Deploying the private sector in Europe will be key to the successful economic integration of refugees from Ukraine

More than five million people or about a tenth of Ukraine’s population is estimated to have fled their country since February 24th, making this the fastest growing refugee crisis in Europe since World War II. This is in addition to the many more who are internally displaced.

As of April 26, neighboring Poland experienced by far the largest influx of refugees from Ukraine, with an estimated 2.94 million people entering the country, followed by Romania (793 thousand). Most of the refugees from Ukraine—in prevalence women, children, and elderly—have fled for safety, protection and assistance, separated from their families.

Host countries in Europe have met refugees from Ukraine with generous care packages and offers of shelter, transportation and food, while the EU has granted them rights to welfare support, jobs and education from day one of registration and for up to three years.

With the war ongoing and its resolution uncertain, it is too early to tell whether most refugees from Ukraine will end up staying in the host countries. In fact, some already have gone back and a few anticipate a long future far from home. However, international experience shows that refugees are less transitory than one imagines.

Therefore, host countries ought to plan now for the integration of refugees from Ukraine in their economies.  The earlier refugees integrate in the economies of host countries, the earlier they turn from an economic weight in need of humanitarian aid to self-reliant contributors to the development of local communities.

Most research shows that over the long term working refugees can help host economies grow, expanding host countries’ productive capacity, paying taxes and generating more business for host communities and their enterprises.

Leveraging the private sector will be key to improve refugees from Ukraine’s and host communities’ self-reliance and resilience.  From multinational corporations and local investors to local microenterprises and social enterprises, the private sector has a critical role to play through creating sustainable jobs and opportunities to start and scale up successful businesses, facilitate financial access and mobilize capital for investment.

There are reasons to believe that refugees from Ukraine can be integrated relatively quickly in host countries’ economies. Many have a network of friends and family thanks to the large diaspora in Europe prior to the war. More generally, Ukrainians tend to be well educated, increasingly use technology and have a record of employment and entrepreneurship.

Host EU countries’ legislation already recognizes the special status of refugees from Ukraine and provides most of the framework for employment and entrepreneurship, removing a traditionally important barrier to private investors’ and entrepreneurs’ engagement.

Yet a market-based approach to the economic integration of refugees from Ukraine requires a conducive regulatory environment supported by resilient institutions to remove residual barriers and fight misconceptions about the potential role of refugees in the local economy. 

To this end, host countries could take the following steps:

• Create a “business compact”. Host countries’ authorities could convene around the same table stakeholders, including local governments, employers’ confederations, and bankers’ associations to discuss options to mobilize expertise, linkages, finance, and resources in support of refugees from Ukraine. This could in turn lead to soft pledges to adopt and implement a “refugee lens” in their respective activities, in line with international good practice.
   
• Boost the enabling environment. The “business compact” would lead to or be preceded by a quick assessment of the readiness of host countries in enabling refugees from Ukraine to enter the private sector—as entrepreneurs, employees, savers, investors, or consumers.
   
• Design support programs for refugee-related businesses. Such programs, targeting both host countries’ businesses that employ refugees from Ukraine and refugee-created businesses, would encompass among others: support through matchmaking events, tradeshows and promotion of internal supply chain linkages; technical assistance to business development service providers; and sponsoring of inclusive entrepreneurship schemes.
   
• Catalyze investment and access to finance. Host countries’ authorities can work with commercial banks, promotional banks and national development finance institutions, investment funds, microfinance institutions and FinTech providers to introduce a “refugee lens” to their investment and lending strategies and facilitate private capital mobilization—through de-risking and other incentives—in support of refugee-related businesses.

While the hope is for an immediate peaceful and durable resolution of the war, host countries will do well to prepare for the economic integration of refugees from Ukraine. Leveraging its Refugee Investment and Matchmaking Platform, and the related Private Sector for Refugees Initiative and relevant partners’ network, the World Bank Group stands ready to support host countries’ authorities in facilitating that process, helping coordinate efforts in parallel with the humanitarian phase of assistance.