ILO explores transformative private sector solutions in forced displacement contexts

Through a three-day knowledge-sharing event bringing together a wide range of partners, the ILO placed the spotlight on the importance of working closely with private sector actors in forced displacement with a collective vision for sustainable and inclusive socio-economic development.

Article | 13 November 2023
Participants at the event representing Government, Private Sector, ILO Constituents, UN Agency representatives, NGOs and ILO Officials. ©ILO
Kampala, UGANDA (ILO News) - In a world grappling with the challenge of increasing human displacement, innovative solutions are essential to improve the lives of refugees, internally displaced persons (IDPs) and their host communities. In this regard, the International Labour Organization (ILO) and its International Training Centre (ITC-ILO) and the Government of Uganda organized a technical knowledge-sharing event on “Inclusive private sector development in forced displacement contexts” in Kampala, between 17-19 October 2023.

The event is a key learning outcome of the first phase of the programme, Partnership for improving prospects for forcibly displaced persons and host communities (PROSPECTS), generously supported by the Government of the Netherlands. It underlined the importance of engaging and developing the private sector in the humanitarian-development-peace nexus.

The conference brought together over 180 international humanitarian and development practitioners, central and local government officials from a range of ministries and institutions, private sector representatives, donor agencies and refugee entrepreneurs to discuss the advantages and challenges of engaging private sector in forced displacement settings.

Welcoming the participants on behalf of the government, Hon. Gidudu Mafwabi, Minister of State for Elderly, said: “Uganda hosts over 1.5 million refugees and is known for its progressive policies on forced displacement. We have inclusive policies for refugees, extending rights to participate in gainful employment and establish business and access to social services on the same basis as Ugandan nationals. We urge more host countries to follow this example and learn from our models of private sector engagement implemented in partnership with the ILO. While we continue to open our doors for refugees, I also urge the international community to address the root causes leading to forced displacement.”

Coffi Agossou, Deputy Regional Director for the ILO in Africa, underlined ILO’s important role in providing support to its constituents in facilitating access to labour markets for forcibly displaced persons. He elaborated: “Our policy framework, the Employment and Decent Work for Peace and Resilience Recommendation, 2017 (No. 205) and the Guiding Principles on the Access of refugees and other forcibly displaced persons to the labour market guide ILO members and other national and international partners in formulating sustainable labour market and livelihood responses to these movements. Through programmes like PROSPECTS, we further aim to enhance our support in transitioning from humanitarian to development-centred assistance and accelerate sustainable solutions for hosts and refugees to build more inclusive, cohesive and productive societies.”

Expanding on the contributions made by the PROSPECTS Partnership, Nicholas Grisewood, Global Programme Manager, ILO PROSPECTS, explained: “In the first phase of PROSPECTS, 2019 to 2023, the ILO piloted private sector engagement activities in forced displacement across a range of thematic areas, while working with governments, social partners and other stakeholders on inclusive policies and programmes to enhance the sustainability of these approaches. As the programme enters its second phase, it presents a timely opportunity to review our engagement, capture what we have learned and sustain and scale up our ongoing efforts. Our aim is to prove the concept that partnership is central to achieving durable solutions for refugees and host communities.”

Over the course of the three days, participants explored practical experiences in formal and informal business development, financial inclusion, market-based approaches, cooperative solutions and private sector engagement. These dynamic discussions were guided by experts from different organisations and institutions and were informed among others by experiences from the PROSPECTS programme, including from refugees themselves.
The key speakers (L to R) Joost van Ettro, Deputy Head of Mission, Netherlands Embassy in Uganda, Hon. Gidudu Mafwabi, Minister of State for Elderly, Uganda and Coffi Agossou, Deputy Regional Director for the ILO in Africa addressing participants ©ILO

Bringing forward the perspective of refugee entrepreneurs

Setting the practical and solution-oriented tone of the conference, two refugee entrepreneurs presented their experiences of establishing businesses and overcoming various challenges in doing so.

Fabien Shema is a Rwandan refugee entrepreneur in Uganda and founder of the Ripple Savings Credit Cooperative. His commitment to providing for his family and community underpin his business model. He established a community school to respond to the needs of local children unable to afford school fees or access secondary school opportunities. He then went on to set up the Ripple Savings and Credit Cooperative to fill a gap for access to finance in his community. “Navigating through bureaucracy and competition, I faced many moments of discouragement. I struggled to win the trust of my own community and hold the businesses together. ILO training programmes like Start and Improve Your Business (SIYB) and on financial education helped me realign my business models with my goals,” said Shema.

Another refugee entrepreneur in Uganda from the Democratic Republic of Congo (DRC), Patient Baraka, built a business in response to local health challenges and, in doing so, demonstrated how challenges can be leveraged as opportunities. In DRC, Patient studied biology and when he fled to safety in Uganda, he started to experiment with natural products that would repel mosquitos and prevent the spread of malaria. “Accessing capital is a challenge for us refugees and I could not expand my business. Training such as SIYB and access to seed funding helped me refine my business model and develop a prototype and packaging for my product. I was able to have the product certified by the Ugandan National Drug Authority, which opened up further markets domestically and abroad. I have an expansion plan in place, however there are still challenges ahead, such as procuring equipment and sourcing raw materials without being a formal enterprise.”

Private sector in the humanitarian-development-peace nexus

Following up with further experience sharing, a panel discussion on bridging the humanitarian-development-peace nexus highlighted the critical importance of multi-stakeholder engagement to bring private sector to traditionally humanitarian dominated spaces to respond to forced displacement. Panellists, including representatives from the ILO, the International Finance Corporation (IFC), the United Nations Agency for Refugees (UNHCR) and the Ministry of Trade, Industry and Cooperatives in Uganda, underscored the need to develop coherent and innovative approaches to humanitarian-development initiatives, particularly through improved coordination between relevant stakeholders and the engagement of the private sector.

“The private sector not only provides solutions for forcibly displaced populations, but also stimulates inclusive local socio-economic growth, benefiting all stakeholders involved. Small and micro enterprises demonstrate immense potential in creating jobs in the forced displacement context,” said Merten Sievers, ILO Global Coordinator for Value Chain Development and Entrepreneurship, in his remarks.
Refugee entrepreneurs sharing challenges in setting up and operating enterprises ©ILO

Opportunities and barriers in private sector engagement

During an exchange on the "Pathways for refugee entrepreneurs to self-reliance through private sector development", experts explored some of the difficulties but also opportunities for refugees in setting up and improving their businesses and what it takes for a refugee entrepreneur to become self-reliant. Alistair Cowan, Regional Alternative Finance Coordinator with the Danish Refugee Council, noted: “Understanding of cultural context of different refugee communities is important to promote entrepreneurship. When the solutions to overcome barriers are co-designed with refugees, they are better accepted and more likely to succeed.”

Contributions from other panellists included initiatives to making business development services accessible and affordable for refugees, helping them transition from humanitarian grants to commercial loans to address market distortions. Panellists stressed the importance of access to financial and non-financial services, cooperatives and innovative approaches such as access to digital finance particularly for informal businesses. A recurring call from many panellists throughout the session was to focus on enabling a sustainable transition out of a purely humanitarian response to support private sector's development in the delivery of goods and services.

Access to finance to supporting entrepreneurial pathways

The pressing issue of financial barriers hindering business start-up and growth among displaced populations was addressed in a dedicated session on "Access to finance in the context of displacement".

Several initiatives supporting access to finance for refugees in the PROSPECTS programme have shown the potential of enabling entrepreneurship and economic growth, which are essential for the self-reliance of displaced populations and to contribute to local economic growth and build more sustainable local economies. These include a collaboration between the ILO and Central Bank of Iraq facilitating access of displaced populations to a government programme called the One Trillion Dinar Initiative. Under this initiative, the ILO acted as a guarantor to provide a de-risking model, enabling displaced populations to access commercial loans despite strict requirements. “This collaboration overcame initial distrust of the banking sector towards displaced people through the fact that the loan repayments achieved a 100 per cent rate,” said Ahmad Mohamed, Central Bank of Iraq.

In Uganda, the Opportunity Bank has adopted a creative approach to refugee financing, offering tailored financial literacy training and group loans through Savings and Credit Cooperative Organizations. Noah Ssempijja, Country Lead for Opportunity Bank, said: “The overall objective is to bring the financial institutions and the displaced community closer together through accessible and innovative financial initiatives and enhance the trust and confidence of each other through training, awareness and understanding of needs, expectations, roles and responsibilities. This process takes time and significant investment, but the results speak for themselves through the emergence of successful businesses with the potential to grow, reinforcing local economies and creating more and better jobs.”

Building success: The importance of partnership

Underlining the importance of partnerships, participants engaged in a session that represented the essence of the PROSPECTS partnership, "Forging win-win situations: Understanding the conditions for successful private sector engagement in forced displacement contexts". Discussions explored strategies to involve the private sector more effectively in supporting displaced populations. The session was introduced through a presentation highlighting the findings of a joint ILO-UNHCR review of the implementation of market-based approaches in displacement contexts. Participants then dug deeper into the challenges affecting private sector engagement in these fragile environments, pointing to the urgent need for co-creation, collective learning and effective coordination between humanitarian and development partners to prevent market distortions often caused by humanitarian aid.

Paul Joicey, Team Leader with DAI Europe, shared his experiences of working in three regions in Ethiopia and using an adapted market systems development approach. “Funding refugee business initiatives works better when it is used to de-risk initial private sector investments, support expansion of business operations and attract further investment. The support should be long term and there must be willingness to accommodate failures,” he explained.

The session included voices from organizations beyond the PROSPECTS programme, for example, Mercy Corps in Uganda and Palladium group in Nigeria. In conclusion, session panellists highlighted the need for a more nuanced approach to private sector engagement, distinguishing between when public service delivery suffices and when private sector involvement becomes more relevant or even necessary.

Driving inclusion through insightful dialogue

Private sector representatives sharing their experience of engaging in the forced displacement contexts ©ILO
Beyond the substantive panel and plenary discussions, space was given through a series of breakout sessions to private sector representatives engaged in forced displacement in different countries in Africa and the Arab States to provide their perspective on the challenges and opportunities they face. These case studies provided valuable insights into the dynamic world of financial inclusion and sustainable business growth for and within displaced communities.

Shabelle Bank is an Ethiopian microfinance institution that has transitioned to become a commercial bank. Digital and savings products were a key entry point to build a rapport with the refugee community through a network of refugee extension agents, which provided additional insights into the market and helped build trust. Ahmed Abas, Microfinance Operations Director, said: “Despite the challenges of business registration and a high level of aid dependency among the refugee population, we were able to help them through financial education and tailored financial products. Shabelle Bank’s experience demonstrates the need for both businesses and refugee clients to learn, build trust and grow slowly over time."

Agriproject Concept International is a Nigerian company marketing and distributing veterinary products, livestock and dairy equipment and agriculture research materials. The business was first established in response to Newcastle Disease that was killing off small-scale farmers’ poultry stocks. The disease could be easily prevented by a vaccine which was not readily available in areas where farmers lived. Agriproject purchased vaccines from the National Veterinary Institute and established a network of village agents, including refugees, trained to administer the vaccine for a small fee. The training was certified by the National Veterinary Institute, giving village agents the legal ability to administer vaccines and provide veterinarian services and products. Within a short amount of time, with local demand for services, the model has become self-sustaining.

Bayrony, an agricultural export company based in Khartoum, was another success story engaging refugee farmers producing hibiscus and peanuts. When Bayrony started to buy this produce from refugee farmers, they faced the challenge of the refugee settlements being in remote locations with a lack of storage facilities. As a result, they had to adapt their business model. By observing the market, the company noticed that refugee farmers would hold onto their produce until market prices went up, but this sometimes meant the produce was spoiled by the time of sale. To address this, Bayrony provided climate-controlled storage space to limit spoiling and improve production quality.

An IFC and UNHCR joint initiative was launched in December 2022 in Istanbul to support the design of innovative and scalable private-sector solutions-oriented projects to be implemented in forced displacement contexts. Speaking on the establishment and ambition of this 5-year initiative, Ferdila Ouattara explained that it seeks to address the challenges faced by refugees and their host communities by fostering private-sector solutions and supporting the creation of economic opportunities in areas hosting large refugee populations. The initiative is still in its early stages and Ms Ouattara underlined the need to explore opportunities for further collaboration in designing and piloting scalable private sector solutions and building a knowledge base of operational lessons and fostering knowledge exchange among key players in the field.

To encourage in-depth and targeted interactions between participants and private sector representatives, “open knowledge sharing” sessions were also organized, promoting insightful exchanges leading to planning future collaboration and addressing challenges in fostering economic growth amidst displacement.

Developing a collective vision for change

The session, “Towards a conducive environment for private sector development in forced displacement contexts,” encouraged interesting exchanges on efforts to promote refugees’ rights to work, access finance, create businesses and engage in cooperative development. Fatma Kaya, Senior Programme Officer, ILO PROSPECTS, shared findings from the “Review of national policy, legislative and regulatory frameworks, and practice”, a global synthesis of research conducted in the eight PROSPECTS countries. The aim of the exercise was to establish a baseline of relevant policies and their application that determine access of forcibly displaced persons to the labour market and livelihood opportunities and their rights at work.

Having set the scene of the significant level of challenges that refugees face in business development due to regulatory and other barriers, there followed a dynamic interactive session during which there emerged a clear demand for addressing the lack of funding and information on formalizing businesses, movement restrictions on refugees and the difficulty to obtain work permits. There were also calls for more responsibility from stakeholders in terms of de-risking investments and managing issues with loan repayments.

In concluding the three days of in-depth discussions and exchange, which often continued in the margins of the conference, participants expressed their support to strengthen efforts to harness the power of the private sector as a catalyst for sustainable development, economic growth and enhanced livelihoods. The discussions emphasized the importance of collaboration and inclusivity in shaping an enabling environment for displaced populations worldwide.

Joost van Ettro, Deputy Head of Mission, Netherlands Embassy in Uganda, said: “The support of the Netherlands for the PROSPECTS Partnership aims to help transform the way governments and other stakeholders respond to forced displacement crises, including the private sector. It is encouraging to see the engagement of participants at this event and the commitment to extend sustainable socio-economic opportunities for all, which are foundational for our well-being.”

Noting the satisfactory outcomes of the event, Coffi Agossou brought proceedings to a close saying: “We are coming away from this conference with proof that through collaboration, mutual understanding and a shared commitment to inclusive growth and development, forced displacement contexts do offer opportunities. We have identified enabling factors for refugee and host community business development and growth. We exchanged experiences in formalization and we heard valuable insights from private sector and refugees themselves on how we can improve our efforts going forward. And we acknowledge that there is a need for strengthened collaboration to share the risk with the private sector and share our resources, technical capacity and contextual knowledge to create decent work pathways in forced displacement.”

Watch more photos from the event here:
Inclusive private sector development in forced displacement contexts Kampala 17-19 Oct 2023