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WFP Management Plan (2018–2020)

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WFP Management Plan (2018–2020) Executive Board Second regular session Rome, 13–16 November 2017 Distribution: General Agenda item 5 Date: 20 October 2017 WFP/EB.2/2017/5-A/1/Rev.1* Original: English Resource, financial and budgetary matters * Reissued for technical reasons on For approval 13 November 2017 Executive Board documents are available on WFP’s website (http://executiveboard.wfp.org). WFP Management Plan (2018–2020) Executive summary A new way of working After a decade of decline, hunger is on the increase, with 815 million people suffering from chronic undernourishment, including more than 100 million facing severe food insecurity. Hunger and undernutrition are significantly worse in countries affected by conflict, which account for 60 percent of the world’s undernourished population and nearly 80 percent of the world’s stunted children. Conflict and hunger have contributed to a doubling in the number of internally displaced persons in 10 years. These are the stark realities in the area of WFP’s core humanitarian work, where it has its largest operations. Yet, for the people that WFP reaches, distinctions between humanitarian assistance, development support and peace building are meaningless. The current reality demands that WFP find new ways of working that enable it to deliver more efficiently, effectively and economically in support of host governments, within the United Nations system and with the private sector and civil society. Food assistance is one of the most important areas of action and investment at the humanitarian– development–peace nexus. Extending well beyond handouts of food, food assistance comprises a comprehensive range of instruments, activities and platforms that together empower vulnerable and food insecure people and communities to obtain nutritious food in various contexts. Through the investments and reprioritizations in this 2018 Management Plan, WFP will continue to improve its food assistance operations through the progressive implementation of country strategic plans and transformed financial and corporate results frameworks; enhance its capabilities in respect of cash-based transfers; and improve its organizational risk management. Together, these initiatives will boost WFP’s contributions to Sustainable Development Goal 2, on zero hunger, and the 2030 Agenda for Sustainable Development as a whole. Focal points: Mr M. Juneja Ms E. Joergensen Assistant Executive Director Director and Chief Financial Officer Budget and Programming Division Resource Management Department tel.: 066513-2408 tel.: 066513-2885 Mr C. Gardner Mr D. Vidal Chief Chief a.i. Budget Service Project Budget and Programming Service tel.: 066513-2077 tel.: 066513-2595 World Food Programme, Via Cesare Giulio Viola, 68/70, 00148 Rome, Italy WFP/EB.2/2017/5-A/1/Rev.1 2 Recognizing the demands on the entire United Nations family to do more with less, WFP proposes also to lower its indirect support cost recovery rate from 7 percent to 6.5 percent beginning in 2018. WFP will also maintain a zero nominal growth programme support and administrative (PSA) budget of USD 335.4 million in 2018. The 2018 Management Plan also transforms the way in which PSA funds are presented, transparently connecting resources budgeted under the headings of “strategy and direction”, “services to operations” and “governance, independent oversight and fundraising” to planned results defined in accordance with key performance indicators. Financial outlook: funding WFP is a 100 percent voluntarily funded organization. Donations are therefore its lifeblood and a top priority of the Executive Director. The funding forecast for 2017 points to income of USD 6 billion – a record amount. While that is good news, the top 10 donors to WFP accounted for 85 percent of its 2016 income, while contributions from other donors dropped in both absolute and proportional terms. WFP is determined to reduce this dependence and from 2018 will make a concerted effort to broaden its donor base, including by targeting private sector and individual giving. The strategic alignment of WFP programmes with SDG 2 and SDG 17 will also provide greater opportunities for collaborative financing with host governments. The forecast income of USD 5.7 billion in 2018, while reflecting some continued funding uncertainty, remains significantly above the 2017 Management Plan forecast for 2018 of USD 5.2 billion. Needs and the WFP implementation plan The continued complex and protracted emergencies that challenge the organization and the international community result in estimated operational requirements of USD 9 billion for 2018. WFP is currently supporting six Level 3 and six Level 2 emergencies. With the exception of Nigeria and most recently Bangladesh/Myanmar, all have been at Level 2 or 3 for more than two years, and with the exception of the Horn of Africa drought, they are all primarily driven by conflict. The implementation plan for 2018 is aligned with projected resources for the year. With a projected gap of 35 percent between operational requirements and the implementation plan (lower than the 40 percent gap in the previous Management Plan), prioritization is inevitable. In order to minimize the effects of this gap, WFP must prioritize based on the geographical areas that are worst affected, target only the most vulnerable households or reduce the size of rations and other assistance. Activities can also be affected to varying degrees, with life-saving activities prioritized over preventive activities and individual capacity strengthening, asset creation, livelihood support and prevention of malnutrition subject to the most significant decreases. The 2018 implementation plan focuses primarily on relief and emergency response, with 74 percent of the projected resources directed towards the crisis focus area. The remaining resources under the implementation plan are directed to the resilience (16 percent) and root causes (10 percent) focus areas. In 2018, in-kind food accounts for the largest portion of projected WFP assistance (53 percent) while cash-based transfers are estimated to increase to 37 percent of total transfers, establishing WFP as the largest humanitarian agency in terms of cash programming. As country strategic plans are finalized there may be some reallocation of resources across focus areas and activities. Evidence of the returns on investment on prevention interventions and asset creation, for example, is growing, and as countries move to long-term multi-year planning, activities aimed at building community-level resilience while addressing the underlying causes of individuals’ inability to support themselves and their families should receive greater attention and funding. 2018 programme support and administrative budget The programme support and administrative (PSA) budget covers the indirect support costs (ISC) required to deliver the implementation plan. The PSA budget is funded by the ISC charged against contributions, which follow the full-cost-recovery principle. The PSA budget will be revamped, broken down according to newly proposed appropriation lines and results pillars that summarize the main results jointly delivered by headquarters and the regional bureaux in support of WFP’s Strategic Results, as shown in the following figure. WFP/EB.2/2017/5-A/1/Rev.1 3 Each of the five results pillars in the figure captures the main products and services produced for programme support and administration, and the results chain will facilitate cross-organizational aggregation of budgets and performance management. Following years during which WFP has received contributions significantly in excess of the levels forecast in its management plans, the PSA equalization account (PSAEA) is expected to show a healthy balance at the end of 2017 (see Table 1). This allows the Secretariat to propose several investments in key corporate priorities to support the effective and sustainable delivery of WFP’s implementation plan. A reduction in the corporate ISC rate from 7 percent to 6.5 percent from 2018 is also proposed, and a dialogue with the Executive Board is foreseen during 2018 to refine WFP’s ISC policies. The proposed zero nominal growth 2018 PSA budget of USD 335.4 million is below the level of anticipated indirect support cost income for the year of USD 342.9 million arising from forecast contributions of USD 5.7 billion using the reduced ISC rate of 6.5 percent. Using current forecasts, at the close of 2018 the PSAEA is expected to have a balance of USD 190.7 million, equivalent to 6.8 months of PSA expenditure. TABLE 1: PROGRAMME SUPPORT AND ADMINISTRATIVE BUDGET AND EQUALIZATION ACCOUNT (USD million) 2014 2015 2016 2017 2018 PSA budget 281.8 281.8 290.3 335.4 335.4 Critical corporate initiatives 9.2 27.2 20.0 13.5 35.6 Proposed transfer to reserves and special accounts 15.0 17.0 PSA equalization account year-end balance/forecast 191.8 138.3 197.4 229.3 190.7 The Secretariat has continued to reprioritize PSA resources (including USD 5.3 million arising from reductions in standard staff costs and other savings) to higher priority areas including training, cash-based transfers, enterprise risk management activities, development of partnerships and governance. WFP/EB.2/2017/5-A/1/Rev.1 4 Transfers from PSA equalization account to reserves and special accounts The Secretariat proposes to inject USD 9 million into the immediate response account (IRA) from the PSAEA. The IRA is a critical tool for WFP in reacting quickly to life threatening situations by allocating funds to projects. This transfer supplements the transfer of USD 15 million made at the start of 2017. The Secretariat also proposes to transfer USD 8 million to the Wellness special account. This will allow WFP to continue its support for its employees in the field through implementation of the Wellness Strategy with regard to matters such as medical and psychosocial health initiatives, work and living conditions, safety and workforce stewardship. Critical corporate initiatives funded from PSA equalization account Critical corporate initiatives strengthen WFP’s programming, operational and administrative capacity to fulfil its mission, and deliver value for money.
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