CL 127/22 |
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CL 127/22 |
Hundred and Twenty-seventh Session |
Rome, 22 – 27 November 2004 |
ADVANCE FUNDING FOR EMERGENCY AND REHABILITATION ACTIVITIES |
Revolving fund - “Early Emergency Coordination Unit set up” (retain US$500 000 target)
Revolving fund - “Emergency and Rehabilitation Needs Assessments/Coordination activities” (increase target to US$2 million)
New Revolving fund component – “Early Warning and Natural Disaster Monitoring Systems” (target US$2 million)
New Revolving fund component – “Early involvement in market research” (target US$1 million)
Working Capital - “Advance funding” (US$15 million)
4. Funding arrangements for projects dealing with emergencies have special requirements, in particular the need to mobilize financial resources rapidly in the face of immediate needs. At its 102nd Session in May 2003, the Finance Committee agreed to set up a new Trust Fund1, the Special Fund for Emergency and Rehabilitation Activities (SFERA), under the provisions of Financial Regulation 6.7. The purpose of the SFERA was to enable FAO to rapidly initiate emergency operations by participating in interagency needs assessment and coordination activities, establishing emergency coordination units (ECU) related to agricultural assistance, preparing a programme framework and projects, and providing advance funding when a donor’s commitment has been obtained for procurement of inputs. A target funding level of US$2 million was established, to be provided from the donor community and the Emergency Operations and Rehabilitation Division’s Direct Operating Cost (TCE DOC) Recovery account.
5. During its 108th Session in September 2004, the Finance Committee reviewed the document on the utilization of the SFERA since the fund became operational in April 2004. It noted that potential expansion of the SFERA would depend on additional donor support and reasserted the importance of such a fund for FAO. It recognized the imbalance between the current target funding level of the SFERA of US$2 million on the one hand, and the resources needed to avert and respond to crises on the other. The Committee recognized that the SFERA sought to enhance FAO’s capacity to respond quickly to emergencies and stressed the importance of drawing lessons from the current locust crisis in West and North Africa for the future and the need to identify and tackle all the regulatory, managerial and other constraints faced by the Organization, when utilizing resources for acute emergencies.
6. The Director-General is taking steps to immediately identify the internal procedural constraints in FAO’s emergency response operations. A review, aimed at enhancing FAO’s coordination and management mechanism, budgetary, financial and administrative processes (including procurement of equipment and supplies, contracts and human resources) and operational support is presently underway, and will ensure that funds, once pledged, will be disbursed quickly and in the most appropriate way.
7. In view of the recent exceptional circumstances, arising from the simultaneous occurrence of four major natural disasters in Africa (desert locust swarms), Asia (avian influenza and floods) and Latin America and the Caribbean (hurricanes), and also the ongoing need to assist those whose agricultural based livelihoods have been disrupted by civil conflicts around the world, the Director-General wishes to draw attention to the urgent need to amplify the scope and target resource levels for the SFERA. He also wishes to inform the Council of the need for funding being made available to FAO under a flexible donor-funded emergency Trust Fund, to enhance FAO’s preparedness for a predictable crisis and start immediate mitigating action while specific emergency appeals are being considered by the donor community.
8. FAO’s emergency relief and early rehabilitation activities aim at protecting and bolstering agricultural based livelihoods, thereby preventing a crisis or contributing to the reconstruction of food and agricultural production systems after a large scale shock. Such action is essential for providing vulnerable or affected populations with opportunities for maintaining and achieving self-reliance. The earlier FAO intervenes to avert or mitigate large scale shocks, the quicker the effects and impact of a crisis are avoided or diminished, which reduces significantly the overall funding needed from donors in response to a natural disaster or complex emergency.
9. This may be illustrated by the recent development of the locust crisis in Africa. While US$9 million were appealed for in February 2004 to stop the locust breeding cycle and protect crops and pasture from severe damage, the crisis has expanded in the absence of a timely and adequate response. As a result, by August 2004 more than US$100 million were expected from the international community to stop the plague, which now threatens at least 14 countries and may have much higher unquantifiable repercussions in terms of food and agricultural assistance, and socio-economic disruption.
10. For those crises requiring exceptional external assistance, early involvement of FAO in providing affected populations with the means to recover and rebuild their agricultural based productive capacity, contributes also to the phasing out of prolonged food assistance, thereby increasing the cost-effectiveness of emergency responses. For example, failure to restore farmers’ access to appropriate seeds and equipment or to repair irrigation infrastructure in the narrow window of opportunity between the loss of these assets and the planting season can result in the need for another year’s dependency on food assistance or worse if there is an inadequate food pipeline; similarly, failure to vaccinate and feed livestock to stabilize livestock mortality and morbidity after a large scale shock can result in dramatically reduced household incomes and levels of nutrition and slow regeneration of herds. Furthermore, in a post-conflict situation, the failure to address in a timely way equitable access to natural resources and the means of production including protection of land and property rights for returnees will contribute to a return to conflict.
11. Adequate planning and timely action clearly make a significant positive difference for the vulnerable, each affected country’s economy and social stability, and hard pressed donors’ budgets. FAO must therefore launch its emergency preparedness activities and operations immediately, ideally to prevent a sudden problem such as a locust outbreak becoming a plague or to mitigate the effects of a dramatic shock on agricultural based livelihoods or launch quick impact recovery actions that contribute to consolidation of peace in an immediate post-conflict context.
12. FAO’s capacity to provide early warning of slow onset of natural disasters or other emergencies such as drought or outbreaks of transboundary pests and diseases of crops and livestock is well established but could be strengthened. To address the requirements of affected populations at the earliest stage, FAO needs also to reinforce its capacity to support preparedness for forecast potential crises, assess the impact of the crises and identify the best adapted interventions for each context. The SFERA enables rapid deployment of a limited number of livelihoods needs assessments in the immediate aftermath of a large scale disaster, but the current level of available resources does not cover properly upstream preparedness and emergency relief and rehabilitation programme costs.
13. Moreover, the critical gaps are the weeks or months that occur between early warning of a need for a rapid response or the assessment of needs following a disaster, and the appeal for extrabudgetary contributions. This is followed by further delays in the receipt of pledges from donors and then the transfer of pledged funds to FAO. In practical terms, donors need time to consider the appeal, and then pledge funds; completion of formal procedures with FAO and eventual transfer of funds takes further time. Yet, FAO requires resources to immediately respond to a crisis following an early warning.
14. The efficiency and effectiveness of FAO’s relief activities would also be increased if, based on donors’ commitments, comprehensive rather than piecemeal operations could be planned from the beginning of a crisis. At present, funding from donors can only be integrated in the overall procurement and disbursement planning once funds have been received. Through the use of an adequately-funded emergency response mechanism, FAO could launch earlier large procurement contracts, which are currently processed through fragmented and sequential tender requests due to the unavailability of funds to secure payment upfront and at one time.
15. To better define the scope of the SFERA and facilitate its operation, it is proposed to clearly distinguish between a revolving fund category and a working capital funding category, as follows:
the revolving fund is intended to be a funding mechanism for activities that can be subsequently replenished by hitherto unknown and unquantified donor contributions. Thus, resources initially disbursed from the SFERA under this category may be, but are not guaranteed to be, subsequently replenished or reimbursed by contributions received for such operations;
16. As described below, neither the current target funding level of US$1 million for revolving fund activities and US$1 million for the working capital category, nor the present scope of the SFERA meet the needs of FAO to play a key role in averting and responding to emergency situations. In addition to the two current revolving fund components, it is proposed to add essential complementary activities for emergency preparedness and programming by creating two new revolving fund components and to bring the overall funding level for the revolving fund category to at least US$5 million and that for the working capital component to US$15 million.
17. This component of the SFERA covers the establishment of emergency coordination units (ECUs) to manage field-based interventions with governments, other United Nations agencies and NGOs. It functions well and responds to the initial expectations presented to the Finance Committee. Given there are 25 ECUs already in place in most of the countries affected by crises requiring exceptional external assistance and assuming that five to ten crises may occur elsewhere each year, the Secretariat proposes to maintain the current funding target of US$500 000. While it is funded entirely from internal resources at present, financial support from donors is required to ensure sustainability of this component.
18. Although some progress has been made, there are clear expectations from the donor community for FAO to have better conducted and coordinated needs assessments (with UN agencies and external partners), of food and non-food needs, including for agricultural inputs such as seeds, fertilisers, animal feed and equipment, in response to natural disasters and other emergencies as well as epidemic animal disease outbreaks. Additional efforts are needed to ensure that baseline maps and information on livelihoods assets, roads, water control/irrigation and other infrastructure, population distribution, weather and natural resources, epidemiological information on infectious animal diseases, etc. are available to assess the impact of a crisis on the affected populations’ livelihoods so as to shape the most relevant mix of livelihood support interventions that should complement and mutually reinforce food assistance. The current US$500 000 target funding level does not allow FAO to respond adequately to these expectations. On the basis of ten to 15 major needs assessment exercises each year, it is proposed to increase the level of funding under this component to US$2 million.
19. This new component will support FAO’s Global Information and Early Warning System (GIEWS) to rapidly and effectively respond to requests for Crop and Food Supply Assessment Missions (CFSAMs), particularly in countries affected by natural disasters, as well as better monitoring and forecasting of excess water stresses (floods and droughts). To provide a global, near real-time warning of weather induced agricultural crises, funding for this component will enable the production of agroclimatic water stress maps up to one year ahead, which would be complemented by high and medium resolution satellite imagery and geospatial mapping systems to better respond to specific emergency conditions. For those countries likely to be affected by quick onset seasonal events (e.g. hurricanes, floods, landslides) the component will also help to reinforce their immediate response mechanisms; and for those with slower onset of seasonal events (e.g. drought) it will be used to establish light monitoring systems or support existing ones ahead of an assessment of the impact of the event, as well as funding the assessment itself. Such pre-mission activities will provide critical information and analysis at assessment time, along with much better information on which to base mitigation and rehabilitation measures. Through these various activities, the affected countries and donors will be provided with advance warning and timely, unbiased and reliable information on the situation to facilitate decisions on appropriate interventions. On a yearly basis, the estimated cost for procurement, monitoring and analysis of data and for the production of agroclimatic water stress forecasts and near time satellite imagery is US$100 000; for 25 CFSAMs the estimated cost is US$50 000 per country and for early set-up/strengthening of monitoring systems in ten other affected countries the estimated cost is US$70 000, therefore the target level of this component is set at US$2 million. While all of the revolving fund components need to be replenished regularly through appeals to avoid depletion, it is also proposed that a small proportion of donors’ contributions to WFP’s food aid appeals should be a cash contribution to this particular component, as CFSAMs form a critical basis for donor decision-making on allocations for food aid.
20. Covering the period between the availability of sound assessment results (in terms of early warning as well as impact assessment), identification of a first set of response action and donors’ agreement on programme/project funding, this component will contribute to the early launch of market research in affected countries, thereby anticipating the procurement of inputs and with the aim of supporting the local economy as far as competitive procurement rules allow. It will aim at acquiring an in-depth understanding of market mechanisms and input availability and will explore local opportunities to reinforce country/regional production capacities. Based on an annual request of 20 to 25 early market research exercises, the target level is set at US$1 million.
21. In light of the lessons learnt in the four major natural disasters and other emergencies, which have occurred this year in Africa, Asia, and Latin America and the Caribbean, coming on top of the many other complex emergencies around the world, the funding target of this component needs to be increased significantly. Based on a typical six-month delivery period for an emergency project and considering that up to six weeks may pass between receiving a firm pledge from a donor, having the project proposal approved and receiving the funds, some US$15 million have to be available to allow immediate inception of emergency activities in the field. This represents only 11.5 percent of the US$130 million appealed for the desert locust, avian influenza, hurricanes and floods emergency crises. It is therefore proposed to bring the current US$1 million target of the “advance funding” component of the SFERA to US$15 million.
22. The Director-General appeals to donors for their support in bringing the funding level of the SFERA to an overall level of US$5 million for the revolving fund and US$15 million for working capital component respectively. This would allow FAO to promptly and adequately respond to emergencies in its field of competence and unique comparative advantage – prompt responses that would significantly reduce the overall funding from donors in response to natural disasters and complex emergencies.
23. Increasing the scope and target of the SFERA will reinforce FAO’s capacity in responding to potential and actual emergency needs. However, the SFERA fails to address the time lag that occurs between the identification of an emergency response and finding a donor able to pledge substantial financial support. Even when the donor community intends to help, FAO has no mechanisms or resources to implement the required emergency action.
24. To be effective FAO needs to ensure that it is able to pre-order and, where applicable, to pre-position the required inputs before donor pledges are received. This entails entering into financial commitments before the “Advance Funding” working capital component of the SFERA can be used.
25. A new “Emergency” Trust Fund that permits such action would be a significant step in addressing the present void. Financial resources and flexibility to launch procurement and other processes immediately are essential for FAO to cope more efficiently and effectively with the effects of natural disasters, pests and diseases, and other complex emergencies, by not losing opportunity for action during the time between completion of needs assessment or market research and pledges received from donors.
26. To ensure adequate rapid approval of the use of the resources under this new Trust Fund, the following mechanism could be considered by the donor community:
given the unpredictability of many emergencies and the need for rapid response and flexibility to effectively mitigate impending crises and their aftermath, operation of the Trust Fund should be kept simple with the minimum of ex-ante constraints imposed through geographic or thematic earmarking;
much of the funding for FAO’s typical emergency operations is pledged against FAO’s part in the UN Inter-Agency Consolidated Appeals Process (CAP) for complex emergencies and UN Flash Appeals for natural disasters. However the funds are often received by FAO in less than optimal time to meet seasonal planting deadlines and quickly protect and bolster agricultural based livelihoods. Building on the well established relationship with traditional donors, it is proposed that these donors consider advance pledging to FAO, at the beginning of each fiscal year, a proportion of the average of past contributions to emergency operations;
FAO could periodically report on the activities undertaken through the Trust Fund. If needed, a consolidated report of activities undertaken could be supplemented by more detailed project-specific reports based on donor requirements. The periodic reporting could also highlight, as far as predictable, forthcoming challenges and the needs for replenishment. Based on one single programme document, donors could be requested to contribute to FAO’s emergency programme, perhaps annually;
a yearly contract/programme could be agreed upfront with the donors based on identified priorities in the CAP, any new rapid and slow onset emergencies, and emerging needs in countries transitioning from conflict to peace;
use of the funds could be contingent on a no objection basis by the contributing donors.
27. A programmatic approach to emergencies would also lower costs in preparation, administration and reporting of donor specific projects, ensure coherent and cost effective operations and reduce the level of, and ensure a speedier end to human suffering. For example, the Trust Fund would enable FAO to address the current highly pathogenic avian influenza crisis in affected Asian countries and prevent a global pandemic of human influenza, as well as optimize rapid response to current and future crises due to other transboundary animal diseases around the world. The present annual cost is estimated at US$38 million, which would include activation of an Emergency Centre for Transboundary Animal Diseases Operations for an emergency response team (US$2 million); contingency resources that could be drawn upon in the event of a new surge of disease or other hyperacute need (US$20 million); implementation of FAO recommendations in infected countries (US$8 million); enhancing preparedness of uninfected countries (US$2 million); sector assessment and rehabilitation programmes (US$3 million); activation of regional networking components (US$2 million); and practical, field oriented studies to optimize diagnosis and control (US$1 million). In short, this would allow for immediate implementation of field operations upon detection of an outbreak of avian influenza or other major transboundary animal diseases, resulting in better prevention, management and control of public health risks, and avoidance of serious impacts upon sustainable agricultural development.
28. The volume of FAO’s delivery of emergency operations has increased progressively from US$50 million in 1996-97 to US$310 million in 2002-2003. In part this reflects the increasing confidence of traditional donors in FAO’s capacity to play an important role in emergencies. The Director-General proposes a US$80 million target for a new “Emergency Trust Fund”. This amounts to less than one-half of the budget approved in the first ten months of 2004 for the Emergency Operations and Rehabilitation Division, and the Director-General appeals to donors for extrabudgetary support for this initiative.
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1 FC 102/14 Proposal to establish a Special Fund for Emergency and Rehabilitation Activities