Mobilizing the Private Sector to Support Conflict-Affected States

July 29, 2016

Readers, I present to you part of the solution to part of the problem. Glamorous, I know.

“The problem” of weak or ineffective states, and the conflict and instability which often accompany them, is complex, evolving, and resistant. The archetypal wicked problem. Therefore, the approach to these states also needs to be complex, evolving, and resistant. Beware of single sentence solutions or pithy article titles that suggest otherwise. This article deals with one part of the approach: part of the solution to part of the problem.

If conflict-affected states are among the most important and difficult problems facing the global community, we should be using every lever at our disposal to support indigenous efforts to address them. But we’re not. Not even close. Currently, supporting conflict-affected states is public sector work. We largely leave it to governments working through bilateral and multi-lateral aid agencies. But this shouldn’t be the case. The private sector possesses far greater monetary, operational, and intellectual resources. So, if we want progress to be exponential instead of incremental, we need to destroy obstacles to, and establish mechanisms for, greater private sector involvement in these states.

It was exactly for this reason that I established Expectation State. I, like many others, have worked on behalf of governments seeking to tackle instability across the world. Whether Somalia, Afghanistan, or South Sudan, donor architecture operates in much the same way. Some things it does well, some things it does less well, and there is always room for improvement. I have seen opportunities missed due to unwieldy bureaucracy, host-governments frustrated due to poor relationships, and donors themselves exasperated due to pressures placed on them by their capitals. Some great work is being done, but there are definitely niches which the private sector can fill, providing complementarity, rather than competition, to public sector efforts. So I have started an organization that seeks to use the best skills, expertise, and thinking available to support conflict-affected states in a way that is nimble, measureable, and host-government led.

The rationale for engaging with conflict-affected states arguably needs little articulation. But, for the sake of rigour, let’s lay it out: Conflict-affected states are contagious, spreading insecurity across borders – regional and international. They disrupt investment planning in the short term, investment confidence in the medium term, and the benefits of investment in the long term. They grossly affect responses to acute poverty. They constrain reactions to natural disasters, from epidemics to earthquakes. To compound matters, states emerging from conflict are more than 50% likely to relapse back into it. Most importantly, they enable human suffering on a gross scale.

State effectiveness, that is its ability to perform its core state functions, plays an important role in enabling or constraining conflict and instability. However, to ascribe blame for conflict and human suffering solely to the ineffectiveness of a given state is misleading (it’s part of the problem, remember). State effectiveness is dependent on a dizzying range of complex variables including realpolitik, social norms, and macro-economics, to name just a few. Therefore, addressing state ineffectiveness can only be considered part of the solution to conflict-affected states, albeit a critically important one.

So, working on the assumption that effective states matter, what has the private sector got to do with it?

Private sector involvement

“Private sector involvement” is one of those ubiquitous terms that we often hear but is relatively meaningless unless defined in its context. In this context, I am not referring to companies pursuing business interests in conflict-affected states primarily for reasons of financial return. The market will do what the market does. When states become attractive to such investment, it will happen. We are talking about both the private sector’s ability – whether through foundations or the corporate sustainable development agenda — to finance support for the machinery of state, and the deployment of private sector finances in support of national development plan implementation.

Philanthropists and foundations are extremely active players in the developing world, with U.S. private philanthropy outspending USG official development assistance, giving huge sums of money to great causes such as vaccinations, nutrition, and basic infrastructure. Ultimately though, most, but not all, tend to focus on the symptoms of state ineffectiveness (i.e. things the state should be able to provide but often can’t). This is important work that no doubt saves and improves lives, but it isn’t a complete approach. Few would disagree that it is the state’s role to maintain rule of law and provide a minimum level of basic services; so, given its importance to enduring stability, why not diversify private sector support in the so-called developing world to include support to the state itself? In other words, tackle the root causes of state ineffectiveness rather than only its symptoms.

Well, one reason is gratification

Measuring change driven by state-building efforts is complex. It is significantly more straight-forward (and gratifying) to invest in a clear causal relationship: x children receiving vaccinations = y percent decrease in infant mortality. But how about supporting the health system through improving financial management and undertaking organizational reform? While perhaps a less appealing investment, what we sacrifice in direct causality we gain in amplification of impact.

For example, improved financial management within a ministry of health could ensure medication flows to health facilities on time and without delay, saving lives. Reforming the payroll can eliminate costly “ghost workers” meaning that real health workers could be paid on time, paid fairly, and as a result decide to show up for work. Sure, perhaps not as causally satisfying, but we start to see the benefit of working on the cause rather than the symptom.

Another is risk

Engaging in conflict-affected states can be off-putting as the instability we are trying to counteract can end up wiping out our investment. Reinforcing health systems, improving public financial management, or strengthening judiciaries all rely on physical and human infrastructure which become extremely vulnerable in times of conflict. So, how do we support states in a way that does not leave the entire outcome, and therefore the viability of that support, completely vulnerable to potential violence and instability?

The answer is that we hedge risk and pursue a dual-track approach to results. Increasing state effectiveness is a long-term endeavor, but that’s not to say some results can’t be realized in the short-term. The outcomes we are pursuing need to be both long-term, in terms of their contribution towards more effective states, and short-term, through concurrently realizing demonstrable dividends. For example, supporting the design of an effective emergency budget might well ensure money continues to flow to government departments. This potentially saves lives in the short term while ensuring fiscal continuity, economic stability, and continued state legitimacy in the long term. Alternatively, institutional strengthening within a ministry of interior leading to more effective policing during times of crisis avoids a breakdown of civil order and all its woes in the short term, and embeds a culture of rule of law and primacy of the state in the longer term.

The rationale for greater private sector involvement in such work isn’t simply based on accessing more funding. More doesn’t always equal better. It is that private sector involvement (think philanthropist funded state-building technical assistance) can approach such problems in a way that the public sector (think USAID implementer) often doesn’t. These include, aligning with and being led by host-government plans and priorities, ensuring adaptive planning and implementation, and not needing to view engagement through the prism of national interest (although, admittedly, the latter is a debate for another day).

Yet risk goes beyond risk to the investment. There can be risks to the funder: reputational, moral, and potentially legal risks given the characteristics of some of the states that need support. And there can be risks to the state: motivated and well-meaning funders deciding to involve themselves in matters of state about which they know little.

Therefore, this is not a call to arms for individuals or organizations to wade knee-deep into medium term fiscal frameworks in Mogadishu. Rather, it is a suggestion that prospective private sector donors take a considered approach to engaging state-building actors able to provide politically-nuanced support to conflict-affected states. Support which benefits the state and, ultimately, its populace.

It is this approach that we are pursuing at Expectation State, encouraging an industry-wide shift in how the private sector supports conflict-affected states.

Greater private sector involvement in state-building is not the solution. It is part of the solution to part of the problem. We can’t divorce efforts to improve the machinery of state in conflict-affected areas from the myriad of other issues at play, whether related to the national political settlement or societal attitudes towards spoilers. Yet if we agree that conflict-affected states pose a problem that is both complex and critically important to the global community, we can’t help but reach the conclusion that the private sector is not spending its money entirely wisely. It needs to diversify its approach to include tackling the root causes of state ineffectiveness, not just its symptoms.

 

Raymond Asfour is founder and CEO of Expectation State, an organisation dedicated to strengthening conflict-affected states through the support of private sector donors, including foundations, corporates, and philanthropists. He has worked extensively in the design, implementation, and evaluation of cross-sectoral projects, programmes and funds in conflict-affected states across the world. He also came up with the name for War on the Rocks, but has yet to receive his free tumbler. You can follow him on Twitter @RaymondAsfour.

Image: USAID