Inclusion of Private Sector in Economic Integration of Refugees

Article by Pratibha Tandon | May 6, 2024 | Global Rights Defenders

In the recent years, the unprecedented increase in the number of refugees, particularly associated with its protracted nature, has emphasized the urgent need to incorporate long term and sustainable solutions to address the refugee crisis. Though humanitarian aid is indispensable in mitigating few of the refugee problems such as providing food, shelter and medical facilities in emergency situation, it is limited in scope and not the most efficient tool to address all the needs of refugees.[i] The unpredictable nature of the amount of humanitarian grants received coupled with the unequal burden and responsibility of hosting refugees in few countries, has resulted in a funding gap of 60-70% of the total needs, which is growing with time.[ii] Though in the recent years, the number of donors have increased, however the rise of new conflicts, climate related emergencies, rising food insecurity and growing debts of developing countries have resulted in ever increasing need of global aid.[iii] It is projected that in 2024, nearly 300 million people will be in need of humanitarian assistance, with the UN and allied organizations appealing for $46.4 billion worth of funds.[iv]

In the present situation, it becomes necessary to adopt a holistic approach that transcends the humanitarian aid dependency by empowering refugees to become self-sufficient through economic inclusion. Economic inclusion can be described as “giving all members of society, including non-citizens and vulnerable and underserved groups, access to labour markets, land, financial services, entrepreneurial expertise, jobs, and economic opportunities”[v]. Ensuring economic integration of refugees within their host community is a transformative approach, which contributes to their self-reliance and resilience[vi], and promotes one of the four key objectives of Global Compact on Refugees (GCR) [vii] The Global Refugee Forum, in December 2023, underscored the significance of moving beyond conventional humanitarian assistance and adopting strategic investment approach for helping refugees. Through their active contribution in the economy of the host country, refugees can fulfil their needs in a secure, sustainable and dignified manner in the later phases of displacement, without reverting to negative coping mechanisms.

Not only does this approach help refugees, but also significantly contributes towards the  progress and development of host communities. For instance, between 1993 and 1996, the refugees in Tanzania employed as labour workers helped farmers to increase their cultivated areas to almost twice the original size. Similarly, in Kenya, owing to greater economic activity near the Dadaab refugee camp, the local earnings are 60 percent higher in comparison to other similar parts of the country.[viii]

As provided in a number of international instruments such as the Universal Declaration of Human Rights (Article 23), the 1951 Refugee Convention (Article 17-19, 24), and the International Covenant on Economic Social and Cultural Rights (Article 6), the right to work, along with other associated rights related to fair and just conditions of work, facilitate the economic inclusion of refugees. The process of economic integration of refugees requires many years of prudent planning, calling for the cooperation from not only governmental bodies, but also from other stakeholders like the UN Agencies, international community and  private actors. The success of this approach hinges on the presence of “conducive enabling environment shaped by rules and regulations governing rights and security”[ix].

The role of private sector becomes crucial here. While the UN agencies and various government organization are indispensable in assistance and protection of refugees, accomplishing their economic integration cannot be solely done by them. Their resources and access are often limited, and they might not be best placed to implement refugee employment and entrepreneurship policies in every refugee hosting area.[x] In recent years, private sector interventions have proved successful to fill these gaps. Private sector by way of complementary pathways leverages new resources in creation of job opportunities, offering tailored services and empowering refugees through offering trainings, mentorship programmes, internships and apprenticeships.[xi] The inclusion of private sector is advocated by the GCR as well, by aiming to broaden the range of partners involved, that can effectively complement the Official Development Assistance.[xii]

Involving private sector can mutually benefit both the refugees and the private corporations. The private sector would benefit from enhancing its reputation and attracting conscious consumers, exploring the opportunity to expand its market presence, for instance by identifying and getting involved in healthcare industry, education, and energy sector. On the other hand, refugees would be able to apply their skills and knowledge from varied areas of expertise and can “leverage the current financial system and ongoing socio-economic development efforts to improve the lives, livelihoods, and well-being”[xiii]. Collaboration between UNHCR and private sector can help promote products made by refugees through innovative business models, providing refugees with unique entrepreneurship opportunities. Further, partnership between UN agencies and companies that engage in the business of products and services required by refugees increases the access of such products/services to refugees.[xiv]

One of the most important initiative for promoting the participation of private sector is the “Private Sector 4 Refugees” launched by the World Bank in partnership with the European Investment Bank (EIB), and the Confederation of Danish Industry (DI), in 2019 during the Paris conference on the Role of Private Sector in Economic Integration of Refugees.The project, which was part of Refugee Investment and Matchmaking Platform of World Bank, aimed to “share knowledge develop new ways to mobilize expertise, linkages, finance, and resources in support of refugees”[xv].

The outcome of this initiative was the Charter of Good Practices on Role of the Private Sector in Economic Integration of Refugees, consisting of 20 principles focusing on four themes – Entrepreneurship, Investment, Employment, Service and Products. The Charter serves as a guideline on “how the private sector can facilitate refugee integration into host community economies, and how policymakers and practitioners can enable the private sector to play a stronger role in Economic Integration of Refugees.”[xvi] Another important project is the IFC and UNHCR joint initiative, launched in December 2022, which aims to promote the inclusion of private sector in forced displacement crisis and create sustainable solutions through private sector investment.[xvii]

In conclusion, the significance of the role of private sector in assisting the economic inclusion of refugees cannot be denied. The success of this approach will differ from country to country depending upon the business environment and access to job opportunities for refugees. Through innovative methods and careful planning, refugee empowerment and self-reliance is achievable. Private sector in collaboration with other stakeholders can become a critical part of devising long-term sustainable solutions.

References

[i] OECD. (2019). Lives in Crises: What Do People Tell Us About the Humanitarian Aid They Receive? https://www.oecd-ilibrary.org/development/lives-in-crises_9d39623d-en

[ii] Private Sector for Refugees. (2023) Refugee related investment- myth or reality?https://thedocs.worldbank.org/en/doc/0f3e72aaa017792e24d18959a560d352-0570022023/original/FINAL-PS4R-Refugee-Related-Investment-Myth-or-Reality.pdf

[iii] Beatrice Tridimas (2024, January 28).  Why is the world’s humanitarian aid gap getting bigger. Context News. https://www.context.news/money-power-people/why-is-the-worlds-humanitarian-aid-gap-getting-bigger

[iv] OCHA. (2023, December). Global Humanitarian Overview 2024. https://www.unocha.org/publications/report/world/global-humanitarian-overview-2024-enarfres

[v] UNHCR. (2024). Emergency Handbook- Livelihoods and Economic Inclusion. https://emergency.unhcr.org/emergency-assistance/education-and-livelihood/livelihoods-and-economic-inclusion

[vi] UNHCR. (December 2023). Global Survey on Livelihood and Economic Inclusion Report. https://www.unhcr.org/media/global-survey-livelihoods-and-economic-inclusion-report-december-2023

[vii] UNHCR. The Global Compact on Refugees.  https://www.unhcr.org/about-unhcr/who-we-are/global-compact-refugees

[viii] The World Bank. (2023). World Development Report 2023: Migrants, Refugees, and Societies. https://www.worldbank.org/en/publication/wdr2023#:~:text=About%202.3%20percent%20of%20the,migrants%20at%20the%20same%20time.

[ix] UNHCR. (2019). Refugee Livelihood and Economic Inclusion, 2019-2023, Global Strategy Concept Note, Pg. 4, https://www.unhcr.org/fr-fr/en/media/refugee-livelihoods-and-economic-inclusion-2019-2023-global-strategy-concept-note

[x] UNHCR. (2019). Refugee Livelihood and Economic Inclusion, 2019-2023, Global Strategy Concept Note, Pg. 6, https://www.unhcr.org/fr-fr/en/media/refugee-livelihoods-and-economic-inclusion-2019-2023-global-strategy-concept-note

[xi] UNHCR. (2019). Refugee Livelihood and Economic Inclusion, 2019-2023, Global Strategy Concept Note, Pg. 7, https://www.unhcr.org/fr-fr/en/media/refugee-livelihoods-and-economic-inclusion-2019-2023-global-strategy-concept-note

[xii] The World Bank. (2023). World Development Report 2023: Migrants, Refugees, and Societies. https://www.worldbank.org/en/publication/wdr2023#:~:text=About%202.3%20percent%20of%20the,migrants%20at%20the%20same%20time

[xiii] Private Sector for Refugees. (2023) Refugee related investment- myth or reality?https://thedocs.worldbank.org/en/doc/0f3e72aaa017792e24d18959a560d352-0570022023/original/FINAL-PS4R-Refugee-Related-Investment-Myth-or-Reality.pdf

[xiv] UNHCR. (2019). Refugee Livelihood and Economic Inclusion, 2019-2023, Global Strategy Concept Note, Pg. 7, https://www.unhcr.org/fr-fr/en/media/refugee-livelihoods-and-economic-inclusion-2019-2023-global-strategy-concept-note

[xv] Private sector 4 Refugees. (2023, December 19). The Global Compact on Refugees. UNHCR. https://globalcompactrefugees.org/good-practices/private-sector-4-refugees

[xvi] UNHCR, World Bank Group, European Investment Bank, Confederation of Danish Industry, International Chamber of Commerce, World Economic Forum, Ministry of Foreign Affairs of Denmark, Danida, DANIDA, UK Aid, & World Bank Group SDG Fund. (2019). CHARTER OF GOOD PRACTICE. https://thedocs.worldbank.org/en/doc/0e5373c495dddba969f1691269954737-0570022019/original/Charter-of-good-practice-the-role-of-the-private-sector-8.pdf

[xvii] UNHCR (December, 2022). New IFC and UNHCR initiative to boost private sector engagement for refugees and their host communities.  https://www.unhcr.org/about-unhcr/our-partners/additional-partnerships/ifc-unhcr-joint-initiative