Published on World Bank Voices

The private sector is pivotal to tackling the global forced displacement crisis

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Ukranian refugees work at a German industrial sensor factory in Veszprem, Hungary, 2022. REUTERS/Marton Monus/File Photo Ukranian refugees work at a German industrial sensor factory in Veszprem, Hungary, 2022. REUTERS/Marton Monus/File Photo

The world is facing a major forced displacement crisis as increasingly more people are being made to leave their homes due to armed conflict, violence, persecution, natural or human-made disasters. Globally, there was a striking 62 percent surge in forcibly displaced people from 2018 to 2023, reaching an unprecedented 117 million by the end of last year . Two-thirds of displaced populations grapple with protracted situations where they must endure prolonged uncertainty and vulnerability. Over 60 percent of refugees today are hosted in urban environments as opposed to traditional camp settings.   

We believe that humanitarian support alone cannot address the challenges posed by forced displacement, particularly in protracted situations and in urban areas. The Global Refugee Forum, held in Geneva in December 2023, reaffirmed the pressing need for a paradigm shift, one that moves beyond conventional humanitarian assistance towards strategic investments that build local economies in areas hosting refugees or internally displaced people. Developing local markets and creating jobs in forced displacement contexts is the most effective way of providing sustainable and inclusive long-term solutions.  

The 2018 UN Global Compact on Refugees encourages innovative approaches to mobilizing resources, including private sector funding, for refugees and their host communities. The compact acknowledges the significant potential of the private sector to foster economic opportunities for refugees, empower them, and support their integration into local communities through job creation and entrepreneurship.  We have witnessed impactful projects and promising initiatives emerging within our portfolios at the International Finance Corporation (IFC) and the United Nations High Commissioner for Refugees (UNHCR) and beyond, particularly in the realms of financial inclusion (often enabled by digital solutions) and access to employment opportunities. However, many challenges remain, and there is a need for further innovation and scaling up solutions that work. 

In December 2022 IFC and UNHCR launched a joint initiative to accelerate financial service provision and private sector engagement in forced displacement situations. Leveraging UNHCR's protection and solutions’ mandate and its extensive on-the-ground presence alongside IFC’s private sector expertise, the joint initiative aspires to create inclusive opportunities for both forcibly displaced people and their host communities through a combination of operational, technical, and financial support to projects and thought leadership. 

To enable and grow private capital mobilization in forced displacement contexts, we are focused on the following priorities:   

First, we need a change in perception. Forcibly displaced populations should not be viewed only as newcomers and aid recipients, but as economic agents endowed with ideas, entrepreneurial spirit, and the capacity to contribute actively to local economies as employees, employers, suppliers, and distributors.   

Second, we must shift our approach from largely humanitarian solutions to building and reinforcing local economies serving both forcibly displaced people and host communities. Focusing interventions on local and regional businesses familiar with the context, who will stay engaged even in a crisis, is a way of strengthening local economies, as our joint work in Kakuma in Northern Kenya has shown. An enabling regulatory framework is a pre-condition to advancing market-based solutions. It is essential to work with public institutions to overcome legal roadblocks and grant refugees’ essential rights, such as access to recognized identity cards and local banking systems, mobility and freedom of movement, the right to work, and business ownership and registration. This can be achieved by engaging collectively and leveraging UNHCR and World Bank efforts across forced displacement contexts.  

Third, we must systematically consider the private sector angle when designing programs and interventions. To achieve sustainable outcomes in humanitarian emergencies, early and active private sector engagement is necessary from the onset of a crisis.  This requires a real understanding of the opportunities and challenges on the ground to enable private businesses in forced displacement contexts, facilitating their access to funding and helping them mitigate financial and non-financial risks. We need to equip private sector companies with relevant data about market opportunities, share lessons of what works and what doesn't, and incentivize the inclusion of forcibly displaced populations. UNHCR and the World Bank have jointly facilitated remarkable progress in terms of refugees’ access to national systems, including education, health, and safety nets, by leveraging dedicated International Development Association envelopes and specialized instruments for governments such as  the Global Concessional Financing Facility for middle income countries. We want to create similar instruments for private businesses engaging deliberately and responsibly in forced displacement contexts. 

The World Bank Group’s 2024 Fragility Forum, taking place this week and focused on “Adapting and Innovating in a Volatile World,” offers an opportunity to share experiences and emerging lessons of the private sector’s growing engagement in forced displacement contexts. Considering the deepening forced displacement crisis, the private sector’s agility, innovation, and capital are needed more than ever.  


Authors

Elena Bourganskaia

IFC’s Vice President of Corporate Support

Raouf Mazou

Assistant High Commissioner for Operations at the United Nations High Commissioner for Refugees (UNHCR)

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