The humanitarian economy is geared towards satisfying the demands of the donor who is in the business of purchasing recognition for the act of giving. This act of giving is project managed by a select group of international non-governmental organisations (INGOs) and international agencies, who in turn procure the provision of certain goods and services from private sector actors to enable them to meet the material needs of displaced people as demanded by the donor.
With diminishing donor interest and fewer resources available to purchase from the private sector, humanitarian sector operations are eventually scaled back. This leaves self-interested firms in the private sector little choice but to move on to concentrate their profit-maximising activities elsewhere – taking any hitherto surplus accrued from partnerships with the humanitarian sector with them. Any wealth that had been trickling down to local host communities quickly evaporates.
This then prompts a number of questions: how do we make international humanitarian assistance work better for people adversely affected by displacement? Can we flip the relationship between humanitarian actors and people adversely affected by displacement so that the former become consumers of goods and services provided by the latter?
A small number of large institutions that dominate the areas they are located, for example the universities, hospitals and other organisations that launched the Evergreen Cooperative Initiative in Clevland (USA), have started experimenting with different operating models. These ‘anchor institutions’ seek to incorporate enterprises from the communities in which they are located into their procurement supply chains, rather than buying in external suppliers. This model is something that could be replicated by the INGOs and international agencies that operate in humanitarian contexts. Their procurement capacity can play a vital role in securing the financial health of community-owned enterprises in their formative years. Aid agencies and INGOs purchase or procure millions of dollars of goods and services annually. Procurement supply chains could be scrutinised to identify items suitable for local production.
Aid agencies typically procure on lowest cost but in certain circumstances adapt procurement processes to benefit local producers. Agreements would be sought with agencies to produce items to the specifications required and with minimum risk to delivery. The objective is to build community wealth and resilience through a social economy approach – each dollar earned is circulated and multiplied within the community, re-energising the local economy.
Thus a cost-effective and holistic response to protracted displacement crises can be found through accessing the procurement channels of humanitarian actors. Donor support could be provided to social enterprises through upgrading existing facilities or investment in new facilities. Appeals can be made to philanthropic institutions and development agencies looking to incubate worker-owned cooperatives. Expertise from private-sector partners could prove invaluable to fledgling enterprises transitioning to a competitive market, once the ‘anchor institution’ has agreed with the cooperative that it is no longer needed. This ensures an exit strategy for humanitarian actors. Over the long-term, this model would help create jobs, develop skills and bring money into the local economy – reducing aid dependency.