The following post is a part of a series that discusses 'managing risk for development,' the theme of the World Bank’s upcoming World Development Report 2014.
Despite more than 19 episodes of severe food shortage in Ethiopia since 1895, it was the dramatic images of famines in 1972 and 1984 which came to the world’s attention and (wrongly) made Ethiopia synonymous with drought and famine. Despite consistent food shortages in Ethiopia for decades, it only became clear in the run-up to the 2002/3 drought that, while the humanitarian system appeared to be saving lives, it was proving to be ineffective in saving livelihoods and managing risks effectively. In essence, rural Ethiopians had faced chronic food insecurity for decades, but were receiving ‘treatment’ for transitory food insecurity. In part as a result of this misdiagnosis, rural Ethiopians were becoming increasingly less resilient to drought and were unable to manage risks effectively. This realization prompted the birth of the Productive Safety Net Programme (PSNP).
The PSNP is the largest safety net in Africa, outside of South Africa. It is run by the Ethiopian Government with support by no less than ten development partners: Canada, Denmark, European Commission, Ireland, Netherlands, Sweden, UK, USA, the World Food Program, and the World Bank.
The PSNP provides cash or food to people who have predictable food needs in a way that enables them to improve their own livelihoods and manage risks today – and therefore become more resilient to the effects of shocks in the future. Independent studies have shown that the PSNP has reversed the pre-2005 trend of decade-on-decade deterioration in livelihoods. The PSNP has shown that providing timely and predictable assistance enables households to manage risk more effectively by preventing costly coping strategies such as sale of vital assets that worsens future food insecurity. The PSNP both protects households from food insecurity and allows them to use their resources more flexibly to smooth out consumption.
However, while the PSNP responds to the chronic food insecurity of households, there are times when a shock results in some households – whether within the PSNP or not - facing transitory food insecurity and requiring additional temporary support. In these instances, the PSNP has dedicated Contingency Budgets, designed to meet transitory needs. However, if a shock is too large, the PSNP’s contingency funds can be exhausted before all the transitory needs are met. When the contingency funds are exhausted, the Risk Financing Mechanism (RFM) is designed to address these needs. The RFM is an instrument that allows the PSNP to scale up in times of transitory crisis, in those districts where it is already operational. In particular, the RFM was designed to reduce the ‘typical’ humanitarian timeline for response, so that households would receive assistance before the crisis was felt.
In this way, the PNSP can expand and respond as the situation requires. The programme can address predictable food needs through usual PSNP operations, can address low-level transitory needs caused by moderate shocks through contingency funds and can address higher levels of transitory needs through the RFM.
In order for the RFM to function correctly, four conditions need to be fulfilled:
- Early Warning: Effective early warning systems need to be in place to indicate the need for a response as early as possible.
- Contingency Plans: Plans need to be put in place so that when a shock is indicated, key actors know how to respond.
- Contingency Financing: Resources need to be available to avoid the major time delays associated with the humanitarian appeal process.
- Institutions and Capacity: Institutional arrangements and capacity need to be in place to allow plans to be implemented.
By putting in place effective early warning systems, contingency financing, contingency plans and institutional capacity ahead of the crisis, the ‘typical’ timeline for humanitarian response can be significantly reduced, from 8-9 months to 2 months, as was the case in 2011, when the Horn of Africa was affected by the largest drought in 60 years. In August 2011, Ethiopia used RFM to address the transitory food needs of approx. 9.6 million drought-affected people.
Addressing transitory food insecurity in addition to chronic food insecurity is integral to the transition from relief to development in Ethiopia. With increased vulnerability as a result of climate change, the capacity of communities and Government to manage risks – already being built by the PSNP – is becoming increasingly important.
The RFM is the largest current example of risk insurance in a humanitarian context in Africa - and the 2011 experience shows that it works. A clear precedent has been set. The RFM can of course be improved - but it can also be copied by other countries. Copying the model implies a paradigm shift for how the humanitarian community looks at slow-onset humanitarian crises. The key question then becomes: is the antiquated and under-performing humanitarian system ready and willing to reform?
The PSNP model (or parts of it) is being replicated in other countries in sub-Saharan Africa to great effect, including in Tanzania, Rwanda, Malawi, and others. Insofar as the author is aware, the RFM has not been rolled out to other countries yet, although discussions are taking place in a number of countries.