Refugees: Economic burden or boon?

By Neil Ghosh 21 March 2016

Two women walk through a refugee camp for Syrians in Turkey. How can the private sector be engaged in solutions for the refugee crisis that go beyond asking for more donations? Photo by: European Union — European Parliament / CC BY-NC-ND

The year was 1947. At least 12.5 million frightened people, displaced from their ancestral homes, fled across newly delineated borders, according to their faiths. Amid massive confusion and panic, some 1 million people — perhaps more — are estimated to have died. An untold number of women (by some accounts up to 75,000) were raped, sometimes tortured, disfigured and murdered.

This was of course the partition of India and Pakistan, an event that created two new independent nations, and unleashed an episode of brutal depravity that might be unmatched in recent history, with atrocities committed by Hindus, Muslims and Sikhs alike.

As a boy growing up in West Bengal, India I heard many horror stories from multiple sources, including my father. They gave a vivid illustration to what I would later learn in school: The birth of independent India in modern times caused one of the world’s largest and most painful forced migrations.

Fast forward to 2016. Today there are more than 60 million refugees worldwide. Syria’s civil war is one the worst humanitarian crises of our time. Half the country’s pre-war population — more than 11 million people — have been killed or forced to flee their homes.

Two factors triggered the plight of the refugees in 1947: misinformation and fear.

Both factors are alive and well today, sowing suspicion, hatred and violence in otherwise civilized democratic societies. Worse, they are threatening to paralyze policymakers.

We can’t change history. But nor should we allow history to repeat itself. We have a responsibility to find solutions to the refugee crisis.

Investment in innovation

While governments work together to find political solutions, nongovernmental organizations and private sector must help to address the population affected by this crisis. Solutions must go beyond asking for more donations from citizens and more funding from wealthy nations. Solutions must instead engage and challenge the business community, civil society and governments to invest in innovative approaches.

While European leaders struggle to find a pragmatic solution to the refugee crisis, they all agree that a key component of any successful strategy must be real and meaningful economic development in Syria, Afghanistan, Iraq, and other countries of origin. Numerous global and U.S.-based organizations are responding to the current crisis and InterAction — an NGO alliance organization in Washington, D.C. — has prepared some excellent guidelines on how best to help in the crisis.

However, this should be more than just increasing financial and humanitarian aid to these countries.

There are many views on how to address the refugee crisis — from building more walls, to accepting more refugees than the existing infrastructure may allow, to giving aid to certain countries to stop the flow.

Will inclusive strategies work in the countries currently hemorrhaging refugees to Europe and elsewhere? In some cases, they already are:

In Afghanistan, the Roshan mobile telephone company has brought thousands of mostly illiterate, rural individuals into its high-tech value chain by making important information — agricultural market news — accessible via voice-response technology.

In Pakistan, Engro Foods, a processed milk company, has built a broad-based procurement system that now includes more than 300,000 small-scale producers, who also receive entrepreneurial and hygienic training to help them improve the quality of their product, and increase output.

In Tunisia, the Enda Inter-Arabe microfinance institution has enrolled more than 265,000 borrowers in an effort to empower women to participate in business and political life.

In Turkey, more than 1,000 U.S. firms have made the country their home, across virtually all industry sectors. Development finance institutions such as KfW, the International Finance Corporation, the European Investment Bank, the European Bank for Reconstruction and Development, or the World Bank, actively engaged in Turkey for the past four decades, recently initiated and/or co-invested in funds — or fund of funds — that provide finance for projects and organizations with a positive impact, and cooperated with Turkish retail banks in the area of renewable energy or energy efficiency finance, (M)SME finance, women entrepreneurship finance and/or guarantees, with many of these programs earmarked for disadvantaged regions in Turkey.

In Syria and Iraq, the Middle East and North Africa Investment Initiative, funded by the U.S. Agency for International Development, and the United Nations, the World Bank Group, and Islamic Development Bank Group recently announced an investment initiative to help countries in conflict, recovering from conflict, or hosting refugees — including a strong emphasis on economic and social inclusion.

These initiatives and others demonstrate that innovative development can take hold in the most adverse contexts, and provide a holdfast for a society in turmoil. They demonstrate the will to flourish even amid destruction and hopelessness. And they demonstrate that tools are available for those who have the vision to use them.

While we need to respect country borders, improve identity checks and enforce laws to penalize smugglers, we also need to invest and increase awareness of the positive economic outcome of the refugees. Even today our governments, philanthropists and business do not command the resources individually to address these complicated problems by traditional means. Businesses are realizing that in addition to their charity role, they also have a role in helping to build economies.

This is not about privatizing philanthropy. It is about combining a social focus and corporate capacities with opportunism in a totally new way.

Two of the most innovative strategies for inclusive growth are inclusive business and impact investing. Both deliver real progress, and are embraced by many as sustainable and scalable strategies for integrating low-income citizens into the formal economy and thereby fueling economic growth.

Both these models must engage local entities whenever possible. Contrary to what some development dreamers desire, after today’s crises have passed — in Afghanistan, Iraq, Libya, Syria, and elsewhere — there will be no blank slate on which to create a development utopia from scratch. History doesn’t work that way. Instead there will be “facts on the ground” — factions, traditions, institutions, habits, faiths — that can outweigh the best imported intentions. But this can be a good thing.

Through thoughtful consideration of these facts and by focusing on inclusivity, developers and others can set the stage not only for sustained prosperity, but also for lasting peace. Case studies from around the world demonstrate the viability of these emerging, inclusive strategies for capitalizing development in ways that may broaden economic opportunity and expand participation in civic institutions.

We don’t know how the current European refugee crisis will play out. Nor can we anticipate when or where the next such crisis will take place. What we do know is that building sustainable economies is a mission for global development professionals energized by a new surge of creative thinking — and also a job for investors able to recognize opportunity where others might see only ruin.

We hope that these new tools are used widely, wisely and most of all, soon. As development and business professionals and government policymakers, we need urgently to increase awareness about the positive economic impact of these innovative models, so that citizens and policymakers alike can begin to shift their perspective — and see refugees not merely as a threat to domestic stability, but as an opportunity for economic growth.

Across Borders is a monthlong online conversation hosted by Devex and partners — World Vision, the European Commission's Humanitarian Aid and Civil Protection department, the U.S. nonprofit partner of the International Organization for Migration and United Nations Volunteers — to analyze and amplify the discussion on global migration and current refugee crises through the lens of global security, development cooperation and humanitarian aid work, and more. Visit the campaign site and join the conversation on social media tagging @devex and #AcrossBorders.

About the author

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Neil Ghoshneilghosh4

Neil Ghosh is executive vice president of the Global Fund for Children, board chair of Youth Resound and former founding president of SNV USA. He is a thought leader and a seasoned executive with more than 20 years of experience helping to address gaps in economic growth, education, capacity building, and governance.


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