Generating Jobs for Refugees and their Host Communities
Foreword by Tareq Hadhad, CEO, Peace by Chocolate
ABOUT THIS STUDY
This paper surveys the status of refugee entrepreneurs in several world regions and offers a menu of possible actions that governments, development partners, and private sector actors (including local and global companies, financial institutions, and investors) can undertake to accelerate the economic and social inclusion of refugee entrepreneurs. In this regard, the paper can be an actionable tool that is useful for refugee-owned and local-owned companies, investors, financial institutions, regulators, and development partners seeking practical ways to implement lessons from the private sector-refugee link.
OVERVIEW
By mid-2022, the number of forcibly displaced persons in the world reached 103 million, including 32.5 million refugees, 53.1 million internally displaced persons, and 4.9 million asylum seekers. Oftentimes, refugees are thought of as a burden on countries who host them. They can put pressure on services like housing, health, and education, as well as locally delivered services such as waste management and infrastructure. In areas already undergoing a job shortage, the arrival of refugees might increase unemployment and have negative impacts on prices and jobs, while fueling social exclusion and discrimination against the newcomers.
Entrepreneurship by refugees can drive self-employment as well as job creation for others, expanding the local private sector and producing more tax-paying contributors to local economies. With most displacement situations being protracted, refugees and other forcibly displaced populations naturally look for economic opportunities to sustain themselves beyond the humanitarian support provided. Self-employment can be a viable livelihood strategy for refugees in urban or rural areas, in cities or camps. Examples of refugees engaging in a variety of self-employment activities – from micro or home-based businesses to big enterprises and firms – exist in different world regions. Entrepreneurship does not only represent a way for refugees to become self-reliant, but can also create jobs for host communities.
When refugees start a business, their activity also contributes to host societies by bringing new business practices, markets, and know-how to local economies. Refugees also tend to hire other refugees or vulnerable locals, as they have empathy for those with a similar experience, further contributing to the inclusion of other groups. When going back to their home country, refugees can use their newly gained business and market knowledge, human capital, and networks to help rebuild their local economies and initiate trade networks with host country firms.
Anecdotal examples of refugees engaging in a variety of self-employment activities within different contexts - from informal microenterprises in the Kakuma refugee camp in Kenya, to industrial firms in the plastic sector in Türkiye - show that refugees use their experience and creativity to find economic opportunities in their host country.
At the same time, the international community has shifted its approach to forced displacement from providing humanitarian aid to adopting a development approach to help refugees rebuild their lives while contributing to host economies.
For refugee entrepreneurs to succeed, local entrepreneurial ecosystems must be inclusive—and business, governments, and the development communities can all play a role in helping make that happen. The entrepreneurial ecosystem includes access to finance (such as the presence and accessibility of banks, venture capital, angel investors, foundations, microfinance institutions, public capital markets, and governmental incentives), the presence of entrepreneurial support entities (such as incubators, accelerators, industry associations/networks, technical experts and services), policy at the national, regional and local levels, the way markets are formed (e.g., the presence of domestic and international corporations, consumers, distribution, retail and marketing networks), the level of human capital in the host country (such as universities and other educational institutions), the existing infrastructure (electricity, transport, communications, etc.), the state of research & development and public and private research centers and labs, and the existing culture as demonstrated by media, government, schools, professional associations and social organizations. Some of these domains could represent an obstacle for refugee entrepreneurs. For instance, research has found that in Europe, finance and policy pose serious constraints to refugee entrepreneurs. In other countries, the local culture might discriminate refugee entrepreneurs, or the existing infrastructure might support refugees access some business sectors only.
The paper includes a detailed checklist of what business, governments, and the development communities can do to advance entrepreneurship by refugees and other forcibly displaced people.