Recommendations
Knowing what to do in each situation
As humanitarians, we need practical, concrete guidance and ideas about how to adapt our programs and our support structures to existing and anticipated economic problems. We want to be more prepared and responsive rather than simply wait and react. We can start by looking at what has already worked elsewhere!
Find out what is the list of best practices and recommendations for your context!
In this section, you will find all the common and essential best practices that have been identified and used in various contexts in response to each of the economic problems discussed in N.E.X.T.
Make sure that you have run a proper Diagnostic of your situation to know which recommendations are relevant for you to look at!
Remember that a list of recommendations is only a starting point! What we have collected for you below is a long list of possible actions that you can take to mitigate or prepare for a given economic problem. They may not all be necessary nor relevant to your specific situation. You may need to adapt them or take additional actions due to some specificities of your context. You will also need to prioritize the steps that are the most urgent for you to implement right now.
Take a look at our Foundations section to understand how each recommendation respond to various potential impacts of each problem. This will help you apply your critical understanding of your context and narrow down the actions that are most relevant to you.
You can then use our Action Planning tool to select, adapt and prioritize the actions you want to implement.
Main recommendations for dealing with high inflation
➀ Adjust frequencies for regular revisions of key documents
➁ Set trigger mechanisms for ad hoc revisions of payments & contracts
➂ Consider giving a bigger weight to socio-economic considerations in your targeting
➃ Adapt the frequency of transfers to your payment objectives
➄ Review your cost-analysis of international vs local procurement
✚ Make sure you have also considered and adequately put in place the actions in the box below, which are meant to prepare you for high inflation contexts in the first place!
How do we prepare for high inflation?
If you are worried that your context could devolve into high inflation in the future, consider putting in place some of the following actions as preparedness measures.
➊ Forecast inflation in budgets, contracts & transfer sizes, etc
➋ Start monitoring prices in your areas of intervention consistently
➌ Explore opportunities for programming financial inclusion components around access to savings
Main recommendations for dealing with rapid inflation & inflation spirals
➀ Shift ‘invisible’ payments into hard currency as much as possible
➁ Adapt your financial management practices in terms of financial monitoring and reporting
➂ Adjust the depth and breadth of your targeting and favor area-based approaches
➃ Explore opportunities for programming financial inclusion components that support participants with ways to store monetary value
✚ Make sure you have also considered and adequately put in place the actions in the box below, which are meant to prepare you for rapid inflation and inflation spirals in the first place!
How do we prepare for rapid inflation?
If you are worried that your context could devolve into rapid inflation or inflation spirals in the future, consider putting in place some of the following actions as preparedness measures.
➊ Start monitoring both the speed of inflation and the depreciation of the exchange rate
➋ Improve the digital integration of your implementation and delivery systems
➌ Start identifying emergency funds for top-ups
➍ Consider opening additional bank accounts
Main recommendations for dealing with hyperinflation
➀ Focus on basic needs and complementary programmatic approaches & service provision that can increase self-reliance
➁ Change your financial management practices in terms of payments, reserves, and transaction schedules
➂ Continuously scope and test new transaction mechanisms and new partners, activate dormant delivery mechanisms, and favour digital exchange mechanisms
➃ Start implementation as early as possible in the grant cycle and adjust the way workplans are made
➄ Look for contingency funds and use crisis modifiers to mitigate risks related to real inflation
✚ Make sure you have also considered and adequately put in place the actions in the box below, which are meant to prepare you for hyperinflation contexts in the first place!
How do we prepare for hyperinflation?
If you are worried that your context could devolve into hyperinflation in the future, consider putting in place some of the following actions as preparedness measures.
➊ Review program criticality and prioritize the interventions that you can conduct in an autonomous manner
➋ Carefully consider what you commit to in proposals and explore alternative & more flexible financing mechanisms
➌ Review your cost structure to look for efficiency gains
➍ Review your SOPs to look for time gains
➍ Check for possible technical limitations in systems and tools
Main recommendations for dealing with depreciation
➀ Limit liquidities and outstanding balance in local currency
➁ Start anticipating commitment and disbursement deadlines
➂ Peg all values and calculations in key programmatic and support documents in a hard currency
➃ Use tokens in distributions and favor delivery mechanisms with late conversion points
➄ Leverage you capacity to absorb inflation to negotiate better contracts with suppliers and partners
✚ Make sure you have also considered and adequately put in place the actions in the box below, which are meant to prepare you for depreciation contexts in the first place!
How do we prepare for depreciation?
If you are worried about significant depreciation in the value of the local in your context in the future, consider putting in place some of the following actions as preparedness measures.
➊ Identify potential additional caseloads at the beginning of your grant cycle
Main recommendations for dealing with multiple exchange rates
➀ Conduct an analysis of the regulatory environment and map access of different stakeholders to various exchange rates
➁ Start using a different system for reporting and for accounting
➂ Advocate for coordination between agencies on implementation guidelines and joint negotiations for preferential exchange rates
✚ Make sure you have also considered and adequately put in place the actions in the box below, which are meant to prepare you for contexts with multiple exchange rates in the first place!
How do we prepare for multiple exchange rates?
There is not much you can do in anticipation to prepare for situations where you have to deal with multiple exchange rates. But if you are worried about the situation with multiple exchange rates in your context becoming increasingly complex in the future, consider putting in place some of the following actions as preparedness measures.
➊ Start documenting consistently the market exchange rate
➋ Know your donors and their regulations in terms of managing exchange gains and losses
Main recommendations for dealing with devaluation
➀ Consider additional targeting and programming for import-dependent segments of the population
➁ Review any contractual payments or programmatic value that is still defined in local currency
✚ Make sure you have also considered and adequately put in place the actions in the box below, which are meant to prepare you for devaluation contexts in the first place!
How do we prepare for devaluation?
If you are worried that a devaluation of the currency may happen in your context in the future or if a devaluation has been announced, consider putting in place some of the following actions as preparedness measures.
➊ Understand key elements of the structure of the economy
Main recommendations for dealing with liquidity constraints
➀ Multiply framework agreements to diversify your partners and your delivery mechanisms
➁ Increase communications with your FSPs and provide them with advance notice of your disbursement schedules
➂ Coordinate implementation schedules with other actors in your areas of operation
➃ Monitor the availability of specific denominations and consider mixing currencies
➄ Consider additional options for supply-side support
➅ Be mindful about how you label transactions when making international transfers
➅ Additional monitoring of negative coping strategies related to access to liquidities
✚ Make sure you have also considered and adequately put in place the actions in the box below, which are meant to prepare you for contexts with liquidity constraints in the first place!
How do we prepare for liquidity constraints?
If you are worried about liquidity constraints in your context in the future, consider putting in place some of the following actions as preparedness measures.
➊ Break down transaction flows into different segments
➋ Scope the feasibility of closed-loop and digital transfer options
Main recommendations for dealing with dollarization
➀ Check the legislation about making direct payments (including distributions) in hard currency
➁ Assess FSPs capacity
➂ Carefully consider the decision to distribute assistance in a different currency
✚ Make sure you have also considered and adequately put in place the actions in the box below, which are meant to prepare you for dollarization contexts in the first place!
How do we prepare for dollarization?
If you are worried that the economy in your context could dollarize in the future, consider putting in place some of the following actions as preparedness measures.
➊ Continuously monitor the legislation about making direct payments (including distributions) in hard currency
➋ Expect a bump in real inflation