Why the World Bank's humanitarian finance plans are a big deal

By Michael Igoe 01 November 2016

World Bank Group President Jim Yong Kim visits classrooms with Syrian refugee students at the Bourjhammoud Public School #2 in Beirut, Lebanon. Photo by: Dominic Chavez / World Bank / CC BY-NC-ND

Few would consider the World Bank a humanitarian relief organization. But the development finance institution’s $1.5 billion facility for refugee hosting countries could help blur the lines — in a good way — between relief and development.

The bank has assembled, over the course of the past year, an expanded financing facility it hopes will help development organizations support refugee populations displaced by war, disaster or persecution. Humanitarian groups have welcomed the bank’s effort to bridge the divide between humanitarian response and development investment, although they say it will take time and oversight to ensure the effort translates into improved refugee services.

The Global Concessional Finance Facility — officially announced at the United Nations General Assembly in September — is a $1.5 billion financing platform the bank hopes will prove responsive to the variety of interests and concerns that make refugee hosting difficult to fund. The GCFF represents a global expansion of a regional facility the bank created for the Middle East and North Africa — the point being to build a financing mechanism that can swing into action and support refugee-hosting countries, whenever and wherever the next refugee crisis breaks out. Qualifying countries that host refugees will gain access to World Bank financing for sectors such as health, education, and jobs — which benefit both refugee and host populations.

The number of people forcibly displaced from their homes currently stands at a record high: 65 million people — or one in every 113 people — were displaced from their homes in 2015, according to the United Nations High Commission on Refugees. An estimated 11 million people have fled their homes as a result of the war in Syria, and more than 4.5 million Syrian refugees currently reside in just five countries — Turkey, Lebanon, Jordan, Iraq and Egypt.

Since the World Bank works with country governments to identify development projects it can finance through grants and loans, refugees present a tricky constituency. The bank could hardly work with the Syrian government to finance projects for Syrian refugees, for example, yet donors ascribe to “country-led” development strategies. How do you finance country-led development projects that target people who’ve fled their own countries?

The clear answer would be to offer support to countries that are providing services to refugees living inside their borders. That’s what the bank has started to do.

But it’s easier said than done. Many of the countries with the largest refugee populations, such as Jordan and Lebanon, are middle-income countries that do not typically qualify for the bank’s most favorable financing terms. Also, these countries face their own development challenges. Asking them to direct funding to refugee services instead of investing in their own citizens risks creating tension between hosts and refugees.

The GCFF aims to start filling that gap by providing concessional financing — below market rate loans — to refugee-hosting, low- and middle-income countries to tackle challenges facing both their domestic and refugee populations. By using grants to buy down interest, every dollar committed through the GCFF platform will leverage three to four dollars of financing, according to Franck Bousquet, the World Bank’s director of regional programs, partnerships and integrated solutions in the Middle East and North Africa Region.

To those who have pressed for tools to provide more and longer term support to refugee populations, the bank’s entrance into this space is a welcome signal and a rare bright spot in an ongoing conversation about bridging the humanitarian-development divide.

“It’s transformational that the World Bank is getting into this space,” said Cindy Huang, a visiting policy fellow at the Center for Global Development. Huang is part of a study group on development and displacement that is looking at the new facility and considering how it can be most effectively applied.

One of the most significant signals the bank is sending, Huang said, is that people working in development might “see refugees as a core part of their job,” in a way that they typically haven’t since long-term development and humanitarian relief are considered separate institutional mandates.

The bank’s emergence into this arena is rooted in its experience with Jordan and Lebanon. Those two countries actually suggested expanding the facility so other countries that find themselves in similar situations in the future won’t have to wait as long as they did for support, Bousquet said.

The bank’s interest also aligns with a broader effort to move “global public goods” closer to the center of the World Bank’s mission. These are things that benefit the world, but with characteristics that make them difficult to manage and protect except through international cooperation. Many — including President Kim himself — have pressed the bank to step into this arena, focusing on global public goods such as climatic stability, pandemic preparedness, and, now, refugee services.

“You’re not only providing support being determined by the income of the country, but also by the global public good they are providing,” said Bousquet. “If Jordan [and] Lebanon were closing their borders it would have impact immediately for other countries,” he added.

For Jordan and Lebanon, an accident of geography has changed everything.

Since the war erupted in neighboring Syria five years ago, an estimated 1.7 million people — women and men, children and adults — have left their homes and sought refuge in these two countries, where life as a refugee looks more hopeful than life under siege. UNHCR estimates there are just over 1 million Syrian refugees living in Lebanon, a country of 4.5 million people. In relative terms, that is a more significant influx than if the entire population of France moved to the United States over the course of a few years.

The vast majority of these refugees do not live in refugee camps. In 2014, 84 percent of Jordan’s refugees were living in urban and rural areas around the country, according to UNHCR. Many of these displaced residents struggle to access public services such as health care and education — particularly when they are displaced to middle-income countries that already struggle to deliver consistent, high-quality services to their own populations.

Nearly 1 million refugee children are out of school in Lebanon, Jordan and Turkey, for example. Almost 60 percent of Syrian adults with chronic conditions are not able to access medicines or other health services in Jordan, according to UNHCR. This is also not a temporary concern. Displacement is often a protracted reality — including for Syrian refugees, who see little reason to hope for a political end to the conflict that’s driven them from home. In order to avoid falling farther behind — or farther into vulnerability — refugee populations need access to the kinds of long-term development services few organizations are able to provide them.

“When people think about humanitarian crises, especially those that lead to displacement, there’s still this very short-term view of what that is,” said Kate Phillips-Barrasso, director of policy and advocacy at the International Rescue Committee. The institutions that are tasked with responding to those emergencies are still set up to approach them with a short-term mindset, she added. Countries that find themselves hosting refugees in protracted displacement don’t have a lot of places to turn to for support that is specifically designed for those challenges.

Advocacy groups such as Amnesty International have criticized the bureaucratic hurdles refugees face when they try to access basic services in places such as Jordan; but they also, like many critics, point out that the international community’s paltry financial support — both to Syrian refugees and to the communities that have stepped up, struggling, to host them — is the larger failing.

“The whole point of the facility is to finance projects that are helping refugees, but also supporting hosting countries,” said Bousquet.

“If you focus only on refugees, you are going to create more tension than anything else,” he added. The GCCF’s goal is “to build the resilience of those middle-income countries to the influx of refugees … but by providing support across all sectors to both the hosts and refugees.”

The facility’s first approved project is a $300 million Economic Opportunities for Jordanians and Syrian Refugees Program, intended to bolster Jordan’s labor market. Roberts stressed that while it’s critical to deliver financial support to help Jordan stimulate jobs that refugees can access, many of the current barriers are political and bureaucratic ones that the bank will have to press its clients to tackle.

“Extra financing for refugees won’t do a lot if people aren’t in a position to access the labor market,” said Phillips-Barrasso.

That means refugees must enjoy freedom of movement, as opposed to encampment policies that are still the preferred model for a number of countries. And it means people working in the informal economy, where they are often exposed to exploitation, need to be counted and protected.

The GCFF’s steering committee also approved a project to rehabilitate municipal infrastructure in Jordan.

Huang emphasized the importance of local research, to ensure the policy levers countries are pulling are ones that can actually create positive benefits for their refugee communities.

$1.5 billion — or even the $5-6 billion Bousquet thinks it might leverage — won’t solve the problems of refugee hosting countries overnight. But it should represent a step change from the smaller pilot programs refugee hosting countries have mostly seen from the international community so far.

The new facility might also have some symbolic value to countries that have borne the brunt of a refugee crisis with implications for the entire world.

The World Bank’s new facility, Phillips-Barrasso hopes, will send a message to those countries: “if you let people in, you will not just be left to deal with this on your own.”

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About the author

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Michael Igoe@AlterIgoe

Michael Igoe is a senior correspondent for Devex. Based in Washington, D.C., he covers U.S. foreign aid and emerging trends in international development and humanitarian policy. Michael draws on his experience as both a journalist and international development practitioner in Central Asia to develop stories from an insider's perspective.


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