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Global Humanitarian Assistance Report 2021: Chapter 2

Humanitarian and wider crisis financing

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Summary

In 2020, global humanitarian needs grew faster than ever, as the Covid-19 pandemic compounded pre-existing and protracted humanitarian crises and sent shockwaves through the global economy.

This chapter highlights key trends in international humanitarian assistance and its sufficiency to meet growing needs. It then analyses how anticipatory approaches and wider development finance provided by multilateral development banks to countries experiencing crisis are contributing to addressing longer-term needs and improved efficiency of responses.

In 2020, total international humanitarian assistance plateaued at US$30.9 billion, despite escalating levels of need. There was significant variation between governments but, overall, contributions from public donors flatlined, reflecting shifting and competing domestic priorities as well as the wider economic implications of the Covid-19 pandemic.

The failure to materially increase humanitarian assistance has serious implications for countries in crisis. As an indication of overall levels of need, analysis of UN-coordinated appeals shows that humanitarian assistance requirements grew quicker than ever before in 2020, increasing by 27% compared to 2019 and totalling a record US$38.8 billion. There were 19 new appeals in 2020, bringing the total to 55, including US$9.5 billion in appeal requirements specifically to address the impacts of Covid-19.

Despite this substantial increase in humanitarian need, funding of appeals fell far short of targets. In total, the proportion of requirements met fell to a record low (52%), resulting in a shortfall of US$18.8 billion. Funding for the Global Humanitarian Response Plan for Covid-19 fell even further short, with just 40% (US$3.8 billion) of the target met.

Within this context of growing humanitarian funding gaps, escalating needs and the failure to address underlying drivers of crisis in many countries experiencing protracted crisis, wider development finance to countries experiencing crisis is key. Multilateral development banks (MDBs) have become increasingly active in crisis contexts in recent years, with volumes of official development assistance (ODA) from MDBs to countries experiencing crisis doubling since 2014 to over US$10.7 billion in 2019. The type of ODA has also changed, with an increasing proportion of ODA to countries experiencing crisis being delivered as loans rather than as grants.

The response to the Covid-19 pandemic has illustrated weaknesses in current approaches to crisis financing, with finance often found only after a disaster strikes, and where disbursements can be slow, poorly coordinated and therefore inequitable. Anticipatory finance seeks to address this through pre-agreed funding and release protocols. Despite some promising pilots, however, this is yet to be fully mainstreamed along with the necessary mechanisms to track funding.

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International humanitarian assistance

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Figure 2.1: International humanitarian assistance plateaued, despite escalating levels of need in 2020

International humanitarian assistance, 2016–2020

Figure 2.1: International humanitarian assistance plateaued, despite escalating levels of need in 2020
2016 2017 2018 2019 2020
Governments and EU institutions (US$ billions) 21.8 22.7 25.1 24.1 24.1
Private (US$ billions) 5.2 5.6 6.2 6.8 6.7
Total (US$ billions) 27.1 28.3 31.3 30.8 30.9

Source: Development Initiatives based on Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC), UN Office for the Coordination of Humanitarian Affairs (OCHA) Financial Tracking Service, UN Central Emergency Response Fund (CERF) and our unique dataset for private contributions.

Notes: Figures for 2020 are preliminary estimates. Totals for previous years differ from those reported in previous Global Humanitarian Assistance reports due to deflation and updated data and methodology (see our online ‘Methodology and definitions’, Chapter 5). Data is in constant 2019 prices.

Despite the increased levels of need in 2020, growth of international humanitarian assistance has stalled. Funding from public donors flatlined, reflecting shifting domestic priorities and the wider economic implications of the Covid-19 pandemic. Estimated contributions from private donors also failed to increase.

  • In 2020, total international humanitarian assistance from governments and EU institutions and estimated contributions from private donors was US$30.9 billion, similar to 2019 levels.
  • Funding from governments and EU institutions stagnated from 2019, standing at US$24.1 billion in 2020. This followed a large fall of US$1.0 billion in 2019.
  • Volumes of international humanitarian assistance had been steadily increasing in the years 2012 to 2018, peaking in 2018 at US$31.3 billion. Between 2012 and 2018, funding grew on average by 12% per year.
  • Estimated funding from private donors also stalled in 2020, amounting to US$6.7 billion. This plateauing follows increased growth in 2018 (up 10.8% from the previous year) and 2019 (up 9.2%).
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Volumes of assistance compared with appeal requirements

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Figure 2.2: The appeals funding gap grew faster than ever in 2020 as Covid-19 response requirements increased overall need

Funding and unmet requirements, UN-coordinated appeals, 2011–2020

Figure 2.2: The appeals funding gap grew faster than ever in 2020 as Covid-19 response requirements increased overall need
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Funding for Covid-19 response (US$ billions) 3.8
Other funding (US$ billions) 5.9 6.4 8.5 12.6 11.0 13.4 16.4 17.4 19.3 16.2
Unmet requirements for Covid-19 response (US$ billions) 5.7
Other unmet requirements (US$ billions) 3.5 4.1 4.6 8.0 9.3 8.9 10.9 11.7 11.1 13.1
Total requirements (US$ billions) 9.5 10.5 13.2 20.6 20.4 22.3 27.3 29.1 30.4 38.8
% of requirements met 63% 61% 65% 61% 54% 60% 60% 60% 64% 52%

Source: Development Initiatives based on UN OCHA FTS and UNHCR data.

Notes: Data from 2012 onwards includes regional response plans for Afghanistan, Burundi, CAR, DRC, Nigeria, South Sudan, Syria and Yemen, as well as Regional Refugee and Migrant Response Plans for Europe and for Refugees and Migrants from Venezuela coordinated and tracked by UNHCR. Data is in current prices and was last updated on 27 April 2021. Totals for 2020 include Syria Regional Refugee and Resilience Plan updates as of 21 February 2021. Totals for Covid-19 response include funding reported under the Covid-19 Global Humanitarian Response Plan and intersectoral plans with a Covid-19 component, and exclude funding for Covid-19 response reported outside an appeal plan.

UN-coordinated appeals provide a summary of funding required by UN agencies and non-governmental organisations (NGOs) to meet humanitarian need in major crises. The aim of the coordinated appeals process is to facilitate a strategic approach to financing the humanitarian response.

In 2020, the impacts of the Covid-19 pandemic compounded existing crises, particularly in protracted crisis contexts, resulting in a significant increase in requirements for humanitarian assistance. Despite this, the shortfall in appeal funding grew more quickly than ever in 2020 and, for the first time in five years, funding fell for requirements not related to the Covid-19 pandemic.

  • A total of US$38.8 billion was requested through UN-coordinated appeals in 2020, of which US$9.5 billion was to address the impacts of the Covid-19 pandemic through the Global Humanitarian Response Plan (GHRP).
  • The number of UN-coordinated appeals grew to 55 in 2020, a notable increase from 36 in 2019. This included 23 appeals which were specifically for the Covid-19 response and had no additional humanitarian assistance requirements, of which 3 were global appeal envelopes.
  • An increasing proportion of country appeals are for countries experiencing protracted crisis (that is countries with five or more years of UN-coordinated appeals – see our online ‘Methodology and definitions’, Chapter 5). Of the 45 individual country appeals, 31 (69%) were in countries experiencing protracted crisis.

Growth in appeal requirements

Appeal requirements grew faster than ever in 2020. While targets for humanitarian assistance not related to Covid-19 fell slightly, the additional need caused by the pandemic significantly impacted overall appeal requirements.

  • Total appeal requirements grew for the fifth consecutive year in 2020 and were 27% (US$8.4 billion) higher than in 2019 as a result of the additional funding required to mitigate the impacts of the Covid-19 pandemic. This represents the highest rate of growth since 2014, when the Ebola outbreak and conflicts in Syria, South Sudan and Iraq drove up requirements, and was significantly greater than growth in 2018 (7%) and 2019 (5%).
  • Funding requested through UN appeals has increased year on year: appeal requirements in 2020 almost doubled (90% higher) from 2015 (a rise of US$18.4 billion) and were over four times higher (310%) than requirements in 2011 (a rise of US$29.3 billion).
  • The highest appeal targets in 2020 were for the Syria Regional Refugee and Resilience Plan (3RP) (US$6.0 billion), the Syria Humanitarian Response Plan (HRP) (US$3.8 billion) and the Yemen HRP (US$3.4 billion). Requirements increased for the Syria appeals: the Syria 3RP grew by 11% from US$5.4 billion in 2019, while the Syria HRP grew by 16% from US$3.3 billion the previous year. In contrast, the Yemen HRP appeal requirements fell by 19% in 2020, from US$4.2 billion in 2019.
  • In 2020 there was one new HRP for Colombia, totalling US$493.6 million (including Covid-19 response requirements). There were also new flash appeals in Lesotho, Djibouti, Lebanon and Cabo Delgado Province in Mozambique, and a new humanitarian appeal in Zambia. Madagascar was the only country with an appeal in 2019 but not in 2020.
  • In 2020, most appeal requirements for countries experiencing protracted crisis increased, on average by 39%. The largest increases in appeal requirements for countries experiencing protracted crisis in 2020 compared to 2019 were for Haiti, where appeal requirements reached US$472.0 million in 2020 (274% increase) and Burkina Faso, where appeal requirements reached US$424.3 million (127% increase).

Requirements related to Covid-19

To address the impacts of the Covid-19 pandemic, the GHRP was launched in March 2020. As an umbrella appeal, the GHRP consisted of 44 individual country appeals, 7 regional Covid-19 response appeals and 3 global funding appeals. Of the total GHRP appeal target (US$9.5 billion), US$6.6 billion (69%) was for specific country requirements.

  • The largest GHRP targets were for the Syria regional appeal (US$758 million) and the global famine prevention appeal (US$500 million). The countries with the largest Covid-19 response funding targets were Afghanistan (US$396 million) and Yemen (US$386 million).
  • Of those countries included in the GHRP, over half (24) also had additional funding requirements through a humanitarian response plan (HRP). On average, countries with a HRP had higher Covid-19-related requirements, while targets for those countries with only a Covid-19 response appeal tended to be smaller, from US$12.0 million (Republic of Congo) to US$255.0 million (Kenya).
  • The number of countries experiencing protracted crisis has more than doubled since 2015, to 34 countries in 2020. Higher Covid-19 response appeal requirements in countries with pre-existing crises suggests they are more vulnerable to the social and economic impacts of the pandemic.
  • Despite several years with no country-specific humanitarian needs, five countries had to launch a country appeal specifically to address the impacts of Covid-19 in 2020. Three of these were already experiencing protracted crises (Bangladesh, Burkina Faso and North Korea). Furthermore, in one case (Pakistan), the humanitarian assistance required to address the impacts of Covid-19 tipped it into a state of protracted crisis.[1]

Funding commitments

Total funding commitments did not keep pace with the increase in appeal requirements. The overall volume of assistance received for requirements not related to Covid-19 fell for the first time since 2015 and, coupled with low commitments to Covid-19 appeal requirements, resulted in a larger-than-ever funding gap.

  • Despite overall levels of international assistance plateauing in 2020 (see this chapter’s section on ‘International humanitarian assistance’), assistance specifically for UN-coordinated appeals slightly increased to a record US$20.0 billion in 2020, a 3.4% increase in overall funding from 2019.
  • The sharp rise in appeal funding requirements in 2020 (27%, US$8.4 billion), however, meant that, despite more funding being contributed to UN appeals than ever before, only 52% of total requirements were met. Overall, the shortfall between requirements and funding grew in volume, increasing from US$11.1 billion in 2019 to US$18.8 billion in 2020.
  • In total, US$16.2 billion was provided for humanitarian assistance not related to Covid-19 in 2020, 55% of total appeal requirements unrelated to Covid-19. Following four years of growth, this returned funding to below 2017 levels, resulting in a shortfall of US$13.1 billion.
  • Total volumes of funding to countries in protracted crises grew only fractionally in 2020, by 0.4% to US$14.3 billion. As a result, the overall proportion of requirements met fell to 57% in 2020, compared to 70% coverage in 2019, leaving a shortfall of US$10.9 billion.

Funding for needs related to Covid-19 fell further short of appeal targets than funding for other appeal requirements.

  • In total, US$3.8 billion of funding was received for the GHRP in 2020, 40% of total requirements.
  • The funding shortfall for the GHRP was US$5.7 billion. Within the specific appeals, the highest volumes of funding received were for the Global Operational Support Covid-19 appeal (US$289.0 million, 77%) and the Yemen appeal (US$271 million, 70%).

The levels of funding and coverage varied widely between individual appeals. On average however, most appeals received less than half the total funding requested.

  • Of the 55 appeals (for Covid-19 and other needs) in 2020, only 7 received 75% or more of funding required. The number of appeals with less than a quarter of funding requirements met considerably worsened in 2020, with 17 appeals (31%) receiving less than 25% coverage. In comparison, between 2016 and 2018, an average of 10% of appeals received less than a quarter of requirements and, in 2019, no appeals were funded less than 25%.
  • In general, countries experiencing protracted crises with larger appeals were better funded than those with smaller appeals in 2020. Countries experiencing protracted crisis with appeal targets of over US$1.0 billion were covered on average at 57%, while countries with targets of under US$250 million had an average coverage of 40%.
  • The appeals that received the highest amount of funding were for the Syria 3RP (US$3.2 billion, 53% of total requirements), the Syria HRP (US$2.2 billion, 59%) and the Yemen HRP (US$1.9 billion, 56%).
  • The proportion of total requirements met in 2020 ranged from 100% for the Cabo Delgado Province Mozambique appeal, to 7% for the DRC RRP.[2]
  • Within the GHRP, the highest volumes of funding reported against a specific activity or country response plan in 2020 were for the Global Operational Support Covid-19 appeal (US$289.0 million, 77% of total requirements) and the Yemen appeal (US$270.5 million, 70%).
  • The GHRP appeals with the highest coverage were for Niger (92%) and Mozambique (91%). The most poorly funded GHRP appeals were for the Horn of Africa and Yemen RRP (1%) and the global NGO Covid-19 envelope appeal (2%).

Funding outside appeals

UN-coordinated appeals do not represent all identified humanitarian needs and funding, particularly as not all countries and crises have a UN-coordinated response. Significant funding is therefore provided outside appeals. Analysis of the funding reported outside UN-coordinated appeals can provide a proxy for the extent of humanitarian coordination.

  • Funding provided outside appeals is decreasing over time. Analysis of funding reported to UN OCHA’s Financial Tracking Service (FTS) shows that the amount of international humanitarian assistance captured through appeals has increased from over a third of total funding (38%) in 2011, to more than two thirds (68%) in 2017, decreasing slightly to 65% in 2020.
  • This pattern of declining funding outside appeals is seen in the largest recipients of international humanitarian assistance. Countries with a UN-coordinated appeal received the majority of funding (80%) through those appeals in 2020. Funding outside appeals in the largest crises predominantly flowed to Red Cross Red Crescent organisations, as well as contributions to UN agencies, NGOs and some private sector companies.
  • On the other hand, volumes of funding outside appeals to smaller recipients of international humanitarian assistance (receiving less than US$40 million) has increased. In 2020, the vast majority of funding (85%) reported to smaller country recipients was reported without appeal information. This represents more than double the amount reported to the same group of recipients in 2019 – from US$421.1 million in 2019 to US$1.1 billion in 2020 – although it is a similar proportion.
  • In 2020, four countries without a UN-coordinated appeal received volumes of humanitarian assistance over US$40 million: Mauritania (US$73.1 million, 48% increase from 2019), Guatemala (US$55.6 million, 148% increase), Madagascar (US$45.8 million, 3% decrease) and Indonesia (US$41.7 million, 37% increase).

Red Cross appeals

The International Red Cross and Red Crescent Movement (RCRC) sets out its requirements separately from the UN-coordinated appeals. In 2020, the International Federation of Red Cross and Red Crescent Societies (IFRC) appeal requirements grew sharply, reaching a record high, while the funding shortfall continued to increase. Funding to the International Committee of the Red Cross (ICRC) also slightly increased in 2020.

IFRC emergency appeals relate mostly to disasters associated with natural hazards.

  • In 2020, IFRC appeal requirements grew to over US$1 billion, a record increase of 61% from 2019 (US$630 million).
  • To meet this growing need, funding to the IFRC grew by 47%: from US$399 million in 2019 to US$584 million in 2020.
  • Despite the increase in funding received, the coverage of IFRC appeals decreased to 58% (from 63% in 2019), well below the average coverage of 74% in the years 2016 to 2020.

ICRC appeals respond mainly to conflict-related situations.

  • The ICRC received US$1.8 billion in 2020, a slight increase from 2019 (2%). Between 2016 and 2020, ICRC funding has grown every year, increasing by 21% over this period.
  • With this increase in funding, the ICRC was able to cover 87% of its US$2.1 billion appeal requirements. Since 2016, coverage has averaged 91%.
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Global development funding and the role of multilateral development banks

Crises are becoming longer-term in nature, with needs too great for the humanitarian sector alone to finance. With the growing concentration of poverty in countries affected by crisis, the role of wider development actors is increasingly important in addressing the underlying causes of crisis and lifting people out of poverty.

There is a growing commitment around the need to strengthen synergies between humanitarian, development and peace action, including around crisis financing. Recent research conducted by Development Initiatives, ‘Development actors at the nexus: lessons from crises in Bangladesh, Cameroon and Somalia’,[3] found that, while there are examples of increasing collaboration in protracted crises, this is not yet systematic. There is a need to ensure that crisis financing is coherent with broader development financing strategies, recognising the differing mandates of development actors and reconciling development finance with humanitarian action. Indeed, while humanitarian assistance is a critical resource for responding to the immediate needs of people affected by crisis, overall volumes of developmental ODA to countries experiencing crisis are larger.

  • Countries experiencing crisis receive substantially more development funding than humanitarian funding, although humanitarian assistance is growing more quickly. Total official development assistance (ODA) to countries experiencing crisis has scaled up in the past decade, from 47% of total country-allocable ODA (US$51 billion) in 2010 to 65% (US$94 billion) in 2019.
  • Most ODA to countries experiencing crisis has been development financing, although the proportion of ODA reported as humanitarian assistance has doubled, from 15% (US$7.6 billion) in 2010 to 29% (US$27.2 billion) in 2019.
  • Total volumes of ODA to countries experiencing protracted crisis (with five or more years of UN-coordinated appeals – see our online ‘Methodology and definitions’, Chapter 5) have grown much faster than ODA to countries in other crisis and non-crisis contexts over the last decade.
  • The proportion of total country-allocable ODA to countries experiencing protracted crisis has grown from 21% (US$22 billion) in 2010 to 52% (US$75 billion) in 2019. While development assistance makes up the majority of ODA, countries experiencing protracted crisis have a higher proportion of humanitarian assistance (33% in 2019).

While developmental ODA to crisis-affected countries has increased, the extent to which this funding is targeting crisis-affected populations is unclear due to a lack of data (see Box 2.1, Issues and challenges of tracking ODA financing in crisis contexts). This information gap poses challenges to the coordination and coherence of humanitarian and other financing in crisis contexts.

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Figure 2.3: Lending from multilateral development banks to countries in humanitarian crisis is increasing

ODA from multilateral development banks to the 20 largest recipients of humanitarian assistance, 2010–2019

Figure 2.3: Lending from multilateral development banks to countries in humanitarian crisis is increasing
Year ODA loans (US$ billions) ODA grants (US$ billions) Total (US$ billions)
2010 3.4 2.3 5.7
2011 2.7 1.7 4.4
2012 2.1 1.4 3.5
2013 3.8 1.7 5.5
2014 4.1 1.3 5.4
2015 4.6 1.1 5.8
2016 4.9 1.1 6.0
2017 7.8 0.8 8.6
2018 8.0 0.8 8.8
2019 9.3 1.4 10.7

Source: Development Initiatives based on OECD DAC CRS.

Notes: Data is in constant 2019 prices. Humanitarian assistance ODA is that reported under the CRS purpose codes: 720 Emergency response; 730 Reconstruction, relief and rehabilitation; and 740 Disaster prevention and preparedness. The top 20 recipients of humanitarian assistance vary each year. Totals include ODA grants and ODA loans from multilateral development banks that report their funding to the OECD DAC CRS.

Multilateral development banks (MDBs) have become increasingly active in crisis contexts, channelling growing volumes of ODA to countries experiencing crisis.

  • MDB ODA disbursements to the annual largest 20 humanitarian recipients have doubled since 2014, from US$5.4 billion to over US$10.7 billion in 2019. MDB funding to countries experiencing humanitarian crisis has accelerated quicker than total MDB ODA disbursements, which grew overall by 28% between 2014 (US$19.9 billion) and 2019 (US$25.4 billion).
  • The largest MDB donor to countries experiencing crisis is consistently the International Development Association (IDA), which disbursed 73% of total MDB ODA funding to the top 20 recipients of humanitarian assistance across the decade.
  • The largest recipient of MDB ODA from the top 20 recipients of humanitarian assistance is Ethiopia, receiving 28% of disbursements across the same period. Despite being within the top 20 for all years, Syria received less than US$5 million from MDBs over the decade – less than 0.01% of MDB disbursements to the top 20 recipients since 2010.
  • The vast majority of ODA from MDBs to countries experiencing crisis is reported as development assistance. Since 2010, humanitarian assistance as a proportion of total ODA from MDBs to the top 20 recipients of total humanitarian assistance has been below 5%, with the exception of 2011 when it reached 15% due to a single disbursement from IDA to Pakistan for earthquake recovery.

The majority of assistance from MDBs to countries experiencing crisis has been in the form of loans. In recent years, the volume of lending to crisis contexts has increased.

  • While the overall volume of ODA disbursements to the largest humanitarian recipients has increased, the share of these disbursements in the form of grants has significantly reduced. Between 2010 and 2014, grants made up an average of 35% (US$1.7 billion) of ODA disbursements by MDBs, and 14% (US$1.0 billion) from 2015 to 2019. In 2018, the volume of grants dropped to US$767 million, the lowest since the beginning of the decade, representing less than 9% of disbursements that year.
  • Meantime, total lending from MDBs to countries experiencing crisis has steadily grown over the last decade, reaching a record US$9.3 billion in 2019. This reflects overall trends in MDB disbursements: between 2010 and 2019, grant disbursements decreased by a quarter (26%) from US$5.1 billion to US$3.8 billion, while loan disbursements almost doubled (191%), from US$11.3 billion to US$21.6 billion.

Analysis of total ODA from bilateral donors mirrors this trend. While grants make up the majority of bilateral ODA, lending has steadily increased over the last decade.

  • The proportion of ODA from bilateral donors in the form of loans and equity has increased, from 14% in 2010 to a provisional 21% in 2020.

The extent to which recipients can manage this debt is important. While lending to countries in crisis may in the short term create greater fiscal space and enable governments to support humanitarian and development response to crises, it may also in the longer term be undermined through debt distress. Even before the Covid-19 pandemic, there were concerns that the growth in ODA lending was leading to a debt crisis. A decade ago, almost a quarter of low-income countries were in or at risk of debt distress, which grew to half in 2019. In the group of countries classified as ‘least developed’, debt service as a proportion of non-grant government revenue has more than doubled, from 7% of government revenue in 2020 to 21% in 2019.

Multilateral development bank financing to the Covid-19 pandemic response

Lending can provide countries experiencing crisis with access to significant volumes of financing to address immediate and longer-terms needs. The increasing engagement of MDBs in crisis contexts was reaffirmed in their response to the Covid-19 crisis, providing significant resource flows in the form of loans to countries experiencing crisis.

  • Analysis of seven international financial institutions by the Centre for Disaster Protection (CDP) identified total funding of US$120 billion as of April 2021 towards the pandemic response.[4] Of this, 95% (US$115 billion) was in the form of loans and 5% (US$5.5 billion) was grants. As a comparison, total humanitarian grants in support of the pandemic response, as reported to FTS as of 16 May 2021, totalled US$6.7 billion.
  • The IMF was the biggest contributor to the Covid-19 response in the CDP study, so far committing US$50.4 billion, 42% of total MDB support.
  • Of the total support from MDBs in response to the Covid-19 pandemic, over half (55%, US$66.1 billion) was provided to countries under the Covid-19 Global Humanitarian Response Plan (GHRP),[5] including almost three quarters (72%, US$4.0 billion) of the total grant funding provided by MDBs.
  • There is a significant degree of variation in terms of which countries covered by the GHRP received funding from MDBs as part of their Covid-19 response. Five countries received upwards of US$5.0 billion each, almost exclusively in the form of loans: Ecuador (US$9.3 billion), Egypt (US$9.3 billion), Ukraine (US$6.1 billion), Nigeria (US$5.4 billion) and the Philippines (US$5.2 billion). At the other end of the scale, five countries received no funding to date from the MDBs for Covid-19 (Libya, Iraq, Syria, Venezuela and DPR Korea), although Syria has the third-largest Covid-19 appeal.[6]

This variation in MDB funding to different countries covered by the GHRP raises questions about the extent to which MDB funding for the Covid-19 pandemic response aligns with funding needs as identified by the humanitarian sector.[7]

  • Analysis of funding provided by MDBs per capita compared with response funding requirements, for the 45 GHRP country appeals, suggests that countries with greater humanitarian funding needs might have been less likely to receive MDB funding.
  • Countries with higher humanitarian need receive less funding from MDBs for a variety of reasons including political instability and high levels of debt distress. Of the ten countries with the largest GHRP requirements in 2020, five have either high levels of debt distress or are in debt crisis, while a further four are classified as extremely fragile by the OECD States of Fragility 2020 index.
  • Given that MDB grant funding is limited, constrained ability to borrow reduces these countries’ access to MDB financing flows. As set out by the CDP, this would suggest a need to rethink international crisis financing, to ensure countries are not left behind due to their limited ability to borrow.[8]
  • Discussions are currently underway around using the IMF’s Special Drawing Rights (SDRs) to provide an additional funding boost for global recovery from the Covid-19 pandemic after the International Monetary and Finance Committee called on the International Monetary Fund (IMF) to propose a new allocation of SDRs equivalent to US$650 billion.[9]
  • New general allocations of SDRs would be distributed among the IMF’s 190 members according to each country’s IMF quota, meaning high-income countries would obtain around two thirds of those reserves.[10] As a result, there are calls for the wealthier countries (e.g. the G7) to make their share available to lower-income countries, or those suffering greater impacts on poverty levels.[11] However, the role of crisis resilience and vulnerability is unclear in discussions around allocating IMF resources to countries most in need.

While humanitarian actors and MDBs increasingly operate in similar contexts, it is important to recognise their different mandates. MDBs primarily supply long-term financing to governments and the private sector in order to boost a country’s socioeconomic development. They also support countries in times of major macroeconomic shocks to alleviate the consequences of crises, which can overlap with the mandate of traditional humanitarian actors. For instance, social protection or emergency healthcare funded by MDBs might intersect with humanitarian cash transfers and health services provided by humanitarian actors. It is important to understand how MDBs make funding decisions to crisis responses, as they did during the Covid-19 pandemic at a large scale, and for effective coordination to take place with humanitarian actors to ensure a more joined-up, equitable financing system.

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Box 2.1

Issues and challenges of tracking ODA financing in crisis contexts at national and subnational levels

There are currently significant challenges in accurately tracking the scale, purpose, and timeliness of development finance beyond national-level aggregates. While ODA flows are comprehensively tracked at a national level, more precise subnational allocations and real-time tracking of development finance flows to crisis-affected countries are not available. This is particularly problematic when tracking development finance to countries experiencing protracted crisis, where localised acute needs cannot be matched against up-to-date information on development assistance flows. This risks poor coherence and coordination with parallel humanitarian assistance flows to the same crisis-affected countries and regions.

Data on both humanitarian and development financing is comprehensively reported at only the national level. While OCHA’s Financial Tracking Service (FTS) provides curated data on humanitarian financing in real time, development finance flows to recipient countries are comprehensively reported by the OECD DAC’s Creditor Reporting System (CRS) with a year’s delay. The implications of this delay in access to up-to-date information have been exposed by the Covid-19 pandemic. Comprehensive information on the scale and targeting of development financing to countries most at risk from the impacts of the pandemic will not be known until early 2022.

The International Aid Transparency Initiative (IATI) fills an important gap in development finance tracking with detailed, real-time data published by many, though not yet all, leading donors and implementing agencies. Data on subnational allocations of development finance can also be voluntarily published to IATI and some national aid management systems. Encouragingly, based on 2020 reporting to IATI, 60% of country-allocable disbursements to countries experiencing protracted crisis contained subnational location information; and 75% of disbursements contained this information for other countries. However, in many cases, location information was limited to the capital or principal city, rather than providing accurate subnational information on where spending was directed. Continuing to improve publishing to IATI, including ensuring that reporting is more consistent and complete for disbursements to countries experiencing crisis, needs to be a priority for donors and implementing agencies.

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Anticipatory approaches to crisis financing

The impacts of the Covid-19 pandemic have revealed weaknesses in the current international financing system, with reactive and often slow disbursements of funding in response to urgent humanitarian needs. Pre-arranged funding, such as anticipatory finance triggered by pre-agreed protocols, seeks to address this. Even though pilots of anticipatory action have increased in number and volume of funding, this and other forms of pre-arranged funding are yet to be scaled up and remain a small proportion of total crisis financing.

Analysis of financing from multilateral development banks (MDBs) for the Covid-19 response by the CDP found that only 2% of total funding came from pre-agreed financing.[12] This included disbursements in April 2020 from catastrophe-contingent loans, such as the World Bank’s Catastrophe Deferred Drawdown Option, and from the Pandemic Emergency Financing Facility. This small proportion of pre-arranged funding from MDBs meant that, for many countries, the pandemic response relied on their ability to borrow after the macroeconomic shock from the crisis had already started to manifest. The limited volume of pre-arranged crisis financing from MDBs in response to Covid-19 reflects a similar pattern across other slow- and rapid-onset crises analysed by the CDP and Development Initiatives:[13] based on nine case studies, only 2.3% of crisis response funding was pre-arranged.

One example of an anticipatory finance pilot[14] is being undertaken by the Central Emergency Response Fund (CERF). The CERF has pledged up to US$140 million to scale up a shift towards anticipatory action.[15] Anticipatory action framework pilots were initiated in five countries in 2020 (Bangladesh, Chad, Ethiopia, Malawi and Somalia). They have already been triggered in Bangladesh (US$5.2 million) and Somalia (US$15 million) in response to floods and food insecurity, respectively. Preliminary evidence from Bangladesh showed that the fast release of CERF funding to protect productive assets facilitated a quicker, more cost-effective response compared with previous years, and contributed to longer-term livelihood outcomes.[16] The pilot also showed that shifting from reactive to proactive humanitarian response requires not only employing new funding instruments, but also developing interagency planning and coordination. One early lesson learned is that this will have to be a long-term and inclusive process to ensure it informs and accommodates the respective priorities for national disaster management and response.

Anticipatory financing feeds into a wider discussion around quality funding, which emphasises the importance of predictability and flexibility in response financing. Pre-arranged funding modalities allow greater visibility of available future funding, and allow implementers to respond more quickly. However, there is currently no tracking system in place to comprehensively quantify pre-arranged humanitarian funding modalities, crisis modifiers or other forms of contingency funding, without which it is hard to monitor progress against commitments to a more proactive funding landscape. We need a discussion within the humanitarian system and beyond of which types of crisis financing enable a more timely and cost-effective response, and how to track progress in scaling them up. This should also include development actors with increasing engagement in crisis contexts, such as MDBs, to provide greater clarity on the division of responsibilities in future.

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Development financing for disaster risk reduction

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Figure 2.4: Countries most at risk of natural hazards received more ODA focused on disaster risk reduction in 2020 than those at lower risk, but volumes remain low and vary significantly between recipients

ODA with a primary focus on disaster risk reduction (DRR) by risk of exposure to natural hazards, 2019

Figure 2.4: Countries most at risk of natural hazards received more ODA focused on disaster risk reduction in 2020 than those at lower risk, but volumes remain low and vary significantly between recipients
Risk of exposure to natural hazards ODA with primary focus on DRR to country recipients (US$ millions) ODA with primary focus on DRR as % of ODA to country recipients
Very high 756 2.5%
High 585 1.1%
Medium 511 0.9%
Low 13 0.8%

Source: Development Initiatives based on OECD Development Assistance Committee (DAC) Creditor Reporting System (CRS) and INFORM Index for Risk Management.

Notes: Data is in constant 2019 prices. ODA totals are calculated from CRS 2019 projects under the DRR purpose code, marked as 'principal focus' with the DRR marker, or identified by a tailored keyword search. Figures include country-allocable ODA only. ODA refers to total gross bilateral ODA as recorded in the CRS. Countries are grouped by INFORM exposure to natural hazards indicator, with countries scored 6.9 or higher grouped as 'Very high', countries between 4.7 and 6.8 grouped as 'High', countries between 2.8 and 4.6 grouped as 'Medium', and countries scored 2.7 or lower grouped as 'Low'. In 2019, 12 countries were identified as ‘Very high’, 48 as ‘High’, 63 as ‘Medium’ and 13 as ‘Low’.

Extreme weather- and climate-related events have become more frequent, resulting in more people needing to rely on humanitarian assistance.[17] In 2020, 33 of 40 countries with the largest populations in need of humanitarian assistance were affected by disasters associated with natural hazards (see Figure 1.3, Chapter 1). Disasters associated with natural hazards frequently occur in countries experiencing protracted, complex crisis. This exacerbates other risks and vulnerabilities, driving the demand for assistance higher and increasing the strain on an overburdened humanitarian system. Investing in disaster risk reduction (DRR) is therefore critical to build resilience against the risks of natural hazards.

Data on ODA with the primary purpose of DRR has been reported against a purpose code and marker for 2018 and 2019 on the OECD DAC Creditor Reporting System. In 2019, the volume of ODA with a primary purpose of DRR grew, with the majority targeted to countries at ‘very high’ and ‘high’ risk of experiencing natural hazards.

  • The total volume of ODA with the primary purpose of DRR grew from US$1.4 billion in 2018 to US$1.9 billion in 2019, accounting for 1.2% of total country-allocable ODA received by these countries.
  • Of this total, 41% (US$756 million) went to 12 countries at very high risk of experiencing natural hazards in 2019, up from 36% (US$503 million) in 2018 directed to 11 very-high-risk countries.
  • A further 31% (US$585 million) of this funding was targeted to 48 countries at high risk of natural hazards in 2019, a slight increase by volume from 2018 (US$566 million to 49 countries) but a reduction as a proportion of all ODA with a primary purpose of DRR from 40% in 2018.

Better subnational data on vulnerability to disaster risk and funding for risk reduction is needed to establish a complete picture. The available data shows that a small number of countries received a large proportion of the total ODA allocated with a primary purpose of DRR, but significant differences are evident in the total volumes received by countries within the same risk category, as well as in the per person volume (so taking into account the size of the recipient country’s population).

  • Among the 60 countries at high and very high risk of experiencing natural hazards, 10 accounted for more than two thirds (71%) of all funding.
  • The two largest recipients, Vietnam receiving US$195 million and Kenya receiving US$144 million, accounted for 25% of all funding to the 60 countries at high and very high risk of experiencing natural hazards.
  • Vietnam and Haiti, along with Ecuador and Somalia, among countries at very high risk, also received significantly higher per person volumes of ODA with a primary purpose of DRR. These four countries all received more per person than US$1.8 (Ecuador US$4.96, Somalia US$3.78, Vietnam US$2.01 and Haiti US$1.89). The remaining eight countries all received less per person than US$1, with India and China receiving just US$0.05 and US$0.01, respectively.
  • A similar pattern of per person funding is evident among countries at high and medium risk, with close to two thirds of countries in each risk category receiving less than US$1 per person (32 of 48 high-risk countries, and 41 of 63 medium-risk countries).
  • Ten countries among those at high or medium risk of experiencing natural hazards – all small island states, with the exception of Bhutan – received much higher per person volumes of ODA with a primary purpose of DRR. The range is from Fiji, which received a total of US$11.1 million (US$12.40 per person), to Tonga, which received US$9.4 million (US$88.57 per person), Dominica which received US$14.3 million (US$199.06 per person) and Tuvalu which received a total of US$3.5 million (US$445.88 per person).

Large volumes of funding for ODA with a primary purpose of DRR are provided by both bilateral and multilateral donors. A small number, however, account for the majority of this funding.

  • In 2019, bilateral donors provided 61% of total funding for DRR, and multilateral organisations provided 34%, compared to 53% and 28% in 2018.
  • Ten donors accounted for more than four fifths (83%) of total ODA allocations for DRR activities in 2019.
  • The three largest donors in 2019 were the IDA (US$453 million), the UK (US$399 million) and the EU (US$243 million). For IDA, these allocations marked a doubling (99% increase) of contributions for DRR activities, while for the UK the rise was even more pronounced, increasing fourfold (315%) from 2018.

Figure 2.1 and associated data was updated on 29 June 2021.

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Notes

  • 1

    According to DI’s protracted crisis methodology, Pakistan became classified as a country experiencing protracted crisis in 2020 when it entered its fifth year of having a UN appeal. However, Pakistan is not experiencing protracted crisis in the traditional sense as it has been affected by different, regional crises over the years, rather than one sustained crisis.

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  • 2

    Funding to the DRC RRP as reported on FTS, which may differ from the UNHCR regional plan dashboard.

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  • 4

    The Centre for Disaster Protection has been tracking the funding provided by the IMF, the World Bank Group (including IDA, IBRD and IFC), the Asian Development Bank, the Inter-American Development Bank, the African Development Bank, the Islamic Development Bank and the European Bank for Reconstruction and Development in response to the Covid-19 pandemic. More information on the research and methodology is available at: www.disasterprotection.org/funding-covid-19-response

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  • 5

    This includes countries with country-specific requirements under GHRP as well as those included as country-components of regional refugee response plans, with requirements for the Covid-19 response.

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