Image by UN Women/Ryan Brown
  • Report

Supporting longer term development in crises at the nexus: Lessons from Cameroon: Chapter 7

Financing tools

Downloads
Chapter 7 of 9
Contents
Share section

Development finance for crisis regions

Cameroon’s crisis regions have seen a gap in funding for longer term resilience and recovery activities. Between 2017 and 2019, the East and Adamawa regions saw a drop in humanitarian assistance as the active phase of the crisis passed, which was not directly followed by an increase in development funding. This gap undermined the continuation of recovery efforts.[1] Interviewees report a similar trend in the Far North. The will of development actors to explicitly target crisis-affected regions and stretch outside traditional bilateral aid programmes is generally there. However, the challenge is the systems and structures they work within. The key constraints are the needs for greater flexibility in development finance and decentralised decision-making (see ‘Organisational issues’).

Dedicated crisis-focused funds and windows

Regionally and globally managed funds are key to fill gaps in resilience and recovery activities in crisis regions. These include several EU and AFD funds (Box 7), which have played an important role in the north and east, including by funding non-governmental actors and local development approaches. In addition, the World Bank’s regional funding and UNDP’s Regional Stabilization Facility have mobilised substantial resources to address the Lake Chad Basin crisis, and the World Banks’s RSW has been instrumental in the refugee response in the east.

However, there are risks associated with creating separation between longer term country assistance strategies and crisis-related activities. Funding through separate crisis-financing mechanisms may be less sustainable and, if driven at the global or regional level, less grounded in local needs. It is important that it complement and reinforce donors’ country strategies and policy dialogue. For example, providing additional resources can leverage reforms that help provide longer term solutions to crisis, as has been the case with World Bank RSW funding. Similarly, AFD has drawn on financing from their Minka Peace and Resilience Fund to adapt its programmes to target crisis-affected areas directly (e.g. working with MINEPAT to develop a special window within the PNDP). In other cases, the links between globally or regionally managed funds and strategic priorities in-country have been weaker. Decentralising decision-making of such funds to country teams can strengthen complementarity and alignment and increase the speed and responsiveness of projects.

Box 7

Role of crisis-financing mechanisms in EU and AFD support

EU trust funds are designed for emergency and post-emergency interventions and offer faster decision-making and greater flexibility than is the case with the bilateral aid programme (National Indicative Programme funded though the European Development Fund). They have allowed the EU to be flexible and quick in approving and operationalising projects to support activities on resilience, economic and employment opportunities, and migration management. The Bêkou Trust Fund for CAR targeted the East and Adamawa regions between 2014 and 2017, linking humanitarian and development efforts. The EU Emergency Trust Fund for Africa funds four projects in Cameroon totalling €40.3 million, of which €20 million is spent on resilience activities in Adamawa, the North and Far North.[2] After support to Cameroon through the Bêkou Trust Fund ended (it continues to fund activities in CAR), the EU continued to support resilience approaches in the East and Adamawa regions through the Pro-Resilience Action project, which is currently in its second of three phases and co-financed by Oxfam.

The EU’s Instrument contributing to Stability and Peace, while not a trust fund but a foreign policy instrument, supports efforts to respond to the crises in northern and eastern Cameroon. It is currently funding nine projects, including stabilisation activities in the Far North.

AFD draws funds for crisis-affected communities from two regional initiatives of their Minka Peace and Resilience Fund launched in 2017: Ga Songo initiative for CAR and Kouri initiative for the Lake Chad Basin crisis in the North and Far North.

France’s explicit focus on support for crisis-affected communities has evolved over time. The first phase of the project under the Debt Reduction−Development Contract tool (€5 million) was a pilot and did not focus on the areas most affected by Boko Haram.[3] The second phase was financed by the EU Emergency Trust Fund for Africa and covered insecure areas in the Far North (€10 million). The third phase is designed to reach remote areas and aims to create 3,500 jobs in municipalities affected by Boko Haram (€15 million).

Reducing earmarking for greater flexibility

Germany’s development cooperation has struggled to adapt to target crisis regions because BMZ’s funding is earmarked to sectors and not by target groups or levels of vulnerability. While it is theoretically possible to adapt programmes, slow pace of change means in practice this doesn’t take place. For example, Germany had significant funding earmarked for agriculture in the English-speaking regions; the security situation made it too difficult to pursue delivery, and a decision was taken centrally to reallocate the funding to other regions. Interviewees from the German government in-country report their frustration; they would have preferred to continue to provide support in these regions – if not through agriculture, in a different way (e.g. education and health).

Where engagement in crisis-affected regions has not been possible through the bilateral aid programme, Germany has provided funds through alternative channels and support to multilateral programmes and financing frameworks (e.g. those managed by the EU). For example, GIZ implemented a project on the socioeconomic resilience of vulnerable youth in northern Cameroon funded by BMZ through the bilateral aid programme and co-financed by the EC over the period 2016−2019. In the North and Far North, the strategic focus of this joint programme changed from rural development to displacement; its work on good governance has shifted to look at how communities can absorb shocks and address vulnerabilities, and its work on health shifted to focus on health provision in refugee situations, and more recently in response to Covid-19.

Need for a high degree of budget flexibility

Budget flexibility is key to adapting programmes to respond to changes in the crisis context. However, it can be difficult for development partners to re-negotiate programmes with government ministries, and donors’ approval processes can be slow and bureaucratic. As a result, this option is not often used. For example, the EU’s Envelope B in its bilateral aid programme (the National Indicative Programme) mobilising additional funding “if unforeseen needs arise”;[4] however, DEVCO’s process to mobilise Envelope B can take a year and requires Brussels’ approval. Furthermore, funding reserves tend to be exhausted towards the end of its seven-year programming cycle. Interviewees report that the EU is expected to address this challenge by including flexible financing options in its next programming cycle.

Greater budget flexibility would allow development partners to adapt programmes in response to changing needs in often fluid crisis situations. The UK’s Foreign, Commonwealth and Development Office’s humanitarian and development budgets are not allocated separately but decided at country level, with the flexibility to move funds between budget lines and programmes in response to contextual changes.[5] A decentralised budget system and fungibility of budget types such as this can facilitate a nexus approach and could be considered by other donors.[6] However, reallocating resources on its own may not be sufficient to deal with the rapid onset of a crisis and only divert funding away from other urgent priorities. One option would be to systematically include a crisis contingency financing window within bilateral aid programmes, enabling flexibility and timelier reallocation of priorities.

Strengthening contingency funding mechanisms

There have been efforts to establish contingency or risk financing mechanisms over recent years, which would enable donors to scale up funding in response to increased needs of crisis-affected populations. However, while some development agencies have integrated contingency mechanisms into existing programmes, these are not sufficient to fill gaps related to Cameroon’s three crises. For example, the World Bank’s Immediate Response Mechanism allows IDA countries to access up to 5% of their undisbursed project balances following a crisis (e.g. to scale up safety nets) and the World Bank incorporates ‘contingent emergency response components’ in select projects, which enable projects to be restructured and the rapid disbursal of funds. However, this must be requested by the government, which limits scope to address needs in contexts where government political will is lacking. We have seen flexible funding to address Covid-19 in Cameroon, which illustrates that a rapid and flexible response is possible when driven by the centre and endorsed by the recipient government (Box 8).

The RPC strategy recommends the adoption of 'additional funding arrangements’ to address shortfalls and increase flexibility in the short-term.[7] To fill the gap between humanitarian to development funding in the northern and eastern regions, UN leadership has been looking into establishing a nexus pooled fund in Cameroon that could be coupled with a UNSDCF pooled fund under a multi-partner trust fund. A pooled fund may be attractive to donors that do not have substantial in-country presence and could enhance coordination in line with principles for operating in fragile states. The proposed nexus pooled fund would be overseen by RC/HC and would amount to approximately US$20 million. Such a fund would allow quick mobilisation of development responses in a crisis, particularly once humanitarian assistance recedes. However, learning from other multi-partner trust funds highlights disadvantages to these mechanisms that need to be addressed, including little flexibility, project-based funding without strategic focus, centralised management lacking contextual knowledge and analytical capacity, and limited partnership options that exclude local actors (i.e. only UN agencies or government).

For a nexus pooled fund to be effective, it is important that the fund manager: (a) has procedures that allow substantial budget flexibility and relatively quick disbursal processes; (b) has political and strategic analytical capacity or can focus funds on an agreed collective strategy framework such as the RPC strategy; (c) has a decision-making process on allocations and project approval that is decentralised to the country level; (d) has the ability to fund diverse actors directly, for example central and local government, local and international NGOs; (e) and prioritises projects that engage with government to support reforms that would better address crisis regions, whether through direct partnership with government or civil society advocacy on key issues (e.g. inclusion of IDPs and refugees in social safety net systems, social spending in crisis regions). Ultimately, a pooled fund should only be considered in the interim period as it risks siloing nexus commitments further, and the aim should be stronger coordination and mainstreaming nexus-related issues into development planning to eliminate funding gaps for recovery and resilience.

Box 8

Contingency and flexible funding to the Covid-19 response

Responses to Covid-19 in Cameroon have demonstrated that programme and budget flexibility can happen quickly. With a drive from the centre, existing programming changed to cover emerging needs more promptly than demonstrated previously.

  • The United Nations Population Fund reallocated core and non-core funding (US$2 million and US$2.5 million).
  • The United Nations Office for Project Services is working on sensitisation of rural communities using existing resources within a water project.
  • The Joint United Nations Programme on HIV/AIDS envisions reallocating US$2 million and mobilising an additional US$2.5 million.
  • UNDP reallocated US$1.2 million.
  • The German government adapted a health project focusing on IDPs and refugees in the Northwest and Southwest in response to Covid-19 and reoriented funding from a programme to support the Central African Forest Commission.
  • AFD reallocated €12 million from health programmes and from sector budgets to support the Ministry of Health’s emergency response.

This shows what can be done by development actors engaging in crisis contexts when the impetus comes from both global and country level and highlights the need for rapid and decentralised decision-making on funding. While reallocating existing funds is one way to scale up responses to Covid-19, there is a need for additional financing to avoid diversion of funds from other priorities.

Global financing windows provide additional funding in Cameroon. For example, the government's national Covid-19 plan benefits from the World Bank’s Financing Deal for Covid-19 (US$35.8 million), the IMF’s Rapid Credit Facility (US$226 million)[8] and WHO global funds. Cameroon received US$7.4 million from the World Bank’s Pandemic Emergency Financing Facility,[9] although this was criticised for slow disbursal and arriving weeks into the pandemic in Cameroon, failing to play a role in prevention. The complex trigger-based structure of the Pandemic Emergency Financing Facility, which requires an acceleration of newly reported cases over a 12-week period, meant it was initiated in mid-April, raising questions about the cost efficiency of risk-based insurance mechanisms for responding to pandemics.[10]

Proposals are also underway for a pooled ‘basket fund’ for Covid-19 with contributions from government, donors and the private sector attached to the United Nations Covid-19 Socio-Economic Response Plan for Cameroon, to be co-managed by the government and UNDP.[11] This is intended to be a flexible structure, with rapid disbursement and simplified procedures to reduce transaction costs.

Notes

  • 3

    Once a heavily indebted poor country has signed a Debt Reduction−Development Contract with AFD, the country continues to service its debt until repayment. At each payment on the due date, AFD transfers the equivalent amount to the country in the form of a grant. This amount is used to finance poverty reduction programmes.

    Return to source text