This October, Marketlinks Explores Private Sector Engagement in Fragile and Conflict-Affected Settings

This post is authored by Laura Meissner of USAID's Bureau for Humanitarian Assistance (BHA) and the University of Arizona and Emmanuel Nouga-Ngog of USAID's BHA.

Happy October! This month, Marketlinks is exploring private sector engagement in fragile and conflict-affected settings. This topic is especially pressing given that humanitarian needs have risen dramatically in recent years, up to an estimated $35 billion in 2021, and donor funding cannot keep pace. A record 48 million people have been displaced due to conflict and violence in 59 countries and territories, according to the Internal Displacement Monitoring Centre. The increasing scale, length, and frequency of disasters and conflicts around the world means that humanitarian actors alone can no longer address the complex needs of crisis-affected people. At the same time, the private sector has long been a major source of funding for and the engine of job growth. Official assistance to lower-income countries is dwarfed by private flows, and nine out of ten jobs in the developing world are created by the private sector.

Partnering with the private sector to adopt context-sensitive, market-based approaches, scale them for impact, and foster innovation is one way USAID supports countries and communities to meet the needs of crisis-affected people, support resilience, and close the gap between needs and resources. Companies and humanitarians may face similar challenges working in fragile environments, including ensuring last-mile delivery, challenges related to infrastructure and telecommunications, and employee safety. Addressing these challenges requires new ways of thinking and problem solving.

The COVID-19 pandemic has highlighted the tight connection between business and society. Large-scale societal problems, which some have traditionally regarded as outside the purview of business, cannot be ignored and must be engaged with. Simply put, the pandemic has demonstrated that companies cannot simply disconnect from communities. Society depends on well-functioning companies to meet people’s most basic needs — for food, shelter, communication, and transportation, among others. Companies cannot be viewed as existing solely to maximize returns to shareholders. This provides tremendous opportunities for USAID and the donor community to adapt their approaches to reflect this paradigm shift. 

USAID’s Bureau for Humanitarian Assistance (BHA) is hosting this month’s Marketlinks webinar. USAID’s Private Sector Engagement Policy, released in 2018, aimed to promote “private-sector engagement as a core tenet of USAID’s operating model,” and in line with USAID’s transformation and reorganization over the past two years. USAID aspires to institutionalize PSE as a way of working to, among other benefits, leverage “the private sector’s expertise, resources, and investment in addressing development challenges.” For BHA, focused on response, recovery, and resilience in humanitarian contexts, adopting PSE as a core way of working will, hopefully, “drive increasingly effective humanitarian responses that incorporate innovative practices and systems to complement existing capacities during all phases of responding to disasters and crises.” 

The private sector is already significantly involved in humanitarian assistance. Companies provide goods and services, generate employment, possess unique expertise and networks, and collectively contribute funding on par with USAID. From 2014 to 2020, USAID provided $33.8 billion in combined humanitarian assistance funding. By comparison, the global private sector contributed around $41 billion in humanitarian assistance during this time. Private sector actors also play a critical role in providing jobs and incomes.

Yet, the risks and constraints of working in fragile contexts require testing and scaling up creative solutions. For example, through Creating Hope in Conflict: A Humanitarian Grand Challenge, USAID/BHA established a $32.5 million investment fund that seeks to attract private investment towards humanitarian outcomes by providing seed money and transition-to-scale funding for innovative solutions that address complex humanitarian challenges in conflict settings.  Since February 2018, USAID’s seed funding has supported 52 innovative and market-based proofs-of-concept in 23 countries, which can be brought to scale with private capital. In addition, the USAID/BHA-funded Defining and Driving Innovative Finance Project, implemented by the International Rescue Committee (IRC), is contributing to the field of innovative finance through a mapping of innovative financing and pilot project designs to implement innovative financing in conflict-affected areas. Finally, BHA is also partnering with the World Economic Forum Humanitarian and Resilience Investing Initiative’s High-Level Group, which brings together investors, corporations, donors, humanitarian organizations, and development finance institutions to build new partnerships that catalyze the development of the humanitarian and resilience investing ecosystem in fragile and conflict-affected settings. 

This month, we’ll be presenting several blog posts and a webinar, as well as hopefully stimulating a rich conversation among members of our Marketlinks community. For donors, we hope you’ll share your own experiences and come away with the courage and know-how about how and when to work with the private sector, especially local actors, in challenging contexts. For implementing partners, we hope our highlighted speakers will give you practical advice to apply in your own projects, and that you’ll share your own challenges and insights. Researchers may come away with ideas for study around different models, different contexts, or measuring the outcomes of using the  local private sector. For private-sector partners, especially small businesses, we hope you’ll come away with new ideas about how to engage with USAID and its implementing partners — and that you’ll share candidly with us what we do, and don’t, understand about what it’s like to operate in challenging contexts. 

Join us! 

Join the conversation throughout October! Sign up for our October 27 webinar on engaging the private sector in fragile and conflict-affected environments with lessons learned from Haiti and Eastern DRC. Submit a blog post about your experiences, comment on our pieces and respond to others, and link to or retweet us sharing your own perspectives. If you have resources or work you’d like to share with the community, get in touch with us at info@marketlinks.org. 

In the meantime, check out these resources: 

• Private Sector Engagement | Work With USAID
• Primer on Private Sector Engagement in Fragile and Conflict-Affected Situations
• Private Sector Engagement in Complex Emergencies: Case Studies from Yemen and Southern Somalia

• Blended Finance in Fragile Contexts (OECD)
• Business Environment Reforms in FCAS (DCED)
• A Seat at the Table: Capacities and Limitations of Private Sector Peacebuilding
• Private Sector Peacebuilding: Review of Past Cases and Lessons Learned
• IFC: Private Sector Initiatives in Forced Displacement Contexts: Constraints and Opportunities for Market-Based Approaches (2021)
• Private Sector Engagement in Complex Emergencies. Case Studies from Yemen and Southern Somalia (2017)