been very little systemic change in the humanitarian aid sector and marginal progress towards fostering more equal partnerships. Funding continues to prioritise international over local actors, and where funding is available for local actors this is often only in the form of short-term humanitarian financing rather than to support longer term resilience and capacity building. UN country-based pooled funds, increasingly seen as effective mechanisms for funding local actors, are not yet a reliable tool for localisation and require clearer commitments.

9.            Dedicated efforts must be made to diversify funding mechanisms and investment models so that local actors are better resourced to play a larger role in developing and delivering development and humanitarian strategies, policies and programmes. Therefore, long-term predictable support to local actors through more direct, core, flexible and better-quality funding, as well as investment in institutional capacity strengthening of organisations, is critical to allow the design, implementation and monitoring of localised and therefore effective poverty reduction strategies, policies and programmes.

Cash and voucher assistance (CVA)

10.            At the BRC, we believe that CVA has the potential to transform the way aid is delivered. Providing cash has proven to be an effective and efficient tool in humanitarian response, including where this intersects with poverty reduction efforts. The Red Cross and Red Crescent Movement is the world’s second largest humanitarian CVA actor, and the IFRC has committed to delivering 50% of humanitarian assistance through cash and vouchers by 2050. CVA makes aid more efficient by reducing the needs for the major humanitarian logistics machine, and kick-starting the economic resilience and functionality of local markets and livelihoods of the most vulnerable and marginalised.

11.            Crucially, a commitment to CVA will improve the quantity of humanitarian support as it is more cost-efficient to deliver than in-kind aid, provided that local markets are functioning, mainly due to avoiding the costs of storing and distributing material goods. A four-country study calculated that an additional 18% of people (more than 40,000 in total) could have been supported if they’d been given money instead of food.[3] More people can be reached for each dollar spent, providing evidence to support the scale up of CVA in response to the growing number of people in extreme poverty.

12.            CVA also improves the quality of efforts to address extreme poverty and vulnerability. It provides choice and preserves the dignity of recipients. It reduces the use of damaging and irreversible coping mechanisms, supporting people to flexibly address a wide range of needs, including rent, food, and ongoing access to key basic services such as healthcare and education. Cash allows people to re-join labour markets on their own terms, promoting long term resilience and reducing the likelihood of aid dependency. A survey for the American Economic Review found that 84% of economists agreed with the statement that “cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value.”[4]

13.            The Covid-19 pandemic has made clear the need to closely link humanitarian assistance and social protection to respond to or prevent extreme poverty. Social protection is one of the main channels to strengthen the humanitarian-development nexus. As auxiliaries to their host governments, Red Cross and Red Crescent National Societies have been recognised for the key role they can play successfully aligning CVA responses with social protection interventions. For example, the Turkish Red Crescent has played a pivotal role in supporting the expansion of several government’s social protection programmes, including the Emergency Social Safety Net programme, which provides cash assistance to 1.5 million refugees.

14.            In recent years, the use of cash and voucher assistance in humanitarian action has increased dramatically, however in-kind support is still the prioritised response. The UK Government played an important role as co-convenor of the now discontinued Grand Bargain workstream for increasing the use and coordination of cash-based programming, influencing the international commitment to scaling up the use of humanitarian cash assistance. As an influential donor with a long-term strategic commitment to the reform agenda on cash, it is recommended that the FCDO continues to explore other ways to play a lead role in this key area of aid delivery, including by increasing the use of cash-based delivery systems for social safety nets/social protection schemes where feasible.

Part 2 – Acting early on in crises, increasing resilience and preparedness

Investing in resilience

15.            As the justification of this inquiry points out, there are many external factors that are having an impact on the extent and severity of extreme poverty globally, including the pandemic, climate change and conflict. Therefore, a crucial part of addressing worsening poverty is directly addressing crises themselves and reducing people’s vulnerabilities. It is often the most vulnerable who are most impacted, therefore building resilience and preparedness for such crises protects them from either being pushed below the poverty line or falling further below it. As the impacts of climate change deepen and protracted conflicts become increasingly the norm, the need for strategies, policies and programmes that are dedicated to building resilience becomes increasingly essential for successful poverty reduction.

16.            An example of where resilience efforts have reduced the humanitarian impacts of recurring crises that threaten to exacerbate poverty is the work of the Mali Red Cross. The livelihoods of a community in a village in the Mopti region of Mali are closely tied to agriculture and animal husbandry, however they are surrounded by three hills that regularly brought in discharge from nearby rivers during the ever-increasing rain season, flooding their agricultural land. A protective dyke in the village was developed by the local population to help cope with recurrent floods due to climate change. As a result, the majority of flood water is redirected away from the agricultural lands and is now being harvested for additional activities, such as stockpiling for times of scarcity, a new brick factory and improved watering systems for animals[5].

17.            IFRC estimates that the number of people experiencing poverty and in need of humanitarian assistance as a result of storms, droughts and floods could climb beyond 200 million annually by 2050 compared to an estimated 108 million today, with a huge financial price tag of US$ 20 billion per year for humanitarian response by 2030 in the most pessimistic scenario. However, by taking determined and ambitious action now to invest in disaster risk reduction and climate-smart development, the number of people in need of international humanitarian assistance annually could fall to as low as 68 million by 2030, and even drop further to 10 million by 2050 – a decrease of 90% compared to today[6]. Investing in local disaster risk reduction and preparedness pays off. COP26 saw over 70 endorsements to the Principles for Locally Led Adaptation and over $540m mobilised – it is crucial that this committed money is translated into effective programmes.

Forecast based financing and anticipatory action

18.            BRC also believes that acting early before a crisis escalates, also known as anticipatory action, is crucial for reducing the humanitarian impacts of disasters, including extreme weather events and climate or conflict induced food insecurity. This involves responding to early warnings by taking steps to protect people before a predicted disaster strikes, rather than investing primarily in humanitarian responses after disasters happen. This enables preparation, lessening the extent to which impacts are felt and therefore reducing the number of people at risk of being pushed below the poverty line when the disaster strikes.

19.            Forecast Based Action is the IFRC’s dedicated funding mechanism for anticipatory action, as part of the Disaster Relief Emergency Fund (DREF). Based on forecasting and risk analysis, it releases money automatically for pre-agreed hazard preparation activities once pre-defined forecast thresholds or ‘triggers’ are met. During 2020, 75 National Societies received DREF allocations for 109 anticipatory operations reaching 80,000 people, totalling CHF 32 million. 80,000 people were reached by anticipatory humanitarian support through the activation of six Early Action Protocols[7].

20.            The effectiveness of anticipatory action at preventing natural disasters from worsening extreme poverty is clearly demonstrated by the work of the Mongolian Early Action Protocol. In December 2020, the annual Dzud risk map indicated that more than 60% of the country was at high risk of suffering extreme weather. In response, the Mongolian Red Cross was able to target 2,000 herder households with unrestricted cash assistance and livestock nutrition kits 1 month before temperatures were expected to drop to their lowest. Supported herders were able to reduce the mortality of horses, their most valuable animals, by approximately 50% compared to households who did not receive the intervention, actually entirely negating the need for any money to be released by the DREF[8].

21.            According to the Risk Informed Early Action Partnership (REAP), early action will make 1 billion people safer from disaster by 2025[9]. An estimated half of all today’s crises are somewhat predictable and 20% are highly predictable, and early warning systems are already available in many areas. However, less than 1% of the financing for crises is pre-arranged,[10] severely limiting the ability of early warning to be translated into early action. The G7 Famine Prevention and Humanitarian Crisis Compact, for example, is a step in the right direction to assist communities that are at a tipping point of experiencing a crisis that may exacerbate poverty[11]. The FCDO must continue to support actors to preposition, act and invest pre-emptively[12], rather than simply reactively, to reduce the extent to which crises worsen extreme poverty and increase vulnerabilities.