When disaster strikes, the private sector plays a role too

The international organizations that are the first to act when disaster strikes were called out last week by the UK branch of Doctors Without Borders. One group spared the criticism is the private sector. That is because, until recently, they were not really thought of as an important player.

That is changing. Companies like Ikea, Coca-Cola and Google are now a contributing to relief efforts following a crisis, and making a profit while at it. They are not only working with the relief groups on the ground, but on their own and with small businesses in different countries.

The involvement of business in humanitarian assistance is not all that new. Local businesses will sell food, water and other supplies in the wake of a disaster. However, nobody really knows how much the private sector is contributing. There is no comprehensive accounting in what happens, just case studies and anecdotes.

The growing involvement and the gap information warrants some attention, say Steven Zyck and Randolph Kent of the UK-based think tank the Overseas Development Institute.

“The private sector’s technical expertise and resources offer great opportunities to innovate and improve services, while humanitarian agencies continue to have leading insight into what types of aid are needed and how to reach people in remote communities,” said Zyck, based on a research he conducted with Kent.

The two researchers published a report this week that sought to answer what the private sector is doing, how it is contributing to humanitarian responses and what it means going forward. They find that not only is the private sector is a key player, but it can compliment the activities undertaken by governments, NGOs and international bodies, like the UN and the US. Humanitarian crises, emergency preparedness and response: the role of business and the private sector uses the consultation of 203 stakeholders, from donors to the private sector to the Red Cross, and other research to determine just how the private sector acts following and preceding a disaster.

Cases from Jordan, Kenya, Indonesia, and Haiti illustrate the many ways that the private sector is contributing. In Indonesia, people are able to purchase dengue fever insurance. Indonesians are insured against the mosquito-borne disease, for the price of a pack of cigarettes. In the case that someone contracts dengue fever, the insurance will pay out $100. The innovation in the insurance scheme is the ease of purchase. People can purchase a simple scratch card and enroll over their phones for the insurance. The success of the product, sold by ACA Insurance, has led to other forms of micro-insurance that can be purchased.

“By developing services for low-income households, insurance companies such as ACA can help increase the financial inclusion of the poor as a way to build their resilience to shocks and reduce their vulnerability to risks,” say Zyck and Kent, in the report.

Another area of note is the transfer of money. Cash transfers are sent through phones to people who enroll in drought insurance in Kenya. Meanwhile, banks in Jordan are working with the World Food Programme to allow Syrian refugees access distributed money. The UN food agency is also working with smaller businesses to accept electronic vouchers to be used while shopping for groceries and household supplies.

“The private sector has transformed cash transfers, telecommunications and logistics in humanitarian crises. Insurance companies in Asia and Africa are blunting the humanitarian consequences of droughts and cyclones, and banks are helping to rapidly transfer money to those affected by disasters. Businesses are also tackling sanitation and disaster preparedness,” says Zyck.

Looking forward is a bit unclear. The report acknowledges that it is possible the private sector and humanitarian industry might align on values or end up competing. What is undeniable is that the private sector is and will increasingly be an important component of emergency response. The main advice is for humanitarian actors to realize that the private sector will engage with their long term and bottom line interests in mind, leading to the need for the sector to question its own assumptions and actions. Doing so holds the potential for an improved overall response.

“There is reason to believe that private sector engagement can help contribute to breakthroughs in several areas of humanitarian response,” says Zyck.

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About Author

Tom Murphy

Tom Murphy is a Maine-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.

  • antonebraga

    The general public should be provided disaster insurance rights and rules of recovery as a matter of course at the inception of insurance.

    Read the full story: Culture change needed on insurance equation http://www.disasterprepared.net/culturechange.html