Analysis of the financial options for addressing conflict-induced displacement in the Caraga Region in Mindanao, Philippines

02 Strengthening Capacities

for Dealing with Conflict-Induced

Forced Displacement

in Mindanao, Philippines

Compilation of Success Stories, Innovative Approaches, and Learnings

Analysis of the financial options for addressing conflict-induced displacement in the Caraga Region in Mindanao, Philippines

As a site of recurring displacements caused by armed conflict and natural disasters, the Caraga Region in Mindanao, southern Philippines is among the areas in the Philippines in the highest need of support for internally displaced populations. Conflict-induced displacement in Caraga is often short-term but repetitive, disrupts living conditions and livelihoods, and reduces access to basic services such as education and health care. Sustainable solutions for the prevention, return, resettlement, and reintegration of displaced individuals and families require considerable public investment.

With this in view, there is a need to understand the available financial instruments for mitigating and managing the impacts of conflict-induced displacement. Government funds are available from multiple sources but need to be better optimized to serve their intended purposes.

For example, Local Disaster Risk Reduction and Management Funds (LDRRMFs) are instituted by the state to mitigate, prepare for, respond to, and recover from the effects of natural and man-made disasters, but local government units (LGUs) experience challenges in accessing and properly utilizing these funds.

Against this backdrop of needs and gaps, the “Strengthening Capacities for dealing with Conflict-Induced Forced Displacement in Mindanao” (CAPID) project, implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), commissioned a study on the financial options for adequately responding to the needs of internally displaced persons (IDPs) and host and home communities. The study aimed to answer five research questions:

Background

1. What state funding instruments are available for the mitigation and management of conflict-induced forced displacement in Caraga?

2. What policies and implementing rules and regulations apply to the various levels of local government in accessing, allocating, and utilizing these instruments?

3. How are these financial instruments currently being utilized by the LGUs towards preventing, mitigating, and managing the impacts of conflict-induced displacement?

4. What are the key issues surrounding the use of these funding instruments?

5. Given the key issues identified, how can policies and processes be optimized to more effectively deliver public services towards mitigating and managing the impacts of conflict-induced forced displacement?

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Key findings

The research was carried out in August and September 2018. Using a mix of qualitative and quantitative methods, the study surveyed the sources and uses of government funds for responding to conflict-induced forced displacement in Caraga. The study looked in-depth into the experiences of selected municipal and barangay LGUs of Gigaquit in Surigao del Norte province and Prosperidad in Agusan del Sur province.

Primary state financing

instruments

The study identified and analyzed the five most useful financing instruments applicable to handling forced displacement scenarios, which are available and feasible for LGUs’ use. They are outlined in the following table.

Primary State Financing Instruments Applicable to Conflict-Induced Forced Displacements

Controlled by Local Government Units Controlled by National Government

Instruments LDRRM FundsConfidential Funds(Peace and Order)

Development Funds

Calamity FundsQuick Response

Funds

Description

Funds set aside to support disaster

risk management activities. Thirty

percent (30%) shall be allocated as a

lump sum.

Lump-sum amount

provided in the appropriation ordinances of LGUs for their Confidential Expenses to

maintain peace and order, and preserve the comfort and

convenience of their inhabitants.

Funds used to provide basic services and

facilities, social development,

economic development, and

environmental management.

Lump-sum fund appropriated

under the General Appropriations Act to cover aid, relief, and rehabilitation

services to communities/

areas affected by man-made and

natural calamities, and repair and reconstruction of permanent

structures, including capital expenditures

for pre-disaster operations,

rehabilitation, and other related

activities.

Built-in budgetary allocations that represent pre-

disaster or standby funds for agencies to

immediately assist areas stricken by catastrophes and

crises.

Allocation No less than 5% of regular sources [i.e.,

Internal Revenue Allotment (IRA) and

local taxes]

Not exceeding 30% of the Peace

and Order and Public Safety

Budget

20% of IRA

Includes for attribution:

5% Gender & Development

1% Protection of Children

1% Senior Citizens & Persons With

Disabilities (PWDs)

2% Discretionary Fund

Determined by agencies and

the Department of Budget and Management,

subject to General Appropriations.

Determined by agencies and

the Department of Budget and Management,

subject to General Appropriations

Approximate value in Caraga in the last fiscal year-

2017

PHP 60 Million PHP 100 Million PHP 238 Million Variable Variable

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Issues and barriers

The study highlights the following key issues and barriers surrounding the use of the identified financing instruments:

1. Lack of recognition of displacement situations by state actors. This translates to a lack of investments for affected populations, who are generally indigenous peoples’ communities. There is a notable absence of conflict-induced forced displacement-specific planning and budgeting resolutions and ordinances across regional, provincial, municipal, and barangay levels of governance, to name one offshoot of this observed governance climate.

2. Lack of understanding among LGUs of policies concerning accessing, budgeting, and disbursing of funds for conflict-induced forced displacement. This results in non-compliance with the rules and regulations on the use of LDRRMFs and the underutilization of earmarked budgets, which leads to non-programming towards addressing the needs of displaced populations, especially at the barangay level.

3. Lack of appreciation and competencies in applying integrated results-based participatory development planning and budgeting. The failure to perform integrated planning and budgeting underpins common notions of insufficient funds for attending to conflict-induced forced displacement situations. LGUs are limited by the idea that they can only use LDRRMFs when they have multiple budget lines to draw from in preparing for or mitigating conflict-induced forced displacement situations, including their LDRRMFs, Confidential Funds, and General Development Funds.

4. The lack of focus on the use of Confidential Funds under the Peace and Order and Public Safety Budget. These funds can be used to address the causes of conflict and prevent armed confrontations between state and non-state groups. Confidential Funds can be used to prevent or reduce incidences of fighting, and therefore, displacement situations.

5. Several policy issues. The most important policy issue is the lack of transparency and the results-orientation of Confidential Funds, which could otherwise serve as a significant resource for the prevention of conflict and conflict-induced forced displacement. Another key issue is the absence of real penalties for non-compliance with LDRRMF spending rules and regulations, thereby usually resulting in underutilization of these funds.

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Given the identified key issue clusters, the study recommends that government actors and supporting stakeholders focus on three primary areas of action to improve the use of state financing instruments for situations of conflict-induced displacement in Caraga:

1. Invest in building conflict-sensitive governance and leadership, with priority for conflict-prone LGUs. This is crucial to ensuring that government decision-makers understand the different conflict parties and make balanced investment decisions that take into account the interests of displacement-prone constituents.

2. Create or support initiatives for increasing the knowledge and competencies of LGUs on the rules and applications of three key financing instruments: 1) LDRRM Funds; 2) Peace and Order and Public Safety Budgets, and Confidential Funds, and 3) Development Funds. The study recommends prioritizing and maximizing these LGU-controlled funds over national government-controlled funding instruments, which are generally reserved for large-scale, rapid-onset disasters.

3. Review policies and create laws, resolutions, and ordinances that will mandate the following:

• Institutionalization of protocols for handling conflict-induced forced displacement by LGUs and government agencies. This can be taken on by the Regional Peace and Order Council (RPOC), the Regional Disaster Risk Reduction and Management Council (RDRRMC), or LGUs;

• Greater transparency and accountability over the use of Confidential Funds under the Peace and Order and Public Safety Budget;

• Penalties for non-compliance with LDRRMF spending rules and regulations, as this usually results in non-utilization and non-programming of preparedness and response funds as well as a diversion to other non-DRRM expenditures. The penalties need to be coupled with improved dissemination of information and measures to strengthen LGU capacities for planning and budgeting;

• Prioritization of 5th- and 6th-class municipalities, whose regular revenues and funding sources are likely to be insufficient for meeting all humanitarian and development needs within their jurisdictions;

• Increased attention to allocating a budget for long-term solutions for peacebuilding, reintegration of former members of non-state armed parties, the return of IDPs to their home communities, and integration of IDPs into host communities; and

• Implementation of the new cash-based budgeting scheme, which will curb lapses of the old obligation-based budgeting and reporting system in which utilization reporting is based on obligations, not necessarily complete delivery of programs, plans, and activities.

Recommendations of the study

Please contact the GIZ team for further information and inquiries.

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Analysis of the financial options for addressing conflict-induced displacement in the Caraga Region in Mindanao, Philippines

Published by Deutsche Gesellschaft für InternationaleZusammenarbeit (GIZ) GmbHRegistered offices: Bonn and Eschborn, Germany

Strengthening Capacities for Dealing with Conflict-Induced Forced Displacement in Mindanao, Philippines GIZ Office Butuan Nimfa Tiu Building 1, J. Rosales AvenueT +63 (0) 085 300-1003

Author Charlotte L. LozadaAdvisor, Inter-Agency Coordination

Responsible Gunhild Schwitalla-RufGIZ Philippines Mindanao ProjectsCluster Coordinator and Principal Adviser, CAPID project

www.giz.de/philippinesDeutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Layout Asia Society for Social Improvement and Sustainable Transformation (ASSIST Asia)

Strengthening Capacities for Dealing with Conflict-Induced Forced Displacement in Mindanao, Philippines

As at September 2020

In cooperation with Office of the Presidential Adviser on the Peace Process (OPAPP)

On behalf of German Federal Ministry for Economic Cooperation and Development (BMZ)

Addresses of the BMZ offices

BMZ BonnDahlmannstraße 453113 Bonn, GermanyT +49 (0)228 99 535-0F +49 (0)228 99 535-3500

BMZ BerlinStresemannstraße 9410963 Berlin, GermanyT +49 (0)30 18 535-0F +49 (0)30 18 535-2501

www.bmz.de

GIZ is responsible for the content of this publication.