According to plan: Second activation of Uganda’s Displacement Crisis Response Mechanism (DCRM)

After a successful 2021 pilot disbursement of the Displacement Crisis Response Mechanism (DCRM) – the world’s first displacement risk financing mechanism – the Government of Uganda initiated a second disbursement in 2023. The second disbursement was executed according to an adopted DCRM handbook, informing a transparent, needs-based, and pre-agreed process for selecting public service sectors and  districts that will receive funds, in line with the World Bank’s new scorecard approach to optimizing impact. Setting up metric-based intervention plans in advance increases the credibility, efficiency, and impact of displacement shock responses.

Overview: Increasing displacement levels reinforce the need for effective policy interventions

The displacement of people poses a major challenge for many societies and governments. Conflict and climate events are primary drivers, and their impact is continuously growing. Conflict-related incidents had pushed the level of forced displacement to over 114 million people globally. It is predicted that climate phenomena could lead to the displacement of one billion people by 2050. These challenges urgently require actions that enhance our understanding and ability to act quickly to mitigate the socio-economic impacts of displacement.

Uganda is at the forefront of this effort, implementing government programs that leverage innovative concepts and technology. The DCRM is the world’s first government initiative to apply natural disaster risk finance (DRF) principles to address the social disaster of human displacement, prearranging funds to build new public service infrastructure in response to the inflows of refugees in refugee-hosting districts. New technology enables robust and timely data collection required to quantify needs and enable the DCRM’s time-sensitive disbursement approach – technology like object classification models applied to satellite imagery.

The DCRM is both simple and efficient: It uses need indices to quantify needs across refugee-hosting districts by measuring the ratio of persons to public service facilities. This method identifies districts with the highest need per sector and finances public service infrastructure development to address these needs.

In 2021, the DCRM piloted its first disbursement of USD 1.2 million to finance education, health, and water infrastructure in two districts heavily impacted by refugee inflows.

From pilot to plan: Second DCRM disbursement leveraged pre-agreed systems

The 2021 disbursement marked the DCRM’s transition from concept to action. It provided districts support to manage a surge in refugee arrivals and gave the Government of Uganda the opportunity to pilot and test the DCRM process. Building on the experience of this pilot, a second 2023 disbursement was initiated.

The second disbursement differed in scale, geographic coverage, sectoral focus, and process. The amount was USD 3.3 million, nearly three times the size of the initial disbursement. This enabled more significant public sector investments. Thanks to advanced preparation and data availability, all 13 host districts were eligible. The first disbursement had only covered Terego and Isingiro Districts, as other districts had not yet achieved the necessary implementation capacity requirements during the pilot disbursement. The government allocated the majority of the second DCRM disbursement to increase access to drinking water, in response to a recent drought that strained available water sources.

By the book: Pre-agreed interventions increase efficiency and trust

The DCRM Handbook outlines guiding principles, the conceptual framework, and an operational process to ensure that funds are allocated proportionate to refugee-hosting districts’ levels of need. The handbook provided the protocols and procedures used when implementing the second disbursement.

Pre-established institutional processes ensure that stakeholder decisions and activities are prepared for various displacement scenarios. This limits the need for ad-hoc responses to shocks, thereby increasing both the speed and effectiveness of interventions. This structure also enhances the legitimacy and governance of government policies by promoting transparency regarding the need-based allocation of development resources. For development partners, this increases agility and helps to address challenges of project life cycles, which often lock in decisions about supported activities at inception, despite evolving needs throughout a project's duration.

Displacement shocks can be anticipated. The question is not whether they will occur, but rather where, when, and on what scale. This makes planning for these events a moral imperative. The Government of Uganda took on this responsibility and, through the DCRM’s successful second disbursement, demonstrated that it is possible and necessary to agree on interventions in advance and effectively implement them when and where they are most needed.