Expert views

Real capital and digital footing for the forcibly displaced

Migrants & refugees

Access to finance and investment

17 June 2020

Sasha Kapadia, Mastercard

Giving refugees the financial and digital means to access work

In our global economy, when a crisis hits, we all face the consequences. Although the COVID-19 pandemic brought this phenomenon into sharp relief, it has been true for quite some time now.

In 2015, more than one million refugees and migrants made their way to Europe. The majority of them were fleeing conflicts – either new ones such as Syria, or older ones like Afghanistan.1 The following year, thousands of refugees from South Sudan streamed daily into Bidi Bidi, a refugee settlement in northern Uganda – it now hosts 250,000 people.2

By 2019, 16% of the Venezuelan population, or 4.6 million people, had fled the country.3

Unprecedented levels of forced displacement have dominated headlines over the past five years. To manage the influx, governments have made appeals. In developed countries, they appeal to citizens to be welcoming, to assist with assimilation. In least developed countries, given limited resources, they appeal to the international community to help alleviate the burden.

What often happens, no matter the geography, is that a person flees for reasons of physical insecurity only to land in economic precarity.

Humanitarianism revisited

The humanitarian imperative is based on relief ‘to protect life and health and ensure respect for human beings.’4 Relief should be temporary, but too often, it is not. The average length of displacement is between 10 and 26 years. It is hardly imaginable to have to rely on irregular handouts for your basic needs and unfathomable to be prevented from pursuing your profession.5

Refugees have skills to contribute and are willing to provide for themselves and their families but are frequently shut out of opportunities to do so. Informal work abounds but offers little to no protection. While relief is critical in the short-term, we need more creative, durable solutions for the long-term. The forcibly displaced need more channels to plug their tools and skills into the global economy.

Here the private sector can play a key role.

The global economy is a digital economy. Digital infrastructure has the ability to shine a light on populations that would otherwise go unseen. Wherever and however possible, humanitarian and development organizations should use technology to empower the forcibly displaced to receive benefits – food assistance, educational support, unrestricted cash transfers – but more importantly, to access a world outside of the relief bubble.

According to Marie Gillespie, a sociology professor at The Open University in the United Kingdom, refugees rank their phones above food in terms of basic necessities.6 A phone is a lifeline for the forcibly displaced, providing a connection to those left behind, as well as access to vital information and opportunities in their new home.

Putting networks to work

A recently published policy paper, ‘Social Networks in Refugee Response’, delves into the lives of Yemeni and Sudanese refugees in Jordan and their use of networks to survive and thrive. These personal networks beget different kinds of ‘capital’: bonding capital ties refugees to others in similar circumstances; bridging capital involves connections to locals and therefore access to new resources; and linking capital brings in external parties, namely humanitarian organizations.7

As we seek to integrate the forcibly displaced into communities and economies, humanitarian organizations, as connectors, should link the forcibly displaced to real capital, or funding for productive activity.

There is no shortage of companies and foundations, both global and local, who have committed to invest in refugees and refugee-owned businesses to encourage their social and economic integration.

The IKEA Foundation has committed €100 million in grants to improve refugee and host community’s employment and entrepreneurship opportunities, to improve agricultural value chains and to increase the use of renewable energy in homes and businesses.8

In Turkey, home to 4 million refugees, ING, a global financial institution, is providing over $10 million in loans to refugees to help them grow small businesses.9

The Refugee Investment Network seeks to connect investors with refugee ventures and change the narrative around the contribution of refugees.10

Mastercard is applying its deep expertise to build digital infrastructure that forges connections for the underserved. It makes business sense – and it is the right thing to do. As a payments technology company, its biggest competitor is not the fintech upstart but cash. By working with the underserved, such as the forcibly displaced, the company can build the knowledge and capacity to address the needs of a new customer set. This allows for the development of targeted and useful products and services.

Digital identity solutions that incorporate the highest privacy standards allow for the forcibly displaced to access critical services. Offline and online payments ensure they receive what they are due. Quality data permit visibility of their needs. For it should not matter where people flee, if we understand who they are and what they wish to contribute.

The coronavirus crisis has demonstrated how quickly virtual and remote work can become the norm for so many of us, even in humanitarian settings. Our goal should be to accelerate the push towards digitization for all – only then will we have a global, digital, and inclusive economy.