Responding to the Refugee and Migration Crisis with Impact Investing
Impact investing has a role to play in the response to the refugee and migration crisis. Both seasoned investors and new entrants who are looking for ways to have meaningful influence beyond philanthropy could consider investment vehicles to drive private sector support for the response to the refugee and migration crisis. Humans on the Move was founded to provide the private sector access to ethical and non-exploitative return-seeking solutions to the practical and tactical challenges that have arisen from an unprecedented period of global migration. We take a collaborative multi-sector systemic approach, looking for both medium and long term investments that have the ability to shift the paradigm around the response to the refugee crisis.
Rather than having a geographic focus we apply an analysis and implementation framework developed during prior work of our co-founder and Chief Strategy Officer, Lina Srivastava, and segment geographies into Sending, Transit, and Receiving communities. In summary, the analysis is that while each city and country may possess unique laws and political situations, the needs of refugees and migrants in those communities in their status of migration are equivalent regardless of borders. For example, the countries that make up the Northern Triangle in Central America: El Salvador, Guatemala, and Honduras, experience similar violence and lack of economic development that Afghanistan does. While there are populations that absolutely must flee, there are certain segments that could stay if the economic environment was more resilient. Therein lies an opportunity to identify scalable solutions with some modifications that can be applicable to both regions.
There are a broad range of strategies towards investing in the response to the refugee and migration crisis, and below we have highlighted three examples of how impact investors could leverage direct investments to drive change. While we are discussing strategies below focused on alternative investments, we do have some audacious goals in exploring what a total portfolio strategy would include. This is the beginning of a much larger and broader conversation, Humans on the Move is positioned to lead, on how investment decisions have impacts on lives around the globe as well as our own backyard.
Placed Based Investment and Debt
There are opportunities for investment in sending, transit and receiving communities. For example, there are increasing numbers of resettled refugees from Syria in the U.S. that have an interest in restarting their businesses that they had before the war in their new home. However they lack access to traditional lending sources here in the US, often need more than micro-lending can afford and less than banks are willing to lend. We are currently working with a national resettlement agency to set up a pilot fund to lend to resettled refugees in the Southeastern United States. Comparatively, in Afghanistan there is a growing social entrepreneurship community that is providing direct investment opportunities, albeit with a different risk profile. The program in Kabul is working both with residents and those who are returning migrants.
Social Impact Bonds
Globally, NGOs and governments are struggling to provide education to refugee children, which is required under the 1951 Refugee Convention. There isn’t enough capacity in local schools and there is a lack of programming that can be brought to school age children who reside both in and outside of camps. Increasing, without access to education children are ending up in human trafficking situations both for labor and sex. A social impact bond could provide a measurable and meaningful avenue to increase educational capacity for transit countries who are looking ways to decrease the burdens on their local school systems.
Through the growth of social entrepreneurship globally, there are companies that are ready to scale who can provide turn-key solutions to refugees directly, the NGOs and governments that serve them. Humans on the Move identifies those opportunities and then sources the solutions that are the appropriate fit for the market and scope. Once that connection is made however, the social entrepreneur often requires additional investment and/or a working capital loan to ensure they have the capacity to scale with the demand.
We formed Humans on the Move, to assist our peers and others in rethinking the response around the refugee and migration crisis. Leveraging the burgeoning growth in socially and environmentally impactful companies to surface connections between the needs of the humanitarian and public sectors and the capacity and desire of social entrepreneurs to scale. Impact investors play a critical role in providing the capital these entrepreneurs need to reach this new marketplace, and we are positioned to help to the private sector broaden its impact into the world’s most vexing challenge.
This article was written by Christine L. Mendonça originally posted on Humans on the Move's Medium page on April 4, 2017.