Save lives, speed up development: Innovative finance and landmine clearance
In recent years over 5,000 people have been killed or injured annually by landmines and other explosive remains such as cluster munitions. Hundreds of thousands of square kilometres of land remain unusable due to mine contamination. As such, mine and explosive remnants of war contamination continues to pose a significant humanitarian and development threat to affected countries. Reducing this burden quickly and effectively will require increased funding and different financing structures for mine action (in other words, mine clearance and support for productive use of cleared land). With that in mind, the UK Foreign, Commonwealth & Development Office asked us — Social Finance and The HALO Trust — to look at how innovative finance and broader partnerships could both accelerate and improve the efficiency of mine clearance.
In this short blog, we cover the key funding challenges that mine action contends with today and present three potentially promising solutions. For a more detailed analysis see our report, Innovative finance for mine action.
What are the key challenges of mine action funding today?
We spoke to a range of Governments, NGOs and private sector actors in mine action, and found a broad consensus as to the current challenges faced by the mine action sector:
1. Inadequate funding for mine action, partly because mine clearance is not always seen as a development need;
2. Funding structures that do not incentivise efficient implementation of mine action;
3. Short term, uncertain funding leading to difficulties in effective planning;
4. Insufficient data on the benefits and outcomes of mine action;
5. Sometimes weak national ownership for mine action, and inadequate linkages to broader development planning; and
6. Sub-optimal coordination within and between donor Governments.
How can innovative finance make mine action more efficient and effective?
To overcome the challenges above, three innovative financing mechanisms emerged as highly promising to improve funding and incentivise more effective mine action implementation:
1. Outcomes finance
Outcomes finance — including impact bonds — incentivises better, more flexible and adaptive implementation by linking disbursements to results, rather than paying for implementation of pre-agreed elements of a log frame or similar structure. In the case of mine action, funding might disburse against mine clearance and recovery of social and economic activity on cleared land, incentivising better monitoring and evaluation of outcomes and strengthening the linkages between mine action and subsequent activities on cleared land. One particularly efficient form of outcomes funding is an Outcomes Fund, which would make pooled funding available competitively to proposed mine action programmes, with only the most effective receiving funding.
Outcomes funding could also help bring in new and enlarged donor funding by:
1) De-risking donors sceptical of the cost-effectiveness of mine action compared to other development programmes (since they only pay on success); and
2) Reassuring them that the benefits of mine action — both of clearance and subsequent activities on cleared land — will be rigorously measured.
2. Outcomes-based public private partnerships
In many cases the return of activity to cleared land, as well as for mine clearance itself, will require subsidies. Unfortunately, traditional input based subsidises tend to misallocate resources and create perverse incentives. In contrast, outcome-based subsidies directly reward achievement of a defined result, rather than subsidising inputs that may or may not help achieve that result.
An outcomes-based public private partnership would support and incentivise both mine clearance and subsequent private sector, for-profit investment. The foundation of the approach is transfer of land to the private sector conditional on successful mine clearance, either for free, or at a subsidised price, with the size of the subsidy depending on the value of the land and the costs of clearance.
Transfer of ownership of cleared land may be enough on its own to incentivise not only mine clearance but also investment on the demined land. Where these incentives are not sufficient, additional subsidised support could be provided through services such as agriculture extension, business development services and skills training.
3. Front-loading funding
The third potential innovative financing mechanism, a front-loading finance facility, would build on the International Finance Facility for Immunisation (IFFIm) approach, adapted for mine action to comprise of four elements:
1. Donor governments make long term pledges of annual funding to mine action.
2. Highly rated bonds are issued securitising the long term pledges, thus allowing more rapid results on the ground though accelerated financing.
3. Funds disburse for priority mine clearance programmes.
4. Programme management is governed by an alliance of implementing countries, donors and UN agencies.
Importantly, front-loading funding allows for significantly faster achievement of humanitarian and economic benefits, saving more lives and reducing poverty, as all as potentially attracting new funders to mine action, who would see benefits without a significant immediate call on aid resources. The stable multi-year funding, aligned to national mine action plans, would also facilitate better planning and enhance national ownership by giving affected country states a seat at the table.
There is huge potential for innovative finance to bring more funding and efficiency to mine action. While there are already a number of mine action stakeholders considering this type of funding to expand, improve and sustain their programmes, rolling out innovative finance mechanisms requires greater engagement — both from actors inside and outside the mine action sector — to foster dialogues and new partnerships, perhaps through the establishment of an advisory board or group of interested stakeholders to champion this work.
If you would like to learn more about our research or are interested in getting involved in these discussions, please reach out to Peter Nicholas.