2003 Southern Africa

Guide to Financial Management

2003 Southern Africa

Case Study - 2003 Southern Africa

Resource Allocation by the UK’s Major Humanitarian Agencies

This extract is taken from “A Stitch in Time? Independent Evaluation of the Disasters Emergency Committee’s Southern Africa Crisis Appeal July 2002 to June 2003”. The full report is available from Valid International.

A6.08 Resource allocation

Allocating limited resources to different activities is the most strategic financial management decision that member agencies face. It is a central part of how an organisation decides what it will do to achieve its objectives.

A6.08.1 The scale of agencies’ resources

  • DEC member agencies combined spend on disaster response programmes in the region over the period mid 2002 to mid 2003 was expected to be approximately £264m. In comparison, the national budget of Malawi in 1999 was £308m . The UN’s total regional spend on disaster response programmes in the region over the same period was approximately £263m .
  • Both individually and, more importantly, collectively the DEC agencies spent a level of financial resources that had a very major impact on the overall response of the international community to the crisis in Southern Africa.
  • Agencies do not have a free hand when it comes to resource allocation. Institutional donors generally put restrictions on the use of the funds they provide. In particular, a significant amount of UN funds were routed through NGOs including the DEC agencies. So some of the UN’s £263m will have become the DEC agencies’ £264m, and a major proportion of this is likely to have been transferred as food aid.
  • However, agencies aim to develop plans in partnership with donors to achieve their joint aims. Occasionally, agencies refuse funds from donors when they cannot reach agreement, or on a point of principle. Agencies aim to be more than sub-contractors for donors and some vigorously defend their independence.
  • In addition, there is increasing recognition that although agencies may operate according to humanitarian principles they are also significant political and economic actors . There are many documented examples of how inappropriate external interventions have had detrimental effects for local people. The scale of intervention brings an important responsibility to ensure that any detrimental effects are identified and minimised.

A6.08.2 Resource Allocation

All agencies made decisions about how much they would spend on which activities in which locations. As shown in figure 3, agencies allocated most of their DEC expenditure to agricultural recovery, supplementary feeding and distributing general food aid.

During humanitarian programmes, decisions about how to allocate limited resources are always made under great pressure. Agencies have an overwhelming moral and legal obligation to ensure that they provide appropriate assistance to as many people as possible. Important decisions about programme design have to be taken very quickly, often with only limited information.

During this crisis, agencies took a pragmatic approach to allocating the resources available from the DEC. The factors that influenced their decisions included:

  • Where they were already working,
  • National and field level assessments,
  • Previous experience of managing different activities,
  • The capacity of field offices and partners to handle funds,
  • Local political conditions,
  • The availability of funds from other donors,
  • The activities of other agencies and donors,
  • Recommendations of partners and field staff,
  • Others.

In general agencies appear to have taken an unstructured and often informal approach to balancing these complex and competing factors.

A recent review of resource allocation in the Southern Africa crisis by the UK based Overseas Development Institute (ODI) noted that: ‘There is much to suggest that how an organisation comes to a decision to intervene, with certain resources, prioritising certain sectors, within a particular geographic scope … is only partially based on an assessment of needs’.

The ODI review concluded that the process by which agencies and donors decided to respond to the crisis ‘lacks transparency’ and that ‘the criteria for intervention are unclear’.

DEC agencies also lacked transparency over how they allocated their resources. It was not obvious that they had taken a systematic approach to allocating their resources so as to maximise their short and long term impact.

There was no evidence that agencies had systematically reviewed the potential negative impacts of their interventions.

This pragmatic approach is at odds with Principle 2 of the Red Cross Code of Conduct which states that ‘aid priorities are calculated on the basis of need alone’.

A6.08.3 Cost Effectiveness

It is always very difficult to compare the cost effectiveness of different activities. Many factors vary between agencies, communities and humanitarian needs. However, given that the level of need continues to dwarf the resources available to meet it, all agencies have a responsibility to maximise their cost effectiveness.

The following examples show different practices:
 

Tearfund's inputs for assets programme

 In Malawi, people were given agricultural inputs (seeds and fertilisers) in return for work on community assets. In this case, the assets were roads.

  • The project was implemented by a local partner organisation Evangelical Baptist Church of Malawi (EBCM) supported by another local organisation, Emmanual International (EI). Both worked with community committees and Traditional Authorities. They also both had an existing relationship with Tearfund.
  • The project cost £152k. Costs were kept low. For instance, field monitors travelled by bicycle. No additional senior staff were recruited for the programme.
  • Beneficiaries received 50kg of fertiliser and 10kg of maize seed for one kilometre of road work. This is enough to make a major difference to the agricultural performance of a small holding, helping a family to grow food for consumption or sale for one season.
  • 8,160 people received agricultural inputs; 7,650 for completing work on the roads and 510 very vulnerable members of the local community who received inputs without working. In addition, the project rehabilitated 102 kms of roads.

This intervention was cheap, with an average cost per household of £19; it built on local capacities; it provided beneficiaries with medium term assets in return for dignified work; and it rehabilitated a crucial community asset

ActionAid’s regional advocacy work

  • ActionAid carried out a range of advocacy activities including identifying working arrangements with regional inter-governmental structures to legitimise civil society contribution to food security policy review in member countries.

This is a highly appropriate intervention which addresses the fundamental issue of national policy making, one of the most important long term causes of the crisis.


Distrubution of agricultural inputs

A DEC member agency funded partner organisations to distribute agricultural inputs to vulnerable farming families in Malawi.

  • 70,595 beneficiaries were reached at a cost of £613k, partly funded using DEC funds. This gives an average cost of £9 per family to increase the chance of a good harvest in the 2003 season.
  • The package distributed was on average approximately10kg fertiliser, 2kg maize seed and just over 1kg of bean or groundnut seed. This is smaller than some other agencies. packages. But it complemented the government’s Targeted Inputs Programme and had the advantage of allowing wider coverage. The agricultural inputs were distributed alongside food aid, so people had the energy to use them.
  • Partners worked with community committees and extension workers from the Ministry of Agriculture.
  • Costs were kept low and partners were supported to build their capacity to run the programme.

The intervention would have been a highly cost-effective way of helping communities to build up medium-term assets. However, a significant proportion of the maize distributed was attacked by weevils, which diminished the use of the inputs distributed.


Distribution of food aid in Western Zambia

A DEC member agency set up a trucking operation to transport food aid to inaccessible beneficiary communities in Western Zambia

  • The programme was based on assumptions about beneficiaries' needs and WFP’s activities that unfolding events negated. It was planned in collaboration with WFP and provided the agency with the benefit of enhanced access to WFP’s decision makers.
  • The output of the programme was that a total of 3,222 tonnes of maize were transported an average of approximately 100 kms during the Disaster Response Programme.
  • There were no established roads in this remote area. Specialist 4x4 trucks were required and no commercial trucking operations were available.
  • The direct cost of the operation was £514k. It is estimated that an additional £128k of support costs should be allocated to this activity. The operation included purchasing and servicing 10 trucks. It is expected that the trucks will be resold, recouping approximately £200k. This brings the adjusted cost to £442k.
  • Very significant sums were spent on ex-pat staff, staff support costs and capital items (including sat phones and vehicles apart from the trucks).

This gives a cost per km tonne of £1.37 which is exceptionally high compared to commercial trucking operations. The programme was focused on emergency food aid and did not provide any long term support to beneficiaries.


Supplementary feeding progarmme in Zambia

A DEC member agency carried out a supplementary feeding programme for orphans, vulnerable children and pregnant and lactating mothers in Zambia.

  • A total of approximately 10,000 beneficiaries received a monthly ration of high energy food, oil, sugar and drink from local health clinics. The total cost was £371k - an average of approximately £37 per beneficiary.
  • The programme was intended to run from Nov 2002 to May 2003, covering the acute need caused by the hungry season. However operational issues (such as procurement and recruitment difficulties) delayed implementation. The programme ran from February 2003 to October 2003. The hungry season ended in approximately April.

The programme was designed as an emergency response to an acute health crisis. As such, it was inappropriate for the operating context. For instance, targeting was carried out on the basis of anthropometric indicators and did not include social factors. The programme did not provide any medium or long term support to beneficiaries.

 

Conclusions

  • All of these activities helped to provide food, assets and a political voice to poor people who were facing hunger.
  • However, some of them clearly achieved a much higher level of cost-effectiveness than others. Some of them also had a much greater long term impact for beneficiaries than others. Only one of them addressed the long term causes of the crisis.
  • In general, agencies which relied on rapid scale-up, employing new staff (particularly ex-pats) and developing new professional relationships particularly struggled to limit costs and to maximise longer term impact.
  • Those which had a longer term presence and an established understanding of the local environment were able to achieve a great deal more.