June 2019 | Rosie Afia
For protracted displacement situations we know the private sector cannot provide for all humanitarian needs. However, there are many opportunities to overcome some service delivery shortfalls, especially with more sustainable models. After all, refugees can and should benefit from competitive, good quality goods and services, such as pay-as-you-go solar energy, mobile phones, improved water, financial services, clean cookstoves, micro-insurance, and rural connectivity as a start.
The GSMA Mobile for Humanitarian Innovation Fund (M4H) is working to test and provide evidence to demonstrate how working with commercial markets can sometimes provide longer lasting, more cost-effective and impactful humanitarian assistance to refugees.
Opportunities and challenges of commercial models to fill gaps in humanitarian service delivery.
The GSMA M4H Innovation Fund supports several partners who are testing semi-commercial business models (in partnership with, or led by humanitarian organisations) in order to provide better quality goods or services to refugees. Whilst living conditions in refugee camps remain extremely challenging there are also vibrant and healthy marketplaces, particularly in areas where refugees have been living for more than two years. In 2018, The International Finance Corporation found that Kenya’s Kakuma refugee camp had a thriving informal economy, with more than 2,000 businesses. The 160,000 registered inhabitants were spending around 1.7billion KES (16.5 million USD) annually. This consumer demand represents an opportunity to address gaps in current humanitarian service delivery with possible market based solutions.
However, for start-ups or organisations attempting to supply refugees with good quality goods or services, there are also a plethora of challenges which inhibit the development of business models. For instance, it is tough to cover disproportionately high set-up costs (e.g. due to regulatory or logistical expenditure of reaching remote settlements) while setting appropriate pricing structures to ensure revenue growth. Many organisations struggle to set prices at levels which cover costs and do not also exclude vulnerable community members who typically cannot afford to pay for such services.
It is true that “pure” market first solutions or Silicon Valley-style innovation is rarely appropriate in refugee contexts, and the “fail fast” attitude is often at odds with the humanitarian principal of ‘do no harm’. However, business and humanitarian principles are not irreconcilable and one does not always have to take precedent at the cost of the other. It is possible to innovate ethically although it takes time and investment. It is also critical to first be honest about the challenges and barriers faced in these situations, and put in place appropriate mitigation strategies before attempting to ‘innovate’ in refugee settings.
Finding appropriate and responsible commercial models with “do no harm” at the core.
There is continued enthusiasm from donors for small-scale investment in piloting new humanitarian innovations (including the GSMA’s M4H Innovation Fund). This provides the humanitarian sector with the opportunity to find and adapt models with the potential to scale up and out services (such as mobile-based cash and voucher assistance programmes) which better meet the needs of refugees. Indeed, the innovation principles of build, measure, learn, iterate are still fundamental and highly relevant in the humanitarian landscape. At the GSMA M4H there are three primary ingredients which are pre-requisites for seeking out responsible business models which can still allow ‘do no harm’ to remain at the heart of innovation.
- Innovate, iterate and ‘do no harm’ requires starting small and measuring impact regularly.
- In order to test new models and willingness to pay, it is critical to take small investment risks (e.g. strategic, financial, operational, reputational) ideally in controlled environments and ensure those risks align with humanitarian principles.
- Partnerships (such as between a mobile operator and humanitarian organisation) help mitigate risks by bringing different types of expertise – humanitarian, commercial, and technical – to the table in the delivery of services.
In summary, it is important to be realistic and honest about the risks of attempting to develop responsible commercial models within refugee contexts. The principle of ‘do not harm’ should not be compromised. However, too often humanitarian innovators give up at the first hurdle of exploration and never find a model that could work for both the service provider and refugee customers. By improving the sector’s approach to build, measure, learn, iterate processes, it increases the chance of identifying models which could be more sustainable and have the potential to scale up and out to plug gaps in aid delivery for refugees.