A blog from our CEO Meike van Ginneken and MD Sectors Andre de Jager
Our work in agriculture, energy and WASH projects to provide practical know-how to make a lasting difference in the lives of people living in poverty by helping them lift incomes and basic services is more relevant than ever. SNV aims to drive systems change by strengthening institutions and kick-starting markets. This focus on systems is the basis of resilience. The pandemic shows that people can easily fall back into poverty if interventions focus on quick wins and do not address the underlying systems that trap people in poverty.
The scope and scale of the impacts of the pandemic are still evolving. We see five major trends that require us to adapt our work in terms of priorities and the needs of our partners.
Trend 1: Increased poverty and inequality
2020 will be the first year since 1998 that the global rate of poverty increases. The World Bank projects an increase in the poverty rate of 2.3 percent compared to a no-COVID-19 scenario with 70 to 100 million people being pushed into extreme poverty in 2020. People living in poverty, women and vulnerable populations are hardest hit by the economic crisis. In-country and global inequality is on the rise. Social safety nets are insufficient in many countries due to limited government capacity and resources. Some countries face major shifts in urban and rural demography (‘ruralisation’).
SNV is responding to this trend by articulating and implementing inclusive approaches with a focus on hardest-hit target groups. With an increasing role of the public sector in addressing these challenges, we specifically include advice and advocacy to governments. We use our proven Gender Equality and Social Inclusion (GESI) tools to ensure WASH and energy services reach vulnerable groups. Our Balancing Benefits approach addresses gender norms and relationships at the household and community levels in our agriculture and livelihoods projects. We are tweaking our agriculture projects to focus more explicitly on nutrition. We are adapting youth employment projects to ensure that we create sustainable employment in these changing socio-economic circumstances.
Trend 2: Decoupling and localisation of value chains
The relations between consumers and producers/service deliverers are changing. As international trade is disrupted, we see an increased emphasis on domestic value chains, local production and informal markets. Political pressure moves governments to price controls for essential food crops and basic services, and the global economic down-turn may depress prices in the long term. Small and medium enterprises (SMEs) in agriculture, energy and WASH gain importance for service delivery but also are hard hit by the crisis. For instance, 85% of the off-grid energy companies reported in a recent survey to be struggling with economic survival beyond a period of more than five months.
SNV is well positioned to respond given our local presence and know-how. Our teams of experts provide data and information and engage stakeholders as markets shift. We are supporting institutional resilience of markets of goods and services in agriculture, energy and WASH. We are softening requirements for access to finance for SMEs in result-based financing projections and matching grants and extend periods of support. We are increasing our focus on informal food markets and reorienting our technical assistance and financial support to essential value chain actors. This includes more focus on logistics of supply chains.
Trend 3: Stress on social compact between governments and citizens
The COVID-19 crisis demands collective sacrifices from communities. Governments that have managed to limit the spread of the virus are often those that enjoy the trust of their citizens. Long before COVID-19 hit, they had a social compact in which members of society cooperated for social benefits while receiving support from governments. People expect governments to step in, but restrictive measures are unpopular, and for public service delivery the state revenues have decimated. Capital and operational expenditure for public service delivery (e.g. water supply, energy, health facilities, food access) is under pressure due to reduced tax revenue in economic slowdown. The combination of higher expectations and lower public resources places great stress on the trust between governments and citizens.
SNV uses its extensive on-the-ground track record to build trust between governments and citizens. We have decades of experience in working explicitly and visibly with governments to provide basic services. While we continue to see an important role for private service providers, we recognise the increased role of governments as duty bearers to provide water, sanitation, energy and nutrition services and in food value chains. In a time that governments need to do more with less resources, we can support governments in targeted and smart subsidy and pricing schemes. We help fight misinformation by generating data and credible information to provide citizens with a strong voice to hold officials accountable. Our explicit focus on inclusion encourages and supports governments to leave nobody behind in their agriculture, energy and WASH policies.
Trend 4: Decrease in finance flow
All financial flows in or to low- and middle-income countries are decreasing including foreign direct investment, domestic lending, public expenditures, remittances and development aid. FDI flows to Africa are forecasted to contract between 25% and 40%. Global remittances are projected to decline sharply by about 20 percent in 2020. There is simply less money to solve bigger problems. We realise that in the coming years, we will face challenges to leverage private or public finance through our projects. This makes us try harder. Markets will require longer and deeper support before they can function on their own. SMEs will take longer to become financially self-sufficient. As many citizens and firms will look for support, cash strapped governments will need to target and smartly design subsidies.
All these trends are interlinked. In addition to the responses already mentioned, we are reinforcing and changing to financial support mechanism to SMEs and market partners. We are working with partners to increase our expertise in developing finance instruments for vulnerable groups and linking to existing funding sources and institutions.
Trend 5: Digitisation is going mainstream in all SNV sectors
COVID-19 related measures have led to a rapid expansion of the use of digital solutions ranging from weather and climate information, market information systems, e-advisory / extension platforms, electronic payment for access to finance, to online trainings. Many of the new tools are not yet fully tested and earning models are not mature. Countries and social groups with poor levels of connectivity risk being further excluded from social and economic opportunities.
We are impressed by the speed and dynamism with which SNV teams around the world are assessing and applying digital solutions across our sectors. This includes supporting SMEs on digital innovations and roll-out and leveraging new information technologies to monitor results and target funds. Like many of our partners, we continue to learn and join forces to make sure that digitisation can make a positive lasting difference in the lives of people living in poverty.
Local know-how for lasting solutions
These global trends hide different local realities between and within countries. Conversations between our nearly 1,400 staff residing in the countries we work in, prioritise different issues and show innovative contextualised solutions. SNV is well positioned to help countries and communities because we have built long-term partnerships. We will continue to make deliberate choices to focus on specific sectors, products and services. While we will maintain the strategic focus on direct results and systems change outlined in our Strategic Plan 2019 to 2022, we will make adjustments in our interventions to effectively address a continuing changing context. This way, we will contribute our experience and resources to help the world overcome the crisis, build a better and more resilient future and continue to contribute to the Sustainable Development Goals.