Resilience, Peace and Security

21.3 million people are at risk if this doesn't change

Migrants line up to receive sandwiches offered by volunteers of the organisation "Solidarity Kos" outside Captain Elias, a derelict hotel where migrants find shelter on the Greek island of Kos, August 17, 2015. Nearly a quarter of a million migrants have crossed the Mediterranean to Europe this year, according to the International Organisation for Migration, with numbers surging in the summer when calmer weather makes the voyage marginally less risky.

Developing a system that recognizes refugees’ special economic status might be the answer to the crisis. Image: REUTERS/Alkis Konstantinidis

Saadia Madsbjerg
Former Managing Director, The Rockefeller Foundation
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Today, there are 21.3 million refugees worldwide. That is 21.3 million people who have been driven from their countries by fear of violence or oppression based on race, religion, nationality, politics, or identity. Many live in overcrowded and unsafe camps, often lacking basic necessities, as they wait for some country to grant them asylum.

But even asylum is inadequate to enable refugees to rebuild their lives. Their legal status as refugees helps to protect their human rights in the short term, but it does not entitle them to economic support to meet their longer-term needs. It is time to develop a system that recognizes refugees’ special economic status, in addition to their special legal status.

The underpinnings of such a system are already in place. The World Bank was established in response to the last historic, world-shaking refugee crisis, during World War II. After the war, dozens of countries created the Bank not simply to rebuild Europe, but also to address the needs of those who had been displaced.

Image: Pew Research Centre

In the decades since, the World Bank has helped to finance international development and poverty reduction. And it remains the best platform for quickly and effectively raising money to address pressing global needs. Indeed, it is already working to address the current refugee crisis.

The Bank’s Concessional Financing Facility (CFF) aims to provide $3-4 billion in low-cost loans to the national governments of Jordan and Lebanon, which have experienced 10% and 25% population growth, respectively, owing to the influx of Syrian refugees. As part of the CFF program, the World Bank is working to raise $1 billion from donors to finance an interest-rate reduction from the level typical for middle-income countries (which would apply to Jordan and Lebanon) to a poor-country rate.

But this approach – in which support is channeled through states and delivered in the form of loans – is fundamentally flawed. The countries on the front line of the refugee crisis face serious economic strain. (The combined GDP of the three main host countries – Jordan, Lebanon, and Turkey – is less than 6% of the United States’ GDP.) In many cases, they are already in debt, and struggling to fund their own investment priorities, such as education, infrastructure, and security.

It makes little sense to force host countries further into debt, in order to support refugee populations. If nothing else, this can cause local populations to view refugees as a financial burden and a drain on national resources. That is not conducive to the integration, much less prosperity, of refugees.

To avoid this perception – and to give refugees real opportunities to thrive – requires grants, not loans, and they need to be delivered not through governments, but directly to programs for refugee education, infrastructure, health care, and employment. And the grants need to be sustained – so-called “resilience funding.”

Make no mistake: long-term solutions are absolutely critical. Many of today’s refugees have already been displaced for decades, with new generations – both kids and grandkids – born and raised in sprawling refugee camps like Kenya’s Dadaab. A dedicated entity delivering long-term economic support is vital to improve the lot of some of the world’s most disadvantaged people.

Such an entity could function within the World Bank’s existing International Development Association (IDA) grant-making stream, which delivers funding aimed at promoting equality, economic growth, job creation, and better living conditions. All that is needed is to enable such funding to go not just to poor states, but also to poor stateless refugees.

Once refugees are made eligible for IDA grants, the World Bank could quickly raise funds – as much as $5 billion annually – by issuing bonds, using its recently awarded triple-A credit rating. Over time, it would repay its investors with funds collected through special IDA replenishment calls.

One critical question remains: Who is accountable for the funds delivered to refugees? When the Bank delivers funds to a government, it is clear who is accountable. In the case of refugees, however, other host-country organizations would have to fulfill this role.

But here, again, the solution would not demand radical change. It would not be difficult for the World Bank to appoint a lean secretariat to formalize a network of the most effective public, private, and non-governmental organizations on the ground to receive and allocate the grants for refugees.

Such a network could include agencies within states, such as ministries of education throughout the Middle East, where a billion-dollar funding gap means that one million refugee children risk being forced to miss yet another school year. It could also include United Nations agencies like the Food and Agriculture Organization, which has piloted refugee cash-for-work employment programs that are helping to rehabilitate much-needed agricultural infrastructure in host countries, while empowering refugees economically.

Finally, the network could include innovative start-ups. BanQu is an organization using blockchain encryption to support an “economic identity platform” – a universal, borderless virtual identity card that could keep track of vital information for all 21.3 million refugees, including accounts of skills training, employment and education history, lists of past financial transactions, and health records.

Incoming UN Secretary-General António Guterres, while serving as the UN High Commissioner for Refugees, referred to the system he administered as “financially broke.” He was right. Rather than creating opportunities for refugees to settle and succeed in new countries, the system meant to address the current crisis is hampering progress, generating discontent, and compounding the pressure on already-strained governments. Now is the time to build a new system on the foundations of the old – one that creates real opportunities for refugees to thrive.

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