Where’s the Refugee Impact Fund?

I must confess I was largely clueless about the work humanitarian agencies did with regard to conflict before working on this month’s issue. I assumed that they provided initial emergency provisions and medical assistance, and I never really thought what they did after that. 

It had not occurred to me that they stay on when wars no longer make headline news, when donations have thinned and the challenges have morphed into something more unwieldy, such as: what do we do with millions of refugees that cannot get work or payment to support themselves? 

It certainly had never occurred to me that these NGOs might be trying to find solutions for digital payments for refugees, improving their ability to receive remittances and developing business grants and loans for them – as well as for host economies’ citizens. Naively I had assumed the financial sector would be taking care of this part. 

But it turns out that it isn’t. 

Save for MasterCard, Western Union and Citi – and chiefly through their corporate social responsibility (CSR) commitments – very few global financial services companies are working with NGOs to bring financial solutions to the world’s 21 million refugees. 

It was only when I sat down with a micro-finance institution in Jordan and asked which global financial institutions had in the last six years of the financial crisis offered some assistance on low interest loans, only to receive a laugh, that I realized what the humanitarian sector realized long ago: there is a large gap when it comes to solving long-term humanitarian challenges.

And that gap is the lack of financial services. 

I am still not entirely sure why this gap exists. NGOs and non-profits offer such potential as partners to financial services companies. Take Mercy Corps.

Among hundreds of innovations it has launched globally, it formed a partnership with a Somalian microfinance institution (MFI) and a Dutch mobile services provider and a created cash mobile wallet, Halo – now the biggest mobile wallet in Ethiopia. It is also working with the Google.org foundation to find innovative solutions to youth unemployment and partnered with them to create a tech incubator in Gaza. We could add to this the water-technology projects it works on, the small business loans it has developed with local partners and its research into using blockchain. 

If large financial institutions find it valuable to partner with small fintechs because of intellectual capital, then I would argue it is as valuable to partner with NGOs looking into challenges around anything financial.

Bankers may feel ‘NGO’ and ‘making money’ do not go together. But that is not the case. MasterCard, for example, outside of its CSR initiatives, is very clear that it needs to make money on its formal partnerships with NGOs and the public sector and it does so through use of its network for aid distribution cards, which it helps to develop. 

Perhaps the idea of only 21 million people to serve is unenticing? It is too small a market. But as Kilian Kleinschmidt, who used to run Za’atari refugee camp with the UNHCR, points out: “If you look who is in need of similar financial services to refugees – it’s anyone on the move – and that’s about 1 billion people.” 

Kleinschmidt has some experience. He helped organize a camp for the Lost Boys of Sudan during the second Sudanese civil war. He was in Mogadishu in 1993 during the battle of Mogadishu. He spent two years in Sri Lanka as a liaison to the Liberation Tigers of Tamil Eelam rebels. And he coordinated the rescue of Rwandan Hutu refugees caught in the rainforests of Congo by repairing an old railway and using a steam train to get them out while he was there with the UNHCR. 

Having seen a fair amount of action (and inaction in terms of partnerships with NGOs), he set up Switxboard to help NGOs, financial institutions, digital innovators, governments and the private sector connect in order to come up with solutions for excluded communities. 

But all this aside, it strikes me that humanitarian crises are ripe for an impact investment fund. I hear constantly from banks about how they each are leading the impact investment revolution, yet not one has come up with an impact fund or bond for humanitarian causes. Mercy Corps floated the idea of a Syrian reconstruction bond, but found no backers. It is almost embarrassing at this point to have heard nothing from European or US banks about refugees. Who wouldn’t want to be the first to launch a bond for refugees? Perhaps they are just as clueless as I was. 

I hope that changes.