Private Sector Solutions at the Global Refugee Forum

Hello and welcome to IFC Audio Stories, where we talk about private sector solutions to global development challenges. I'm your host, Lindy Mtongana.

Forced displacement is fast rising to the top of the global development agenda – with the number of displaced people globally, now exceeding 114 million. 

This December the UN Refugee Agency – UNHCR -  is hosting the 2023 Global Refugee Forum the world's largest gathering in support of refugees. And the International Finance Corporation will be bringing private sector solutions to the table.

Today I’m in conversation with Michel Botzung. He is the Head of the IFC UNHCR Joint Initiative, which seeks to promote financial inclusion and market-driven opportunities in displacement contexts.

Lindy: Michel what is the global refugee forum? And why is it so important to IFC?

Michel: Yeah, thanks Lindy. So, the GRF is the biggest event in the forced displacement space - think about COP28 applied to forced displacement. It's an event taking place every four years. This one is the second one. And it brings together a wide range of stakeholders, humanitarian actors, philanthropists, NGOs, governments, development finance institutions, and increasingly private sector companies.

It matters to IFC, because on the one side, from a strategic perspective, our shareholders are expecting us to bring private sector-led solutions and innovations in the area where it matters the most, and forced displacement today, with 114 million people forcibly displaced, is one of those key crises that we are facing.

Lindy: Michel we know that at the heart of the event, is also the Global Compact on Refugees, essentially, a framework through which states commit to working together to transform the way the world responds to refugee situations. And of course, at the moment, you're heading up what's known as a Joint Initiative between IFC and UNHCR. Tell us more about this Joint Initiative and how it’s priorities align with the Global Compact on refugees.

Michel: So the Global Compact on refugees from 2018, so five years ago, has been the absolute game changer in that space - for two reasons. The first one is that, for the first time, it has been calling for a change of focus, moving from purely humanitarian approaches to development ones. So, evolving from a focus that was traditionally just on refugees themselves as persons of concern to a much larger range of stakeholders, including the host population, so, moving from refugees, to forced displacement contexts. And that's broadening the scope, and probably also broadening the opportunity for private companies to play a role in that space. That's the first big change that has taken place enabled by the Global Refugee Compact.

The second one is that it has been calling for a much wider range of stakeholders to get involved in that space, not just humanitarian actors, NGOs, but also the private sector; the private sector which is expected to provide sustainable solutions in terms of jobs, skills, housing, food security, access to education, access to water, access to electricity. So it’s an absolute game changer, which is also paving the way for us to get more involved in that space.

Why does it matter for the Joint Initiative? The Joint Initiative was launched about a year ago. And the ambition is to actually accelerate the pace of private sector engagement because five years after the Global Refugee Compact, some progress has been made yes, particularly when it comes to financial  inclusion, but to a large extent, the private sector engagement today is still focusing on procurement - so someone is paying you to deliver some goods or services, or corporate social responsibility which is absolutely great, but not necessarily sustainable.

And what we are calling for, what all the stakeholders are calling for is the business dimension of the private sector to be brought to forced displacement contexts. And the ambition, the role of the Joint Initiative - by bringing together humanitarian actors like the UNHCR, and IFC’s private sector expertise  -  is to grow the space and enable for a much more massive, much more systematic, private sector business engagement in forced displacement.

Lindy: Specifically looking at IFC’s interventions and IFC’s approach, can you share some examples of where and how IFC is working to support displaced people in different displacement contexts.

Michel: We have 12 projects in the IFC portfolio that are mapped to forced displacement. And it's really they fall into three categories. On the one side, it's the engagement we have with our clients, that the clients who will hire refugees, who will buy goods and services produced by refugees, who will provide electricity and key services to refugee population and to the host communities. So working through our client companies to reach the target audience, and the areas that are impacted by forced displacement. And that's the normal IFC Type of business. It has happened a lot in financial inclusion. We have examples from Lebanon several years ago with microfinance Al Majmoua. This has then extended to Latin America. Bancamía is an example that we have highlighted quite often recently and is very exciting. But there has been a transaction in Eastern Europe also with Bank Santander Poland, where the bank will be actually extending loans to refugee-managed businesses in Poland, and to SMEs locally hiring refugees.

The second one is, is focusing on local economic development. And that's the work the IFC teams have done in Kenya, for example, around Kakuma, which is a large refugee camp that has led to the emergence of an urban settlement. And here beyond just one client, it's a much more comprehensive and holistic local economic development intervention, that combines support to small businesses, enabling the business environment jointly with the local county government, and trying to attract bigger companies, including IFC clients to an area which was today, little bit until today, a little bit under underdeveloped and not on their radar.

The third one, which is more moving forward is, is having large infrastructure transactions - water or electricity - that could be serving areas and geographies that are impacted by forced displacement. That's the that's the way forward. So really a diversity of engagement, a growing one. And I must say that I'm actually very happy and very impressed by the level of responsiveness we are getting from our colleagues on the ground, in the industries, in the country officers to take this work forward.

Lindy: Speaking of the way forward, if we look at the scale of the situation now – 114 million displaced people where are you focusing your attention.

Michel: Forced displacement is an evolving reality. And the big evolution is that it's a reality that is today impacting middle income countries, both as countries of origin, and countries that are hosting refugees. What we have seen in in the Middle East around Syria and the neighboring countries, what we have seen more recently around Ukraine, what we have seen in Latin America, with the exodus of, of Venezuelan leaving the country and moving to into the neighboring countries -  it's becoming to a large extent also a middle-income country problem. And there on the positive side, our clients are much more receptive and much more ready to address this crisis and this opportunity. On the on the flip side, I think we are maybe, as a DFI, missing the key instrument that would enable us to really support our client's engagement in that space. The availability of blended finance that could be deployed in middle income countries to address the forced displacement crisis is pretty limited. So it's a new challenge that we are facing, and we need to adjust to that. 

Lindy: Michel finally, you mentioned that the global refugee forum only comes around every four years. So what do you hope emerges from this year's meeting,

Michel: There are a few expectations. The first one is really to increase the level of awareness of the role played by the business component of private sector. The second one is build alliances and bring on board relevant partners, including in the philanthropy maybe. And the third one is, is really to mobilize more support for the IFC engagement in force displacement. And there will be two events, one will be materializing the second phase of the Prospect's Partnership, funded by the Netherlands, which provides a combination of blended finance and advisory for several countries in East Africa and the Middle East. And the second one is pledges made by the US and Denmark to actually support the Joint Initiative. So it's a combination of moving the agenda to strategic level, building alliances and, and growing the range of stakeholders supporting our engagement.

Lindy: Thank you Michel

Michel: Thank you Lindy.

Lindy: Thats it for this episode of IFC Audio Stories. If you’d like to find out more about the IFC UNHCR Joint initiative visit our website, ifc.org. As always, thanks for listening. I’m Lindy Mtongana.