Financing Social Spending in Humanitarian Settings: Four urgent actions needed to address a growing problem

By: Catherine Agg and Frank Otchere

Children, particularly those living in poverty, continue to bear the brunt of conflict and humanitarian crises across regions. Nearly 40 per cent of children in countries affected by conflict or fragility live in extreme poverty compared to just 10 per cent for children who live in non-fragile states1. Social services should be prepared to respond swiftly and effectively to reach children before, during and after emergencies. For this to be achieved, financing social spending needs to be at the core of humanitarian appeals and responses.

The frequency, duration and complexity of humanitarian crises has multiplied in recent years. Since 2020, the world has seen a series of shocks amounting to a polycrisis . The physical, social and economic impact of conflict, climate change and natural disasters has left at least 363 million people in need of humanitarian assistance in 2023, more than quadruple the people that needed humanitarian assistance in 2013. A disproportionate number of people in need of humanitarian assistance are children .

In humanitarian crises children lose access to critical health, education and social protection services . Available evidence shows that humanitarian crises are increasingly concentrated in the poorest countries. Of the top 10 countries by number of people in need of humanitarian assistance (Table 1), seven are low-income, and six are in, or at high risk of, debt distress, with levels of debt that threaten their financial stability2. In these countries, humanitarian requirements for health, education and social protection often outweigh total government spending on the sector, putting children’s lives and their wellbeing at risk.

Table 1. Top 10 countries by number of people in humanitarian, July 2023

Humanitarian assistance from external sources is therefore a critical source of funding in these contexts. However, despite the growing need, the provision of effective humanitarian assistance is threatened by significant funding shortfalls . In 2022, just 57 per cent of the humanitarian aid requested through the UN-Coordinated appeals was raised, and in the 17 out of the 28 countries with Humanitarian Response Plans, pledged funding met less than 50 per cent of assessed needs. For 2023, the predicted funding gap could be even larger, with just 25 per cent of the total funding required received as of July 2023.

This level of underfunding, particularly in social sectors, not only affects the life chances of children today, but has wider implications for recovery from, and prevention of, future crises. While governments are primarily responsible for providing an adequate humanitarian response, underfunding and lack of preparedness continues to affect social sectors in emergencies, with health, education and social protection sectors all requiring increased funds to meet growing needs.

Challenges by sector

Even relatively stable low- and middle-income countries struggle to adequately fund social services. On average, spending on health, education and social protection in low- and middle-income countries remains below the recommended minimum levels required to meet the Sustainable Development Goals (SDGs). For countries facing humanitarian crises, often in the poorest parts of the world, this challenge is magnified.

Health services face the biggest funding gap with an extra $3.9 billion needed worldwide for health in humanitarian settings. This deficit puts children at risk of being cut off from essential care , in contexts where the threat of disease and malnutrition soars. The countries facing the highest ratio of humanitarian requirements over current government spending are Yemen, where health requirements are 4.2 times the size of current government health spending, Afghanistan, with needs 2.6 times the current government health spending, Syria with 2.5 times current government health spending, and South Sudan, where health requirements are more than the current government health spending.

Education services also require a further $3.1 billion globally to cover estimated humanitarian costs. This funding gap not only threatens children’s right to education , out-of-school children face a greater risk from the physical and psychological dangers around them. Syria’s humanitarian requirements for education currently amount to over three times current government expenditure on the education sector. Humanitarian requirements for education in Afghanistan, Yemen and South Sudan are also high in proportion to current government spending, making up the equivalent of 43.1 per cent, 35.9 per cent and 28.3 per cent of government expenditure on education respectively.

Although data is harder to come by for humanitarian cash transfers (HCTs) ?– the ?cash or voucher assistance that UNICEF and other agencies provide to assist families caught up in crises – the estimated costs of HCTs are significantly higher than current government social protection expenditure in the countries most affected3.?HCTs distributed in Afghanistan are estimated to be over 3.4 times the value of government social protection spending in the country. In Yemen the ratio is higher – over 4.6 times the value of government social protection spending; and in Syria it is 15.8 times the value of current social protection spending.

More sustainable solutions to financing social spending in humanitarian emergencies are required. There is a growing evidence base that suggests that the under-funding of social services not only restricts response and recovery times, adequately funded social services play a significant role in preventing humanitarian crises. These findings highlight the need for the humanitarian system to focus attention on the financing social spending for children caught up in armed conflict, natural disasters and other emergencies.

Recommendations

To bridge the funding gap and adequately finance social spending in humanitarian contexts, the following four actions are recommended to address the growing need:

1. Investing in anticipation, preparedness and resilience. Despite the recommendations of the UN High Level Panel on Humanitarian Financing , 93 per cent of humanitarian aid continues to go to emergency response, with just 4.5 per cent going to disaster prevention and just 1.9 per cent to reconstruction, relief and rehabilitation. Ensuring that sufficient flexible humanitarian finance is available to social sectors in low-and middle-income countries – with a greater proportion of humanitarian Official Development Assistance (ODA), climate finance and development lending going towards preparedness and resilience – will allow governments to provide quality social services in emergencies.
2. Accelerating the harmonisation of donor support. Efforts to align humanitarian, development and climate finance by donors and UN agencies are critical to ensure better coordination and long-term financing, with greater use of pooled and unearmarked funds. This will also involve harmonising financing at sector level: integrating humanitarian cash transfers within existing social protection systems, and better support for displaced children within local health and education systems.
3. Strengthening public finance systems. Greater support from development partners to governments in low- and middle-income countries to strengthen their public finance systems is essential to improve their capacity to assess, prepare and respond to shocks. This should include prioritizing investments in preparedness and contingency plans as essential pillars of programming, as well as more equitable access to global insurance and risk finance markets, to allow governments to establish affordable pre-arranged financing mechanisms for humanitarian response.
4. Improving effectiveness and accountability of the use of humanitarian funds. With ever growing levels of unmet humanitarian need for social spending, especially in the education and health sectors, more detailed analysis of both the level of requested support, and the impact of the funding gap is required. Greater progress on tracking humanitarian cash transfers is required to improve the transparency and accountability of humanitarian reporting at global and country level.

These findings highlight the need for increased, sustainable long-term financing of humanitarian assistance, with a greater focus on prevention. Governments bear a significant proportion of the costs caused by disasters and establishing pre-arranged financing mechanisms for scaling up established government programmes in the event of a crisis is crucial. Children in need of humanitarian assistance are particularly vulnerable given their time-sensitive needs for education, health, and protection. It is therefore essential that humanitarian assistance addresses not only immediate need but also contributes to the strengthening of social services in all low-and middle-income countries.

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1 https://www.unicef.org/press-releases/1-6-children-lives-extreme-poverty-world-bank-unicef-analysis-shows

2 Afghanistan, Ethiopia, Sudan, Pakistan, Ukraine, South Sudan.

3 While HCT expenditure is not directly comparable to government social protection spending, the ratio of expenditure is given here to highlight the scale of the challenge of providing adequate social protection in humanitarian settings.

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This blog is based on a forthcoming Social Spending Monitor Report on Financing Social Services in Humanitarian Settings. The Social Spending Publication Series is a joint collaboration between UNICEF Social Policy (Public Finance for Children) Programme Group and UNICEF Innocenti - Global Office of Research and Foresight. The authors are grateful to Buthaina Al-Iryani, Orria Goni Delzangles and Natalia Winder-Rossi for their technical guidance.

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