How impact investing can help ease refugee crisis
George Soros' recently pledged to invest $500 million dollars in refugees, but investing in refugees is currently a confusing and little understood market for investors. We explore existing and future impact investing solutions, and chat to Techfugees' COO Joséphine Goube about what investors should be looking for.
There are currently more than 65 million displaced people in the world, the highest number on record since the UN Refugee Agency (UNHCR) began collecting statistics – surpassing even post-World War Two numbers. In 2015, over one million refugees crossed the Mediterranean into Europe to seek a better life and escape war, persecution and poverty and other life-threatening situations. Humanitarian organisations, social services and members of the public continue to work tirelessly to provide immediate, frontline support to those in need, as international governments struggle to adequately respond and adapt to the rising number of displaced people. Recently, the role of businesses in supporting refugees was put under the spotlight: last month the White House announced the responses to its call to action for private sector engagement on this issue. Examples of responses included Airbnb committing to develop a program to enable existing Airbnb hosts to temporarily accommodate refugee families, Facebook pledging to bring Wi-Fi connectivity to 35 locations across Greece, and LinkedIn promising to growing its refugee initiative, “Welcoming Talent”, to additional countries beyond Sweden. This ‘Call to Action’ coalition included George Soros’ pledge to invest $500 million in refugees. Soros explained his decision in a piece in the Wall Street Journal, writing “our collective failure to develop and implement effective policies to handle the increased flow has contributed greatly to human misery and political instability… Migrants are often forced into lives of idle despair, while host countries fail to reap the proven benefit that greater integration could bring.” Without delving into the moral and humanitarian arguments for providing assistance to refugees, evidence shows that refugees are a valuable economic resource. A comprehensive international study of how refugees can contribute to advanced economies conducted by the Tent Foundation and Open Political Economy Network found that investing one euro in refugee assistance can yield nearly two euros in economic benefits within five years. But what does or should investing in refugees look like? “Over the past year we’ve seen an increase in interest from impact investors to invest in refugees, and most came to us looking for guidance on how to navigate this emerging ‘market’. Often when people think of refugees, they think of humanitarian aid and think that there’s no market, no pipeline of projects and no revenue to be made,” explains Joséphine Goube, COO of Techfugees, an organisation that coordinates and curates a community of over 15,000 tech professionals that create tech to respond to the needs of refugees. “It’s hard for investors to understand or find out about the wide range of projects and innovations that are already happening on the ground, and that need investment to scale.” Earlier this year, Techfugees started building the open source platform Basefugees to overcome this barrier. Basefugees is designed to coordinate the emerging marketplace of refugee-focused businesses and investors. NGOs and refugees can post challenges they face on the ground and then tech innovators and social entrepreneurs can pitch a prototype or working product all of whom will have passed through the Techfugees due diligence process. “We look for entrepreneurs and organisations who understand the problem on the ground, practice a user-centered design approach and are creating with refugees. We want people who have a hacker mentality and who are ready to work with partners on the ground to refine their tech. If you’re not working with refugees and with people on the ground, there’s a chance you will hurt the very people you are trying to help,” adds Joséphine. “What we realized is that the refugees and NGOs do not need unicorns or one big app solving it all. They need tech support, because tech scales, and from there so much impact can be created” Big Society Capital explored how different investment structures can be used to promote the integration of refugees and asylum seekers as part of their Social Investment Insights Series in May this year. One of the report’s recommendations is an Immigrant Access Fund (IAF) to support refugees and asylum seekers who, although high-qualified in their own countries (e.g. architects, lawyers), need to obtain qualifications that will be recognized in new countries. Canada has already launched an IAF that has provided $13 million in micro-loans to thousands of migrants, with a 98% repayment rate. Another is Belgium’s Social Impact Bond that funds matching between retirees and 18-30-year-old migrants to help them obtain employment. This week, Kois Invest announced it is to conduct a feasibility study into a proposed Development Impact Bond with the intention of improving the lives of Syrian refugees across Turkey and the Middle East. There are many examples of businesses focusing on integration: in London alone, we have the restaurant Mazi Mas, catering company Papi’s Pickles and fashion brand Heba, who all focus on providing women migrants with safe and fulfilling employment. Transitions is a recruitment agency specialising in accessing the skills of refugees, and whose mission is to facilitate a more diverse and equitable skilled jobs market in London and nationally. In Sweden, Mitt Liv connects refugees to jobs and is paid to consult on diversity in the work force. Responding to the unprecedented influx of refugees and displaced people remains an ongoing challenge, and one that will only be resolved by a coordinated, international effort by both the countries from which people are fleeing and the countries that receive them. Similarly, the private sector and individuals cannot be expected to replace the role of governments. Nevertheless, it is clear that the private sector has an important role to play in easing the burden and providing much-needed and long-term support for integration for refugees. Photo credit: Mazi Mas via Facebook