UNHCR helps direct and register refugees into the Kakuma Refugee Camp, at the Reception Center, in Kakuma Kenya. Photo: Dominic Chavez/IFC.
By Michaela Wieser
Forced displacement has become one of today’s most pressing global challenges. From the Sahel to Ukraine, and the Middle East, conflicts and climate change have displaced approximately 114 million as of October 2023, who are living in increasingly dire circumstances.
In a strategic collaboration, UNHCR, the United Nations Refugee Agency, and IFC have teamed up to find sustainable, private-sector-led, solutions that work to address the issues faced by not only refugees but also their host communities. This is not your typical humanitarian effort. It's a game-changer that takes advantage of the synergy between the public and private sectors to create innovative solutions that are reshaping how we tackle humanitarian crises.
Michel Botzung, Principal Operations Officer at IFC, who has been at the forefront of this initiative, explains the ambition and scope of the partnership.
A Force Years in the Making
This initiative didn't spring out of thin air. "It's actually fascinating,” says Botzung, “we, at IFC, have partly consciously and sometimes unknowingly, been working with the forcibly displaced for a while." IFC has been gradually wading into the waters of forced displacement contexts since 2015, with 12 projects currently in our portfolio that have an explicit forced displacement angle.
"It started in an uncoordinated way, with solutions tailored to the local context, in three different regions," explains Botzung.
In the Middle East, IFC clients Al-Majmoua and Luminus recognized opportunities arising from the influx of Syrian refugees. They approached IFC, asking to extend loans to refugee-run small businesses and provide vocational training to meet the growing demand. “This was something IFC teams were quite comfortable with: our client companies identifying a market opportunity in a challenging environment and calling upon us to share the risk and provide the capital,” he says.
“In Latin America, financial inclusion is a key driver of IFC’s initiatives,” says Botzung, describing the political context as “open and particularly welcoming to Venezuelan refugees.” Bancamía is one of IFC’s clients in Latin America that is actively working to create a more accessible financial sector, including for Venezuelan refugees.
A Project with Lasting Impact
But it was in Africa that UNHCR first approached IFC. The agency had been managing refugee camps in Kenya since 1992 and – what was meant to provide temporary accommodation for refugees fleeing conflict in Sudan and Somalia – still remains today.
“UNHCR felt that the protracted situation would benefit from a private-sector angle,” says Botzung. This led to the production of Kakuma as a marketplace, a pioneering endeavor to view a massive refugee camp and its neighboring city, from a private sector perspective as an untapped market opportunity.
“We asked: What is the business opportunity, can we quantify the economic behavior, what are people buying, what are they asking for?” The team then presented the results to various sectors in Kenya, and launched an ambitious local economic development project, with significant success: 52 business moved or expanded into the area, including IFC’s client Goodlife pharmacies, 15 of which are run by refugees, the others by local populations.
A Visionary Collaboration
In 2023, the two institutions, building on these projects, formed a strategic partnership to create lasting change in how we address forced displacement issues globally by bringing in the private sector as a main stakeholder – at scale and in a more systematized approach.
Four major roadblocks need to be addressed:
1) Enabling the regulatory framework, meaning the capacity for refugees to move, open bank accounts, and run a business.
2) Broadening the focus and moving from refugees only to geographical areas, whether urban or rural, impacted by forced displacement, allowing us to serve a much larger population.
3) Bridging the awareness gap for private companies on market opportunities.
4) Bridging the gap between private companies and humanitarian institutions.
By working together, UNHCR and IFC are uniquely qualified to move the needle on these issues.
The UNHCR-IFC Difference
"This joint initiative brings two very different institutions together: IFC, a development finance institution, and UNHCR, a UN agency that has a mandate to protect and provide solutions to the forcibly displaced population." The sheer uniqueness of this partnership lies in the stark contrast between the UNHCR's humanitarian mandate and IFC's private sector expertise.
UNHCR is “an essential partner to enable us to access, understand, and operate in those settings,” says Botzung. “They have the market intelligence, the understanding of the dynamics, and the presence on the ground – and they have the political clout and know who to talk to.” It’s IFC’s global presence and technical expertise, ranging from agribusiness to affordable housing to financial inclusion and the way we engage with private companies – with proper due diligence, ESG compliance, the transaction structuring skills – that make it the perfect partnership.
“It’s really exciting – and sometimes quite complicated,” he says. “It can feel like running a startup between two bureaucracies.”
Increasing the Impact
IFC is aiming to increase its portfolio and deliberate engagement in areas impacted by forced displacement.
To enable this, the Joint Initiative provides project teams with additional resources, including funding, advisory support, and access to the UNHCR expertise and clout. Besides the operational support, the Joint Initiative will also create and disseminate operational knowledge, enabling IFC and UNHCR to lead thought and practices on how to leverage private businesses in forced displacement contexts.
In a world where the challenges of forced displacement continue to grow, the UNHCR-IFC partnership offers a glimmer of hope. “We have provided relevant solutions already with a host of projects,” says Botzung. “Now it’s about scaling our efforts and seeing how far we can push the envelope.”
