Why Business and Social Protection are Not Contradictory but “Two Sides of the Same Coin”

By Dr. Kathryn Taetzsch, Director, Humanitarian Response & Private Sector Partnerships, World Vision International

Why Business and Social Protection are Not Contradictory but “Two Sides of the Same Coin”
Longstanding (mis-)perception of the distinctiveness of business ambitions and Social Protection (SP) goals has inhibited identification of joint opportunities to leverage synergies for effectively addressing needs with market based solutions. This discussion is increasingly relevant for protracted (often chronic displacement) crises caused by conflict or weather induced disasters that create and exacerbate existing vulnerabilities among populations, undermining public service support and economic resilience.

While multi-national business has the opportunity to engage with the ILO –led initiative around the Global Business Network for Social Protection Floors[1]the importance of complementary engagement and possible synergy between local business and shock-responsive Social Protection (SP)[2] mechanisms especially in fragile contexts is still being neglected.[3]

With the impact of humanitarian cash transfer interventions (as one element of SP) being evidenced (UNICEF), research conclusions highlight that establishing systematic linkages with services (and service providers – whether public institution or business entities) is critical. Initiatives aiming at mitigating against impact of slow-onset weather related humanitarian disasters (like the 2015/2016 El Nino phenomenon having affected 60 Mio people globally causing food insecurity, displacement, undermining livelihoods/ income base) work with private sector to reduce impending loss of development gains. Early Warning and Early Action linked to preparedness and mitigation-focused social safety net interventions in partnership with business – as exemplified by the Kenyan Hunger-Safety Net Programme, disbursing preparedness funds to already enlisted vulnerable cash transfer-receiving households to buffer potential loss of harvest due to expected El Nino related weather impact (drought) – showcases one element of not only well-positioned Disaster Risk Reduction. It also highlights the economic benefit – as cushioning and timely safety net interventions are less costly for Governments, communities and the economy alike.

Local private sector entities to deliver transfers – e.g. in the Kenya case – by Equity Bank – point to the importance of complementary engagement to achieve one common goal: less vulnerable households and communities, that are able to protect, maintain and grow their asset base, are likely to become stronger actors in the marketplace – utilizing services of the same financial institutions that were partnering with them through public service provisioning, before, during and after recurrent livelihood shocks. Another example of private sector role and public safety net complementarity are recovery loans by micro-finance service providers.[4]

It is time to take advantage of this opportunity for different players to commit further to harmonise strategic approaches of humanitarian cash transfer interventions to longer-term sustained market-based support solutions for vulnerable groups working with and through local, multinational business and Governments.[5] Social safety net interventions – sometimes wrongfully labeled as “welfare”- are long-term investments and should not be perceived as cost or dis-incentive for economic activity. They are rather two sides of the same coin, enabling and adding value and providing sustainable RoI.

The “Why” is evident, the “How” often still remains unclear and a major obstacle to succinct and comprehensive social safety nets that are linked to and facilitated by effective to cross-sector collaboration. The challenge of a multiplicity of actors with somewhat isolated and different planning perspectives and timelines, target groups and approaches – will need to be tackled as per commitments by the World Humanitarian Summit. Commitments to Action :

– Integrating humanitarian safety nets to fully fledged SP, risk reduction and livelihood support – based on the commitment to “Reinforce, (…) not replace, national and local systems” (World Humanitarian Summit-WHS, Core Responsibility 4 to “Change People’s Lives-From Delivering Aid to Ending Need”) – humanitarian organisations like MercyCorps and World Vision International pledged increase of their cash transfer programming by 25% and 50% over coming years respectively, in close partnership with multinational and national business and Governments

– Diversifying the resource base and increasing cost-efficiency (WHS Core Responsibility 5 – “Invest in Humanity”) – including private sector and social financial transfers at the centre – which again will be assisting governments and national actors to strengthen SP programming

Promoting a cross-sector shared-value model to create a common good in cooperation with humanitarian actors is critical and has been mostly overlooked. The commitments to the Grand Bargain at the WHS – as well as commitment to connectingbusiness.org are crucial elements that require further integration of the localization agenda.

– Mobile money transfers by multinational and local service providers’ joint ventures are the new norm – as “dual-function” vehicles for business and social safety net purposes. For a more distinct “signature” of the “two-sided” coin, the following is critical:

Traditional humanitarian actors and business could:

– Support Government in strategically linking short-term humanitarian cash based interventions to longer-term Government-led safety net interventions for child-headed households (grants) based on humanitarian and development principles – to address – “…economic as well as risk-informed (environmental, conflict-sensitive) factors, … in disaster-prone areas; … households to…avoid distress asset sales in the face of recurrent risks, such as climatic shocks…”[6]

At the same time, Government supported social safety nets or comprehensive SP systems could:

– Social safety net transfers enable income-generation, increase of productive assets and further economic self-reliance via incubation and creation of small-medium enterprises among those that are part of the programme, with multi-fold positive secondary effects for these household’s larger eco-system. Business can help lower costs of service delivery of social safety nets if competitive market-feasibility and shared-value creation models are provided as enabling framework – cost efficiency combined with equity of access.

– Business/ Public Service Nexus – is fulfilling the call for Governments to play the role of good custodians of public good & welfare: beneficiary identification, fine-tuning targeting based on evidenced needs and holistic census-like dataset collation and updates are critical challenges for existing Government-led safety nets – best policies however will fail without local business’ knowledge and agility linked with multinational business offering globally proven technology and comprehensive systems’ capability (for data privacy and management) – it requires strategic pre-positioning of stakeholders, planning and ongoing engagement – “preparedness” – for better shock-responsiveness of systems, resilience and self-sufficiency of actors and markets in the future; enabling social policy frameworks will pave way for programmes beyond survival assistance, connecting safety net interventions that foster recovery and are transitioning into existing or new long-term SP programmes contributing to political and socio-economic stability [7]

Business Ambition as part of and support for social safety net could be relevant as:

– Private sector expertise is required to establish robust systems and processes – often, initial stages require risk-taking “trial-and-error” in fragile contexts – entering previously neglected market opportunities and segments that make an economically viable investment case due to scope of the unexplored market or absence of competitors – even if and due to the fact that it is a fragile context. Local business is often less risk-averse, but resilient, swift and connected, knowledgeable in business acumen, adapting to changing market environment and especially security situation in conflict contexts – evidenced in panoramic view from Somali traders to conflict-displaced Nigerian business owners engaged in humanitarian safety net interventions or remittances.

– To support Government, traditional humanitarian and business actors to jointly identifying niche opportunities – when safety net interventions yield substantial progress, new BoP mass markets open options for business diversification, strengthening the role of local SME and startups, economic recovery – which facilitates “graduation” out of economic marginalization.

[1] http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_533351/l… -The Global Business Network for Social Protection Floors (SPFs) intends to be a platform for enterprises to share experiences on social protection and to foster the debate regarding the role of enterprises to support the installation of public social protection systems in countries where they operate.

[2] Social Protection (OPM-DFID 2016) can be distinguished between contributory and non-contributory mechanisms. Contributory mechanisms include social assistance (social (cash/ voucher) transfers), Cash For Work – Public Works Programmes, fee waivers (e.g. for access to education, subsidies (fuel, other basic survival consumer items), while social insurance (like old age pension, disability insurance, etc.) is contributory and will not be the topic focus in this text. Social safety net programmes as sub-category of SP include cash and in-kind transfers targeted to poor and vulnerable households — help protect families from the impact of economic shocks, natural disasters, and other crises (World Bank).Welfare is defined as 1. Availability of resources and presence of conditions required for reasonably comfortable, healthy, and secure living. 2. Government support for the poor and otherwise disadvantaged members of the society, usually through provision of free and/or subsidized goods and services. (BusinessDictionary).

[5] World Bank Report, 2015: More than 1.9 bn people in 136 countries benefit from social assistance programmes and approximately 718 million people are enrolled in cash transfer programmes. See Honorati, M., Gentilini, U. & Yemtsov, R. 2015. The state of social safety nets 2015. Washington, The World Bank. http://documents.worldbank.org/curated/en/415491467994645020/pdf/97…

[6] FAO 2016: FAO’s agenda for action for social protection and cash based programmes.

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