Last Updated 21st November 2022. The next update to the Index is expected in August 2023.
The Cost of Doing Business Index is a way to understand which humanitarian contexts are more expensive to work in.
Our 2022 index shows that: refugee responses are expensive, whilst flash appeals are cheap; Europe and MENA are expensive places to be, whilst Sub-Saharan contexts are some of the cheapest places to programme; and Ukraine, Haiti and Afghanistan became significantly more expensive in the last year.
At present, we don’t believe there is an index that measures the costs of programming in the sector. We’ve chosen to fill in this gap, given it’s importance at a global and country level.
At a global level, this can help us understand some of the drivers behind why the sector as a whole needs so much money. At a country level, this can help agencies to understand the costs of programming in a given context (particularly if they are yet to start work).
So what does the ‘cost of doing business’ look like? It depends on your perspective. If you are a person affected by a humanitarian situation, then we can look at it through the lens of “total cost to meet the needs of one person”, in other words, cost per person.
If you are looking at it through the lens of an organisation who is implementing activites, you might ask, “what is the cost of one activity reaching one person?”, in other words, cost per activity.
Both are presented below in the table. But we have chosen to rank contexts by ‘cost per activity’. This is because viewers of this website are far more likely to be people who work for organisations that implement activities, and thus may find this framing more useful for their purposes.
The aim of this index is to: create a ranking of costs in different contexts, and therefore inform the actions of people and organisations who work in the humanitarian sector.
Note that the costs shown are not ‘actuals’, but budgeted, based on interagency response plans. Check out the Sources and Methodology section at the bottom of the page for more details.
Which contexts have the highest costs?
Across the 36 humanitarian contexts we analysed, the average cost per activity is $60, whilst the average cost per person is $202, with an average of just over three activities per person.
However, there is huge variation in the index, particularly by type of response and region.
Regional refugee response plans (RRP) are the most costly type of response. The regional plans of Ukraine, Venezuela, and the DR Congo occupy the top three places in the index. All of them require over $100 per activity. The only other RRP on the index is the Rohingya response which ranks 6th, but is actually the most costly per person at $604.
In contrast, Flash Appeals tend to be some of the cheapest responses. Flash Appeals occupy the bottom 2 places on the index. With the exception of the Ukraine Flash Appeal, all Flash Appeals have a cost of less than $50 per activity. And in terms of cost per person, they occupy 4 of the bottom 6 places.
Significant contextual changes have moved some places up the index. Ukraine has soared up to 7th, ⬆️ from 31st last year, Haiti has climbed to 10th, ⬆️ from 28th, and Afghanistan has moved up to 17th, ⬆️ from 35th. These contexts are now more expensive to programme in than last year. On the other hand, Libya and Mali have fallen down the index by 17 places each.
Europe and the MENA region are expensive places to programme. Europe ranks 1st and 7th, by which we mean the regional Ukrainian response, and the country-based Ukraine response. The diversion of funding away from other contexts towards Ukraine is, therefore, not just because of the scale and prioritisation of the crisis, but also because of the higher costs of operating there. Iraq (4th), Palestine (5th), and Syria (14th) are all also in the top of half of most expensive places to operate.
West, Central, Eastern and Southern Africa are some of the cheapest places to programme. Sub-Saharan contexts make up 8 of the 10 least expensive places in terms of cost per activity, and 6 of the 10 least expensive places in terms of cost per person. The median cost per activity is $51 across these contexts, compared to a median cost per activity of $69 across MENA contexts.
Cost per person and cost per activity are broadly correlated. For example, 13 of the 18 contexts in the top half of the index for cost per activity, are also in the top half for cost per person. However, there is clearly some variation. This is due to the different scope of activities across contexts.
Contexts in the top 10 for cost per person constitute 40% of the funding requirement (of contexts on our index). This leads us to the conclusion that some of the most expensive places in terms of cost per person drive the overall funding requirement (such as the regional Venezuela response, Syria, Ukraine, and the regional Ukraine response).
However, there are other contexts with huge funding requirements (Afghanistan, $4.4bn; Sudan, $1.9bn; and Ethiopia, $3.1bn) that rank lower in terms of cost per person. This points to the obvious truth that it’s not just the number of activities or cost per activity/person, but also the sheer number of people that drive the funding requirement (Afghanistan: 22m people, Sudan, 10.9m people, Ethiopia: 20m people).
What does the picture look like if we break it down by sector?
We have looked at the median cost per activity across all contexts where there is data. From this we can see three tiers of sectors. The top tier (the most expensive one) consists of four sectors where the median cost of reaching one person is around $100. These sectors are: Food Security, Early Recovery, and Shelter/NFI.
This is then followed by a middle tier of sectors where the median cost across contexts is around the $65 per activity per person mark. The sectors in this tier are Nutrition and Education.
The bottom tier of sectors consists of six sectors where the median cost across contexts is on either side of $30 per activity per person. This consists of Health ($37), Child Protection, GBV, CCCM, WASH, and Protection ($23). Mine Action then sticks out as an outlier at a median cost of $12 per activity per person.
However, as the graph shows, there is huge variation from context to context. We’ve put two small red dot on either side of the big green dot which shows the median, and these two dots show where 75% of contexts with data fit on the chart. With most contexts fitting into this range, we can see what is typical.
And what is clear is that whilst we have shown the ‘average’ context above (the big green dot), there isn’t a narrow range of ‘typicalness’ for each sector. Costs vary from context to context, affecting the cost for the sectors.
We’ve published a 2021 Cost of Doing Business Index. We didn’t publish this index last year, but we’ve constructed a 2021 index as a comparison point to this year’s index.
Sources and Methodology
Cost per activity and person
Cost is determined in two ways.
The first way, cost per person, takes the total humanitarian funding requirement divided by the number of people targeted by the response plan. For example, if 100 people are targeted in the plan (regardless of sector), and the total cost is $9000, then we get 9000/100 = $90 per person.
The second way, cost per activity, takes the total humanitarian funding requirement divided by the total number of people targeted by all humanitarian sectors. This assumes that each sector implements one activity. Normally, a humanitarian sector (e.g. Health, Protection etc.), will have a target associated with the sector. We are therefore making the assumption that there is just one activity implemented by a sector.
This is not really the case, but it does show us how much funding is required in relation to the scope of the crisis. For example, if you need $9000 to meet the needs of 100 people, but only in Food Security, then the cost per person is $90. But if you need $9000 to meet the needs of 100 people across 4 sectors (e.g. Food Security, Health, Nutrition, and WASH), then we get 9000/(100*4) = $22.50 per activity, which is considerably cheaper. Whilst we can’t get into the minute detail of each activity in each sector, this way of calculating things provides us with a proxy for the “costs vs. scope” dimension.
Lastly, the number of activities per person is determined by either cost per person divided by cost per activity, or cumulative target (across all sectors) divided by response plan target.
The ‘costs’ shown below are not ‘actuals’ – that is they are not based on what is spent. The costs in the index are budgeted costs, as per the different interagency response plans. These can be calculated in different ways (e.g. project-based, unit-cost, hybrid approach).
But no matter the methodology, one would hope that these budgets are based on historical data of past projects and actual costs.
One last clarification. We have calculated below ‘cost per activity’. This is the cost of reaching one more person with one more activity. For a full explanation, please see the methodology notes below.
Funding requirement comes OCHA’s Financial Tracking Service (FTS) which details all humanitarian funding requirements for inter-agency response plans and individual sectors: 2021, and 2022.
Number of people targeted comes from OCHA’s Humanitarian InSight which details all targets for response plans and individual sectors. Where data was not available on the website, we examined response plan documents in order to retrieve sector-level targets.
Note #1: Venezuela RMRP is included in the 2022 index using 2021 data. This is because we felt it important to reflect the regional Venezuela response in our index, despite the lack of data this year.
Note #2: The upper range on the ‘Sector’ graph for Early Recovery is missing. This is because the upper value is $517 which is an extreme outlier when compared to other sectors. Therefore, we have chosen to keep the graph narrower in the range and omit this value for ease of reading