At the forefront of the humanitarian-development-peace nexus, the International Committee of the Red Cross

AS CRISES AND CONFLICTS BECOME MORE PROTRACTED, WHAT ROLE CAN THE PRIVATE SECTOR PLAY IN COMPLEMENTING THE RESPONSES PROVIDED BY HUMANITARIAN ORGANIZATIONS ?

Undoubtedly, there is an important drive across the ecosystem to ensure that public and private actors other than humanitarian agencies step up their investments in fragile settings. The ICRC and other Movement partners have been exploring innovative financing approaches. These include the Humanitarian Impact Bond (HIB), the Goma West Water Project and the DREF Insurance, the latter led by the International Federation of the Red Cross (IFRC). The key learning here is that partnering across sectors – with humanitarian agencies and Movement partners, development institutions, corporates, investors, and host governments – enabled by innovative financing approaches, de-risks specific projects and catalyzes the deployment of public and private capital as well as market-based solutions for the benefit of people and communities in fragile settings. An avenue we are interested in exploring with Proparco’s support is the link between the cash transfers provided by the ICRC and other Movement partners -such as the IFRC and the British Red Cross- and the long-term access to inclusive financial services. This may be another bridge between humanitarian action and development, and therefore lead to enhanced resilience for people, and less dependence on aid.

WHAT CONDITIONS WOULD ENABLE THE PRIVATE SECTOR TO SUPPORT THE DYNAMICS OF RESILIENCE? CONVERSELY, IN WHICH SCENARIOS COULD THE PRIVATE SECTOR BE A FACTOR OF DESTABILIZATION?

Let us use the fictitious case of a mining company – call it ExtractCo – operating in a conflict-affected and fragile context. ExtractCo receives a legal license from the host government to use the land and extract minerals, without much consideration for any environmental, social, and governance (ESG) standards. In no time, ExtractCo’s operations and security set-up start exacerbating tensions with the local communities, fueling violence and further instability. To preclude the emergence of another ExtractCo, heightened, conflict sensitive human rights due diligence (HRDD) processes should be mandatory for private companies operating in fragile contexts. These should include proactively identifying, measuring, mitigating and wherever possible preventing negative impacts. This especially because of the exacerbated risks in these contexts. Conflict sensitivity in this case means adjusting business strategies and operations to ‘do no harm’ and maximize positive contributions to peace and stability. Companies that adhere to high standards of responsible business conduct are also better informed about their operating environments and the potential impacts of their actions; consequently, they are better equipped to build resilience to crises and conflicts, both for themselves and local communities. This proactive approach has the potential to turn businesses into peace-building actors.

ARE SPECIFIC GEOGRAPHICAL, CULTURAL OR SOCIAL CONTEXTS MORE CONDUCIVE TO COOPERATION BETWEEN HUMANITARIAN AND PRIVATE SECTOR ACTORS?

The essence of successful collaboration lies in the parties’ mindsets and identifying shared goals and objectives. When humanitarian actors and private sector entities share a common understanding of their objectives – be they resilience building, community support, or sustainable development – the groundwork for meaningful cooperation is laid. This shared perspective facilitates pooling resources, expertise, and networks to achieve collective goals. Besides, specific contexts can be more conducive to cooperation. The presence of SMEs in a region fosters collaboration, enabling the leveraging of local expertise and networks to enhance aid impact and build economic resilience. It is no coincidence that the majority of fair-trade enterprises are located in the Global South, as they embody a response to community needs, championing responsible business practices and sustainable development.

HOW CAN INTERNATIONAL INITIATIVES, SUCH AS THE HRI, HELP CONVERGE THE OBJECTIVES OF THE PRIVATE SECTOR AND HUMANITARIAN ORGANIZATIONS?

Initiatives like the World Economic Forum’s Humanitarian and Resilience Investing (HRI) initiative help interconnect fragmented eco- systems to catalyse public and private capital to strengthen the resilience of the most vulnerable communities. This particular initiative supports humanitarian organisations, donors, DFIs, investors, foundations, and corporates to increase their readiness to engage with one another through tools such as the ‘Organisational Readiness playbook’, and convenings, such as a curated meeting to ‘Unpack Humanitarian-DFI partnerships’. Most recently the HRI initiative launched a ‘Call to Action’ to align the efforts of these organisations to mobilize 10 billion USD in commercial and catalytic capital to enable 1,000 businesses to scale up in frontier markets by 2030. This ‘Call to Action’ received over 40 commitments from diverse organisations including humanitarian and private sector actors, and will work with its partners to align their efforts in specific markets, starting in Northern Kenya as the first frontier market. Finally, the initiative works with humanitarian partners to foster private-public-philanthropic partner- ships to support and scale projects addressing the impact of climate on our most vulnerable communities. Notably, Proparco and the ICRC are both active members of the HRI.

CAN YOU GIVE AN EXAMPLE OF A PROJECT OR OPERATIONAL COLLABORATION THAT ILLUSTRATES THE LINK BETWEEN THE ICRC AND THE PRIVATE SECTOR?

Globally, the ICRC engages with major compa- nies to mobilize their comparative advantages and know-how. An example is Lombard Odier, a Swiss private bank that has collaborated with the ICRC since the early 1860s. It has provided funding for operations, seed funding to boost innovation and innovative finance at the ICRC; helped design the sector’s first Humanitarian Impact Bond (HIB) and has invested in it; and, together with the ICRC, the World Economic Forum and the IMD Business School, has co-de- signed the ‘Driving Innovative Finance for Impact’ course. Another example, on the health front, in Lebanon and Iraq, is the ICRC’s work with Novo Nordisk, the Danish Red Cross, the London School of Hygiene and Tropical medicine and local academic partners and national societies to improve access to, and care for non-communicable diseases (NCDs) in humanitarian settings.Other examples at the country level, potentially relevant to the prospective Proparco-ICRC collaboration are:

• In Ukraine, the ICRC provides conflict-affected small- and medium-sized enterprises (SMEs) with conditional grants of EUR 5,000- 20,000 to restart or increase their production and create new jobs. These are repaid by the SMEs in the form of goods and services for the community at no cost or a subsidized cost. An example is a construction company ‘repay- ing’ its grant by providing pro bono shelter repairs to vulnerable community members. Another is a factory that produced briquettes for heating repaying its grant by providing briquettes at a subsidized cost to vulnerable elderly community members.
• In Iraq, where villages were razed, the ICRC provided cash grants for people to rebuild their houses. But to enable this, the local black smiths, carpenters and masons – who had losttheir tools, machinery and workshops – were provided with start-up grants to ensure that they – rather than bigger companies from a major city 40 km away – would benefit simultaneously. This created a multiplier effect in the local economy, and within a few months, people had moved back to their villages, and more shops and businesses reopened.
• In the DRC, the ICRC with coalition partners, including Lombard Odier, SDC, and the World Bank, designed a project to sustainably reinforce the Goma West water service. With its comprehensive studies and core infrastructure, the project is envisioned to enable privateoperators to develop sustainable business models for providing water.

As indicated, the ICRC engages with the private sector at global, national and local levels. We envisage significant scope for the ICRC, the Movement, and PROPARCO to develop approaches to partnering, funding and financing that lead to market-based solutions at the country level, for the benefit of people affected by conflict and fragility.