South Sudanese refugee women attend a tailoring class with Mandela ‘Vision’ Tailoring Shop in Kenya’s Kakuma Refugee Camp. The shop is a beneficiary of the Kakuma Kalobeyei Challenge Fund (KKCF), IFC’s first refugee and host community focused program in sub-Saharan Africa. Photo: Credit: Amit Ramrakha for KKCF/IFC.
With her long career in financial services spanning Africa, Europe and East Asia, Jumoke Jagun-Dokunmu understands the intricacies of mobilizing private capital into diverse country situations. However, few people are as familiar as she is with fragile settings, where violence, displacement, and now climate change are complicating development efforts. As Chief Investment Officer and Head of Fragility for Africa based in Nairobi, Jagun-Dokunmu tells us about her efforts to take conflict, displacement and climate resilience into account in all of her work.
How do climate and fragility interact with each other?
Around 56 percent of the people who live in conflict-affected areas are also highly vulnerable to climate impacts – such as droughts and floods. Climate change cumulatively worsens their situation, threatening food security and exacerbating conflict over resources such as water. Lake Chad is one such example. Over the last four months, this already fragile region took in 400,000 people from Sudan, so the government is now working to prevent potential conflict over dwindling water resources, as well as basic necessities like food, shelter and medicine.
How can our projects begin address the vicious circle of poverty, conflict and climate change?
We need to operate at the intersection of these three areas, providing innovative solutions that accelerate economic development while at the same time preventing conflict and advancing people’s resilience to climate impacts. This means working in very different ways. Take Mali’s first modern shea butter processing plant, which IFC financed. Before identifying the location of the plant, we conducted extensive analyses to factor in erratic rainfall, soil erosion and conflict dynamics. It took some patience, but the project now provides higher incomes for 120,000 shea producers who supply nuts to the company.
Jumoke Jagun-Dokunmu speaks at the Global Refugee Forum. U.S. Mission Photo: Eric Bridiers
What role can the private sector play in fragile settings?
The private sector can complement public and donor funding to provide much-needed investment, driving economic growth and employment, and advancing climate resilience across a wide range of sectors. And indeed, a number of private companies are looking to invest in these countries, combining purpose and profits. However, they face specific challenges that add to the cost of doing business. This requires institutions like IFC and the broader World Bank Group to facilitate their responsible entry into the market, introduce business reforms, create bankable projects, and help to share and reduce risks among investors.
What specific measures and tools do we need to accelerate the flow of private capital into fragile settings?
Up-to-date regulations that define rules for investment in key sectors like energy sector or public-private partnership contracts are an important foundation to sustainable private sector investment. Such laws are often outdated or incomplete in fragile settings, and the capacity needs are large. As a result, development finance institutions such as IFC can play an important role advocating for private sector-related reforms and advising government partners on how to put in place fair and transparent regulation. When the time comes to mobilize private capital into a project, we employ a variety of de-risking mechanisms. In the north of Kenya, for instance, IFC and its partners are advancing a broad array of solutions for displaced people residing in the Kakuma refugee camp, as well as host communities. These include mobilizing financing for solar powered mini-grid systems and internet infrastructure, but also microfinance and pharmacies. Engaging commercial banks to co-finance such projects – which are complex and small in scale - requires all kinds of guarantees and concessional financing mechanisms.
Where do you see our climate programming evolving in fragile countries?
Much of our focus in Africa’s fragile settings is on developing climate-smart agriculture value chains - and specifically fast-moving consumer goods, which generate more value. Agriculture is the source of food and income for many people in fragile situations, but it is also heavily dependent on rainfall. Therefore, it is especially impacted by climate change. Research shows that only 3 percent of cultivated areas in fragile and conflicted affected areas are equipped for irrigation. Another area of opportunity is access to clean energy, which enables economies to grow through industry, medicine, transport and agricultural processing. We have done a lot of work specifically to finance and scale mini-grids. But such projects are challenging and slow to develop. Countries like the Democratic Republic of Congo (DRC), for instance, are perceived as risky and insecure, whereas in fact most of the DRC is safe. So a lot of work needs to be done to educate private companies and partners and convince them to invest there. Once they have seen the reality on the ground, their perspective changes.