Shelter Materials and Services Market and Cash Feasibility Assessment Gedeo/West

Results and Response Recommendation Report (4R) Background

After two significant conflict incidents, almost 1 million people were displaced between Gedeo and Guji Zones, with vastly diverse urgent and humanitarian needs, and in different states of displacement, with some returning to their place of origin, some relocating and some staying in collective centers and host communities. The Shelter Cluster, with support from the Global Shelter Cluster, organized and carried out a Market and Cash Feasibility Assessment in response to displaced populations of Gedeo and West Guji Zones during the months of August and September.

The key analytical question for the assessment to answer was:

What is the market functionality and feasibility for cash-based interventions for key shelter materials and services in the Gedeo and West Guji Zones?

The assessment team gathered information on: (i) the materials and services value chains relevant to shelter; (ii) the environmental impact of these value chains, (iii) basic IDP shelter needs; and (iv) price data for shelter materials and services. The results of the assessment inform: 1. A response analysis regarding the feasibility and appropriateness of an environmentally friendly, low risk, market-based response for shelter in the Gedeo and West Guji; 2. The development of a proposed methodology for the implementation of cash programming in shelter responses for forced displaced and returning populations of Gedeo and West Guji Zones;

The Shelter Cluster assessment did not: (i) assess IDP/Returnee needs in depth, (ii) provide a detailed mapping of financial service providers and their capacity to deliver cash assistance. Methodology

The assessment team was made up of 8 field officers1, 1 logistical coordinator and 2 technical leads. The tools developed for this assessment reflect lessons learned from Cash Champion deployments in other contexts. They also take into consideration the strengths of the various global market assessment tools currently in use, such as RAM, EMMA and the 48-hour tool, as well as tools developed by partners based in Ethiopia (e.g. DRC, IOM).

1 Field Officers were seconded to the Shelter Cluster from IOM, CRS, NRC, CARE, GOAL, UNHCR, and World Vision.

Cash Feasibility for Shelter Programs Ethiopia has experience implementing cash programs throughout the country, including in response to the West Guji and Gedeo displacements. For this reason, the focus of the cash feasibility portion of the assessment was not directed at gauging the practicality or potential to implement a cash program in the target region; but rather to measure the appropriateness of using a cash-based intervention within the overall design of a shelter response to the returnee populations of Gedeo and West Guji.

Market Functionality for Shelter Programs Several market assessments were carried out by shelter cluster partners in the target areas. This assessment differentiated in its purpose, focusing its analysis on the capacity of the target markets to meet the demand for specific shelter materials. Two value chains were originally planned to be assessed: (i) skilled and unskilled labor markets, and (ii) local wood products (eucalyptus). While carrying out the assessment, the technical leads modified the data collection so as to also include the Corrugated Galvanized Iron (CGI) sheet value chain.

Table 1 gives a summary of the assessment tools.

Assessment Tool Respondent Purpose: To understand…. Sampling Key Woreda 13 Summaries  IDP situation and needs Informant Administrators,  Shelter materials and services: profile, availability Interview Vendors, IDPs,  Market Functionality Emergency  Preferred assistance and delivery mechanism Operations Center  Environmental Considerations Coordinators, etc. IDP Survey IDPs and Returnees 107 Surveys  Availability, accessibility, quality of Materials and Services  Environmental Considerations  Livelihood and Assets Context  Transport and Labor Mapping  IDP/Returnee Needs and Vulnerability  Understand challenges and risks anticipated in shelter construction Focus Group IDPs and Returnees 7 Summaries  Cross-check with results from other questionnaires Discussion  Same purpose as IDP survey Market Transect Walk as 7 Summaries  Market access, functionality, profile Observation Price Data is  Availability, accessibility, quality of Materials and Services Questionnaire Collected  Changes in Market since conflict Vendor Small, medium and 41 Surveys  Market profile Questionnaire large vendors selling  Availability, accessibility, quality of Materials eucalyptus poles,  Environmental Considerations timber, small and  Transport and Labor Mapping large manufactured  Resilience of vendors items used for  Willingness to collaborate construction  Gov’t Regulations affecting trade Laborer Skilled and Unskilled 23 Surveys  Labor profile and mapping Questionnaire laborers  Availability, accessibility, quality of Services  Environmental Impact  Resilience of laborers  Willingness to collaborate  Gov’t Regulations affecting labor

Price Vendors, 5 Summaries  Prices and trends of shelter materials collection - Transporters and Materials Laborers Selection of Market Locations for Assessment

Market locations were selected based on DTM analysis of target population’s place of origin cross-checked with information from local authorities and partners. According to the DTM, the woredas of origin of the largest number of displaced groups are, in order of importance: , , Galana, , Yirgachefe, Birbirsa Kojowa. Table 2 gives a summary of the markets in the region.

# Region Name Woreda Market Type Assessment Update Priority Woreda Markets 1 West Guji Kercha Woreda Assessed – Diversified 2 West Guji Hambela Wamena Woreda Not Assessed – Inaccessible 3 West Guji Galana – Tore Woreda Assessed – Limited Town 4 Guji Bore Woreda Not Assessed – Out of Scope 5 Gedeo Yirgachefe Woreda Assessed – Diversified 6 West Guji Birbirsa Kojowa Woreda Not Assessed – Road Blocked Secondary/Supportive Woreda/Zonal Markets 1 Gedeo Dilla Zonal - Primary Assessed – Primary Zonal Market 2 West Guji Bulé Hora Zonal Assessed – Highly Diversified 3 Gedeo Gedeb Woreda Assessed – Diversified 4 Gedeo Kochere Woreda Assessed - Limited

 The assessment team was blocked from reaching Birbirsa Kojowa.  Road conditions due to weather prevented the assessment team to access Hambela Wamena.

Limitations The assessment results are based off of surveys, FGD, and KII, which provided insight into the context and used to identify trends to feed into proposed actions and recommendation. The data gathered and reported on below is not representative of the target population. Results The assessment results are summarized and presented in bullet form for the purposes of focusing reader’s attention on the prioritized information, meanwhile saving space and time with excessive narrative. The Shelter Cluster assessment team is available until October 15th, 20182 to respond to any questions and expansion of detail on results on request of readers. Reach out to [email protected] with copy to [email protected] for further information.

2 Date was defined as one month from end of deployment and based off of constant and fast changing contexts in the West Guji/Gedeo zones. This report summary is mostly relevant during this time period.

Cash feasibility

Standard considerations in the feasibility assessment of cash transfer programs includes nine factors.3 Of those nine, only six factors were relevant to this assessment and the Gedeo/West Guji conflict induced displacement.

General Cash Feasibility considerations

For West Guji and Gedeo zones: o Beneficiary Preference and Needs: . IDP/Returnee identified diverse needs that are not being met by in-kind assistance  Preference for cash and immediate assistance  Perception that materials/services are readily available in market.  Shelter was reported as a priority need in the survey and FGD results. o Market . Market is frequently visited and accessible by the target community. . Yirgachefe and Dilla are the main markets for Gedeo. Kochere (Gedeo) and Yirgachefe (Gedeo) communities traditionally travel to Yirgachefe on market days. . Galana (West Guji) communities typically travel to Yirgachefe on market days. . Kercha (West Guji) communities traditionally travel to Kercha Town on market days. . Bule Hora (West Guji) is the main market in West Guji zone. . No significant challenges in accessing the local market reported by target population. Cost of transport was identified as a limitation for some responders. . More info on Market presented in Market Functionality section. o Financial Infrastructure and Capacity . Yirgachefe (Gedeo) has more than eight (counted) financial service providers. . Only one FSP (CBE) was identified in Kochere (Gedeo). . Dilla (Gedeo) has numerous FSPs and is the main Zonal market for the region. . Galana (West Guji) only had Savings and Credit and a branch of CBE that was closed at the time and whose operational hours are not defined. . Kercha (West Guji) had several FSPs including Oromia International Bank, which has past experience implementing cash programs in the region. . Bule Hora (West Guji) has numerous FSPs and is a Zonal market. . Families that don’t have access to identification, can obtain a letter of reference from their Woreda Administration and Kebele leaders to meet documentation requirements for cash transfer. There is mention that a fee is associated to getting letter of reference from the Woreda Administration. This was not confirmed.

For Gedeo zone only: o Government . EOC leadership and Zonal head for Gedeo are supportive of cash programming . Woreda administrations of Yirgachefe and Kochere are supportive of cash programming  Suggested vouchers and conditional cash for shelter programming o Risks

3 Cash Feasibility Assessments factors, as defined by the IFRC, are 1) Beneficiary Needs; 2) Government; 3) Funding; 4) Markets; 5) Organizational Capacity; 6) Beneficiary Preference; 7) FSP Infrastructure and Services; 8) Risks; and 9) Timeliness

. No significant risks identified associated with cash transfer programming for shelter outcomes in Gedeo.

For West Guji zone only: o Government . The EOC leadership for West Guji are not supportive of cash programming and have prohibited humanitarian organizations from implementing CTP.  Concerns that past cash programming could have increased conflict tensions in target communities. . Kercha, Galana and Bule Hora Woreda Administrations are supportive of cash programming  KII mention that Woreda Administrators are supportive of CTP but during program implementation, are not involved sufficiently in programming so as to decrease/avoid community tensions.  KII INGO representative with past experience on cash programming in region mentions insufficient participation of Woreda Administration in the process of beneficiary communication and crowd management during the implementation of a cash disbursement. o Risks . Past cash distributions for basic needs (multi-purpose cash) caused a security incident with community youth that were not targeted and selected to receive assistance. Once word of distribution was generated, a crowd made up primarily of youth stopped the distribution. This caused a security incident that was communicated to the EOC and Zonal government heads. . Due to the history of ethnic tensions in the region, high profile programming, such as cash distributions at centralized locations, are significantly at higher risk of increasing tensions between ethnic groups and between beneficiaries and non-beneficiaries.

Note on price trends – Source: FGD Discussions (Anecdotal) o Traditionally, prices increase during coffee harvest season, which is September-November (Primary/Wet Harvest). May-June sees an increase in costs of shelter material, as traditionally families build homes during this time. o Price increases range from 15%-25% o For the Primary/Wet Harvest Season – price increases are typically for clothes and food.

Considerations of Cash Feasibility for Shelter Programs

Purpose: To measure the appropriateness of using a cash-based intervention within the overall design of a shelter response to the returnee populations of Gedeo and West Guji.

Cash programming is feasible for the Gedeo context, considering the proximity to functioning and diversified markets, preference and need of the target population, decreasing ethnic tensions, availability of FSPs, and support of cash programs by government institutions.

For West Guji, at this time, cash programming is unfeasible due to the government’s position on cash programming, the limited number of FSPs offering non-centralized distributions methods for cash assistance, and the heightened ethnic tensions in the region. Specific actions must be taken to resolve these barriers to cash feasibility. Below are the author’s recommendations to improve the probability of cash feasibility in West Guji

Zone. If further detail on the proposed solutions are needed, reach out to [email protected] with copy with [email protected] for further information.

 Proposed solutions to feasibility barriers4: o Advocacy on government’s position – The Addis-based Cash Working Group is advocating at the national level for a reconsideration of cash programming in West Guji. Cash Working Group chairs and secretariat should lead formerly document the West Guji EOCs position on cash programming. Once documented, the Cash Working Group can initiate an advocacy campaign to resolve the specific limitations as defined by the EOC. o Strengthen and promote Woreda Administration and other leadership involvement in programming – The process of communicating with communities around cash programming requires a significant level of participation and effort from the Woreda Administration. As defined by the Minimum Economic Recovery Standard (MERS): Asset Distribution Standard 2 recommends that all programming should develop communication plans and strategies to ensure asset donations are transparent from the community’s perspective. Proper communication with community leaders, and inclusion in the beneficiary selection process will avoid risks and decrease tensions between ethnic groups. Incorporating youth leaders and other stakeholder group leaders into the beneficiary selection process. o Incorporating sector-specific objectives and conditionality in transfers – Design cash transfers for specific shelter outcomes by using conditionality for the reception of transfers. Through the use of conditions, implementing organizations influence beneficiaries’ purchasing habits and actions, requiring recipients to purchase specific materials and build structures as the condition to receive subsequent cash and asset transfers. o Shelter In-kind plus cash – High transfer values increase tensions between beneficiaries and non- beneficiaries. Avoid high transfer amounts by purchasing and distributing high-value items, such as CGI sheets. o Low-profile distribution methods – Partner with FSPs that offer low-profile payment mechanisms (mobile money) and/or are willing to distribute at the Kebele level, at smaller scale, and more often. This would decrease the profile of centralized distributions that traditional occur in the Woreda town center.

Market Functionality

Purpose: Focusing its analysis on the capacity of the target markets to meet the demand for specific shelter materials. Three value chains were assessed: (i) Skilled and Unskilled labor markets; (ii) Eucalyptus; and (iii) Corrugated Galvanized Iron (CGI) Sheets.

Skilled and Unskilled Labor  There was an increase in labor supply, both skilled and unskilled, with the arrival of displaced people to the woreda centers. As families return to their place of origin, labor supply is expected to decrease in the woreda town centers. Demand for labor decreased during the displacement. Demand for labor is expected to increase with the return of families and distribution of assistance. No price change on labor reported or witnessed before, during or after the crisis.

4 Note that these proposed solutions should also be considered in the implementation of cash interventions for Shelter programs in Gedeo.

 The skilled and unskilled labor market in Gedeo and West Guji are active and in supply at the woreda level. KII and FGD respondents confirm availability and appropriate pricing of labor. IDP respondents report that traditionally, skilled labor is available at the kebele level.  It’s common for families in target locations to contract skilled labor for the construction of the shelter structure, and installation of CGI sheets.  Most families do their own unskilled labor. Vulnerable households (Single Women head of households, disabled, elderly) are the most in need of unskilled labor. Families contract unskilled labor for hauling shelter materials and mudding for shelter walling. The decision by families to contract unskilled labor is dependent on the families’ availability of funds and, level of vulnerability and need.  Families tend to contract labor, both skilled and unskilled, locally within their kebele, however, availability of skilled labor may have been disrupted due to the conflict and displacement.  Labor supply differs per kebeles and is dependent on population size, however, any shelter response will affect the level of available labor supply. The response’s impact on the labor market can only be measured concretely once numbers of affected households are reported by kebele.  Programming Recommendation: Implementing partners should collect kebele level data on partially and fully damaged households. Compare total population vs affected population. Assumption needs to be made by Woreda based on % of HH that will contract skilled labor. These assumptions can be made in collaboration between partners and revised during implementation as more labor-related data is collected.

Eucalyptus  Supply and availability of raw eucalyptus wood products (posts, walling, rafters, beams, roofing) was not significantly affected during the conflict and displacement. Eucalyptus material is readily available all year round.  The Shelter design for the target region uses 3-5-year eucalyptus saplings as their main source of timber, which is raw (not milled).  Raw eucalyptus timber, ready for purchase, are available along the roadway and in the markets of Yirgachefe and Dilla; yet not as common in the West Guji markets. Eucalyptus products in Kercha and Galana are obtained through orders to private landowners.  There is a price difference of 15-25% between the wet and dry seasons.  Eucalyptus timber is harvested primarily from private plantations, which were not disrupted during the conflict or displacement. There are some government plantations in the region, however, extraction is approved only through a bid process from medium/large contractors. Some families report having access to eucalyptus timber for their own shelter construction once they return home.  There are no government regulations regarding the harvesting of eucalyptus, as it’s a non-native species. Two KIIs mentioned that the transportation of any wood products requires a permit unrelated to the amount, however, it’s not specific to eucalyptus nor does it limit the extraction of eucalyptus.  No environmental concerns were identified in the extraction/harvesting of eucalyptus for reconstruction efforts.  IDP FGD and survey results indicate that families access eucalyptus products through a mix of payment to eucalyptus vendor and self-harvest at own plantation.  For Kercha, implementing organizations should monitor prices of eucalyptus products and capacity of the forest to provide through self-harvest, due to the high number of displaced families in Kercha, and the limited number of eucalyptus vendors in West Guji.  Programming Recommendation: Implementing partner carrying out a shelter response in Kercha should incorporate a comprehensive monitoring system for prices and environmental quality. Monitoring can be done by setting up a strong relationship with the eucalyptus vendors, FGD/KII with laborers (hauling and

cutting is done by unskilled labor) and FGD with target community. An environmental impact assessment can also be carried out, although not required.

Corrugated Galvanized Iron Sheets  Two main sources of CGI for Ethiopia: 1) Nationally produced; and 2) Imported with source unknown. Both products enter the market chain in Addis.  Nationally produced CGI is considered to be of higher quality (gauge) and price than the Imported CGI.  Both products are available in the local markets.  Primary Zonal market for CGI is Dilla. o Several Dilla wholesalers distribute CGI to vendors in target communities.  Wholesalers have stock of average 2000 CGI in warehouse. o Most restocks range from 1000-2000 CGI sheets per order.  Local vendors in Gedeo and West Guji prefer to procure directly from the Addis producer/importer, as its cheaper than procuring from Dilla. Local vendors make decisions to purchase CGI in Addis vs. Dilla based on availability of transportation, availability of funds for advanced payment, and urgency to restock. o Vendor KII reported that there is weekly transportation from local market to Addis, hence its always an easy option to restock directly from Addis. o Most restocks range from 500-600 sheets per order. Most vendors have small warehouses or open spaces to store CGI.  Advanced payment is required for vendors to restock on CGI. With advanced payment, restocking of CGI takes 1-3 days from Dilla, and 3-5 days from Addis.  Price data collection shows little change in CGI prices, however, FGD discussion mentions an increase in prices for shelter materials from May-June.  As zonal markets, Dilla and Bule Hora have significant supply of CGI sheets. At the woreda level, Gedeb, Yirgachefe and Kercha have multiple vendors offering CGI sheets, along with small and other large manufactured items. Kochere and Galana have fewer (1-2) vendors offering CGI sheets and other shelter material. Based on feedback from Shelter Cluster Partners working in the area, assumption is that Birbirsa Kojowa and Hambela Wamena are similar in market capacity as Kochere.  The limiting factor in the CGI sheet value chain is transportation and cash liquidity of vendors to restock, especially significant for Kochere, Galana, Birbirsa Kojowa and Hambela Wamena.  Programming Recommendation: Implementing partners operating in markets that are limited (less than 3 vendors) should monitor vendor capacity and seek ways to support their capacity to restock, to avoid complete depletion of vendors’ stocks and restocking being delayed or blocked by unexpected circumstances.

Other Relevant Information  October-November is typically the coffee harvest season for the region, which is the main income generating time of the year for households. Although some Woreda Administrators mentioned that crops were affected during the conflict, no other evidence of damage to coffee plantations was found.  The majority of the population participates in the coffee harvest, be it as the plantation owner, or as unskilled labor. Traditionally, the months of October and November are the months where people in the region have available funds to spend on own needs.  Partially damaged households ranged in level of damage, however, all households reported a complete loss of CGI sheets.

 During market transect walks, the assessment team noted the resale of second-hand CGI sheets. It is noted that during the conflict, violent actors were responsible for stealing CGI sheets from homes of displaced families.  Resale of NFI items was noted during the vendor surveys. It is unknown if the resale of NFI items was due to other priority needs, or families’ inability to store NFIs in collective centers.  Although food is being distributed, survey respondents mentioned that all food needs are not being covered. Recommendations Based on the assessment results, the following Shelter and Cash programmatic recommendation are presented by the author. These recommendations are limited only to Shelter and Cash responses and do not take into consideration other proposed programming to cover vulnerable families’ basic needs.

1) Response for Partially Damaged Households able to participate in coffee harvest: Distribution of CGI Sheets and Cap Nails

CGI sheets and Cap nails are the main expenses and limiting factor to families that have partially damaged households. To avoid duplication and fraud, on-site verification of households with GPS marking should be carried out for selected households that receive the in-kind materials. In order to support the return of displaced families to their place of origin, the author proposes a direct distribution of in-kind material (CGI sheets and Cap nails) to selected households with partially damaged homes. There is an urgency in the return of families, as the wet harvest for coffee is in October-November. By doing direct distribution of in-kind material, implementing actors can facilitate the return of families, which ensure families participate in the coffee harvest, and are able to earn income for their own self-recovery. In-kind distribution of CGI sheets is recommended to avoid the risk of financially benefiting violent actors that were involved in the theft of CGI sheets from homes of displaced families. Other costs associated to rebuilding partially-damaged homes are of lower cost and can be expected to be covered by households able to participate in the coffee harvest. As the main CGI market actors are based in Addis, implementing partners should be able to design a CGI and Cap Nail pipeline in a relatively short amount of time. Vulnerable households (no income single-women households, disabled, elderly) that are unable to participate in the coffee harvest nor gain an income, should not be considered in this response recommendation; rather they should be included in the below recommendation for fully-damaged households.

2) Response for Fully Damaged Households:

Families of fully damaged homes (and vulnerable households as defined above) required a significant level of support to rebuild their homes. For the purposes of supporting the return of families to their place of origin, the author proposes a three-step response action plan.

a. First Assistance Transfer: Cash distribution based on need to buy locally produced materials/pay skilled labor to build structure. Minimum Economic Recovery Standards (MERS): Asset Distribution Standard 2 – Asset programming stimulates recovery without undermining local markets. The assessment results support the direct delivery of assistance through local market mechanisms that will support local market operations and minimize adverse impact to the local economy. Initial transfer is to support households in contracting labor and rebuilding their shelter structure. As food needs continue to be prioritized by families, and to decrease the risk of households using the entirety

of disbursed funds to cover urgent food needs, its recommended to include a value amount for a partial coverage of food needs in the initial unconditional transfer. The transfer value, with or without the food value, should be discussed and designed by the Shelter Cluster in coordination with the Cash Working Group and the Food Security Cluster. Another option regarding the transfer value is to ensure that targeted households are also households that are receiving food assistance from other programming interventions. The transfer value should include costs associated to nails, lumber (posts, rafters, and walling), and skilled labor. Tools for construction should not be included in the transfer value calculation, as its assumed skilled labor will have the necessary tools; or families will be able to support each other to ensure tools are not a barrier to construction. Care should be taken in the transfer value calculation, keeping a hawkish eye on the items to consider in the value amount. b. Second Assistance Transfer: Once structure is verified, conditional distribution of CGI sheets and Cap nails to households that have built structure. The direct distribution of CGI sheets and Cap Nails should be carried out based on the condition that families have a structure built and ready to install CGI sheets. The verification of built structures should be carried out through on-site visits by staff and GPS marking. The on-site verification will confirm the conditionality and activate the in-kind CGI and Cap Nail distribution. Other than the condition, this transfer is similar to the recommendation presented above for partially damaged households. c. Third Assistance Transfer: Once CGI sheets are installed, conditional cash distribution for mudding material and pay unskilled labor to complete household structure. The first two transfers are urgent and require a tight turnaround, in order to support the speedy return of displace families. Unlike the first two steps, the third transfer allows for a slower turnaround for the transfer and incorporates the use of conditions for the monetary transfer. Once the installation of CGI sheets is confirmed through on-site verification and GPS marking, implementing actors can initiate the final cash transfer. The value for this third assistance transfer is to cover expenses related to mudding and unskilled labor. Implementing partners can also incorporate a knowledge transfer option into this condition, promoting active participation from the target population in capacity-building activities. The value of the transfer should be designed by the Shelter Cluster in coordination with the Cash Working Group. Transfer Mechanisms and Financial Service Providers The MERS Financial Services Standard 2 promotes the engagement and support to the local supply of financial services, establishing partnership with local market actors that have in place the capacity, scale and resilience to continue to deliver services. According the assessment results, the complexity of the region, the urgency of the response, the risk for fraud or misuses, and the limited presence of partners on the ground is cause to reject the design of any voucher program for the purposes of a shelter response. Rather, implementing organizations have already assessed the distribution networks of financial service providers in the region, which this assessment corroborates. The MERS Financial Services Standard 2 recommends that actors promote linkages, wherever possible, between relief efforts and long-term access to financial services to support sustainable livelihoods. Based on this standard, mobile money seems to be an ideal delivery system. Unfortunately, experience in other response in Ethiopia has shown that the mobile money operators (or ICT companies offering mobile money services) do not have the capacity presently to take on humanitarian actions. Implementing partners should monitor how these products develop and seek opportunities to pilot, whenever possible.