After a disaster, bringing local markets back to life aids recovery

As they rush in to hand out much-needed food and supplies in areas devastated by hurricanes, floods or earthquakes, aid agencies might be missing an obvious trick.

Instead of parachuting in emergency relief when disaster strikes, they should tap into the local economy and social networks that already form the backbone of communities to better help people rebuild shattered lives and stem the impact of disasters, says a new report by Mercy Corps.

Funnelling money to local businesses and banks could be a key way to stretch hard-won donor dollars further while laying the foundations to build longer-term resilience for communities likely to be hammered again and again by disasters, it argues.

“After a disaster, we see that markets are really at the core of this. Markets are both fragile and adaptive,” said Alison Hemberger, senior adviser for markets and learning at U.S.-based humanitarian agency Mercy Corps. “We need to make sure we're supporting them so they can really launch recovery.”

After the disaster shock fades, the reality quickly dawns for people that they need cash fast to feed their families, pay bills, and face the momentous challenge of replacing what they've lost - whether it's cattle, crops or a hairdressing business.

Providing cash transfers or vouchers recognises that local people know best what they need to get through a crisis, and ensures that money moves through the economy as they buy from local businesses, helping suppliers and transport companies down the chain, said Mercy Corps.

In one Zimbabwe programme, each $1 cash transfer generated $2.59 in additional income for the local economy, according to Mercy Corps, which says financing such as loans and insurance is needed to drive recovery.

FINANCIAL LIQUIDITY

Local businesses are often just as devastated by disasters as their customers. They might lose staff and premises, or find that suppliers and services can't reach them. The banks they depend on for credit may be struggling for liquidity as customers fail to pay loans, said the report.

“We need to be supporting these systems before,” said Hemberger. “The more you're able to strengthen the ability of financial systems to have liquidity, for example, in a crisis, the better, the stronger the local economy is, and the more they're prepared for the eventuality of disaster.”

Households and businesses can both benefit from efforts to guarantee access to finance and markets after a disaster, said the report.

Aside from transport and infrastructure, government information and services - from seeds and fuel supplies to technicians – are also important to speed up recovery.

Bearing in mind that disasters are not as random as they may seem makes it easier to prepare people to cope with regular events, said Hemberger. Those could be the hurricanes that plague the Caribbean, Asia's torrential monsoon rains or droughts that hit crops and flocks in Ethiopia.

“We also need to recognise that longer-term funding, even in recovery from a disaster, is something that makes a lot of sense,” she said.

In the near-impossible scenario the world gets through the next year without a disaster, 26 million people would be able to edge out of extreme poverty, said the Mercy Corps report, citing World Bank figures.

But that seems rather like wishful thinking. If Hurricanes Irma, Harvey and Maria are any indication of the course being set by climate change, preparation is more essential than ever.