Inception: What Led SME4H to Make the Commitment?

The Scoping Paper of the UN Secretary-General’s High Level Panel on Humanitarian Financing exposed an immediate need to more actively engage the Private Sector in meeting the world’s humanitarian needs, and to improve the operational efficiency of the international community’s humanitarian operations.

Therefore, on May 23rd 2016, #SME4H hosted an event at the World Humanitarian Summit in Istanbul to introduce SMEs for Humanity (SME4H), a new private sector-led initiative that aims to trigger positive and impactful change both at the process and policy levels by empowering small and medium-sized enterprises [SMEs], which are the largest untapped source of private sector energy, capability and goodwill in the global economy, through the provision of greater connectivity, transparency and innovation.

SMEs for Humanity (SME4H) was envisaged as an online portal that could more effectively connect SMEs with other businesses and relevant stakeholders in the humanitarian ecosystem before, during and after a humanitarian crisis.

It was also anticipated that SME4H could become a useful platform for building SME resilience. Recognising that one of the most important ways that local businesses in crisis-hit areas can contribute to crisis recovery is by actually continuing or quickly restarting their operations, SME4H would seek to provide advice and technical support from experts and other private sector representatives enabling SMEs to develop their own business continuity and contingency plans in advance of a potential crisis.

Early-Stage Discoveries

All United Nations Agencies have signed up to the Grand Bargain and the Global Compact for Refugees, both of which call for partnering with the private sector in ways other than direct funding and, more importantly, commit to increase funding to local entities by 20%.

In this context, it is important to clarify that it was not proposed that local SMEs replace or undertake the work of existing humanitarian relief organisations and NGOs, as existing agencies fulfill an irreplaceable function delivering large-scale humanitarian relief operations requiring international support and funding. The complex political nature of many humanitarian crises and the inherent dangers prevalent in disaster zones were also taken into consideration.

Instead, SME4H was designed to merely seek to harness the power of existing efforts, assets and resources in a more efficient, transparent and coordinated way to deliver better humanitarian outcomes, whilst establishing a powerful international network of SMEs to boost the resilience, capacity and impact of the sector as a whole.

Consultative Dialogue at the Strategic, Tactical and Grassroots Levels

Given the complexity of the issues involved, and the need for multistakeholder input into this concept, in-depth discussions were carried out with a wide range of stakeholders. These efforts culminated in the establishment of the SME4H Steering Committee, which comprised a balanced mix of 20 members from SMEs, NGOs, IGOs and large corporations. The Steering Committee was established to advise and guide the SME4H project to ensure that it effectively harnesses the capabilities and goodwill of the world’s SMEs for the achievement of better humanitarian outcomes. Some of the subjects that the Steering Committee studied include:

  1. Obstacles to better engagement by SMEs with key players in the humanitarian ecosystem
  2. Types of support SMEs could provide and/or seek via a platform such as SME4H
  3. Ways to ensure SMEs are more effectively supported by the world’s humanitarian system 
and have greater access to participate in related projects
  4. Recommendations on the potential role of large businesses – including those with large 
SME supplier bases – in a platform such as SME4H
  5. Recommendations on the potential piloting of the concept in a specific geographical area and/or involving a specific type (or types) of business
  6. Recommendations on the ideal phasing for the potential development and roll-out of the platform
  7. Opportunities for integration or coordination with other national, regional and 
international initiatives seeking to achieve similar or compatible outcomes

Pilot Project

Jordan was recommended as the first pilot country for the availability of key success factors such as the predictability of humanitarian needs, established IGO/ NGO procurement processes, available market intelligence, a reliable network of suppliers, and an established local goods and services market for technological and logistical infrastructure requirements.

Throughout several discussion with key players on the ground in Jordan, it was proposed that the potential contributions of SMEs to humanitarian operations in Jordan could include technical and logistical support, local and cultural advice, financial assistance, and the provision of volunteers and equipment before, during and after a humanitarian crisis, and that the benefits for participating SMEs could include access to urgent supplies and equipment, technical and logistical support, business advice, new relationships and a range of immediate and long-term commercial opportunities.

With the support of Steering Committee members and the SME4H network, SMEs in Jordan were encouraged to sign up at no cost to receive alerts when humanitarian needs were posted that are a) technically relevant and/or b) geographically close to them, with focus on:

  1. Reducing fragility and building resilience in vulnerable communities
  2. Prevention, preparedness and disaster risk reduction measures
  3. Response and relief operations, including supporting refugees and long-term displaced people
  4. Rebuilding, reconstruction and restarting community infrastructure

Specifically, some of the most valuable potential SME contributions that were envisaged included matters in relation to disaster prevention and preparedness, contingency planning and capacity building in vulnerable communities in advance of a potential humanitarian crisis – including in Jordan's case the recurring snow storms that affect refugee camps in winter. These contributions could include stockpiling emergency supplies, repairing shelter facilities, or working with local authorities on evacuation and response plans.

During the pilot, it was envisaged that SME4H would operate independently and in partnership with the world's leading humanitarian organisations, national and international NGOs, private sector industry groups and SME associations.

Iterative and Focused Platform Tech Development

In preparation for the pilot, tech-design for the platform’s minimal viable product (MVP) was completed with defined target user personas, user stories and MVP functionalities. The platform process flows were proposed by SME4H and approved by the Steering Committee.

The Pilot Supply Side

A validated database of 30,000 SMEs was made aware of the plans to launch the Jordan pilot, which triggered a significant amount of interaction across multiple industries and 177 SMEs registering as participants.

The Pilot Demand Side

The demand exploration results were less attractive due to risk aversion from the United Nations and major humanitarian agencies in relation to working with local suppliers. This represented a significant risk to the pilot’s success as the UN system alone claims an approximate 62% of global funding share for humanitarian crisis response.

Other Challenges Faced in Pilot Implementation

In addition to demand-side concerns, preparations for the pilot revealed the following challenges:

  • Risks of quality and capacity of delivery, as well as increased contracting costs
  • Limited investment in readiness at the sector level
  • Inadequate infrastructure and validation systems in most target communities
  • Reactive-based delays in post crisis situational assessment methodologies
  • Fragmented needs-assessment and aid procurement systems
  • Rigid buyer requirements, poor connectivity, lack of transparency and language barriers
  • Poor utilisation of technology to connect need-driven demand with impact-driven supply of aid goods, services and volunteers

Final Conclusions

Purchasers within the international humanitarian system are mainly funded by governments or large private donors that are extremely averse to risk. The UN Global Market (UNGM) portal remains the entry point for procurement opportunities with 29 UN agencies, and its database has more than 195 thousand registered vendors. More often than not, local sourcing is managed through the establishment of procurement operations on the ground in order to maintain full visibility and control over the process, which can inadvertently result in local players being kept out of the response cycle.

The SME4H pilot will therefore be frozen at this point in time. Its interim findings, database and resources will be fully preserved in order to ensure that they are available for future consideration, if and when relevant humanitarian procurement standards become more accommodating to allowing SMEs and MSMEs greater opportunities to prove their value as potential suppliers. This could be realised through sector-level transformational urgency by all agencies to simplify and unify their requirements in order to enable local communities to engage more directly in humanitarian efforts, thus unlocking their own capacity to contribute to better responses and more resilient and prosperous markets.

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