Today, the world honors refugees, and celebrates their courage and resilience–but a failure to address a growing crisis means, this year, the words of support may ring hollow.
In 2022, according to the UNHCR, there were 32.5 million refugees, a higher number than at any point in history since the Second World War–and this figure has more than doubled in the space of a decade.
Approximately 22% of refugees, around 7 million people, live in refugee camps or settlements, often for years. In fact, it’s becoming increasingly common for entire generations to grow up in them. Life in a refugee camp is extremely hard–and it’s been getting tougher.
Traditional approaches are failing refugees
The current model for supporting refugees living in camps is not working. The traditional approach has been to spend aid money on subsistence handouts, giving people the bare minimum to survive. The basic rations are essential in the immediate term, but can lead to dependency over the long term. When people are forced to rely on aid to live, they have no control over their futures. Trapped in poverty, they feel helpless and hopeless.
Moreover, with an ever-increasing refugee population and global food shortages, there is less and less to go around. The UN World Food Programme has shifted to needs-based targeting of food assistance for refugees in Ugandan camps because demand consistently outstrips available funds. Highly vulnerable families at times only receive 40% of basic survival rations.
To address this problem, we need to find ways to use the money spent on aid more effectively: to turn every dollar donated into three, four, or five. And we need to find approaches that empower people living in refugee camps and give them agency to improve their lives.
We’ve been working on one such approach with Mercy Corps; unleashing the power of entrepreneurship to enable refugees to lift themselves and their families out of extreme poverty.
Entrepreneurship as a route out of poverty
Providing people with the skills and means to start their own businesses and generate income is a tried-and-tested approach in settings where people live in extreme poverty. The success of this approach is backed by robust academic research, including a groundbreaking 2015 study led by Nobel Prize-winning economists Abhijit Banerjee and Esther Duflo, and published in Science.
Our recent longitudinal study, which followed more than 400 entrepreneurs in Kenya and Uganda, also showcased the sustainability of this approach: Five years after participating in the program, participants benefited from an 83% increase in household consumption and a 933% increase in savings, even despite the economic challenges of the pandemic.
Every dollar invested in such programs is multiplied many times over by the graduates that complete them, and the skills they develop last a lifetime.
How to start a business in a refugee camp
This approach is now being applied to one of the world’s most intractable problems: the refugee crisis.
If you’ve ever started your own business, you know the hard work and commitment it requires. This challenge is far greater for refugees, many of whom don’t have the skills, capital, or tools to start a business, but more fundamentally, are also faced with the lack of an obvious market for goods or services, the social networks, and understanding of the socio-economic-political context to do so.
That’s why, on top of equipping refugees with the resources and tools to become entrepreneurs, we're partnering with Mercy Corps, who are experts in market systems development. By conducting market assessments, we are able to identify high-opportunity value chains and bring on board private sector companies and distributors, thus creating the markets the new small businesses need to sustain themselves. In the Bidi Bidi refugee camp in Uganda, entrepreneurs are growing and selling sesame, raising chickens, and selling fish to local markets.
The opportunity to earn money and become financially self-sufficient can be life-changing for refugees living in camps and settlements around the world–yet many countries won’t allow them to work or start a business. Complex rules hold back many refugees from creating livelihoods and contributing to the local economy.
The Global Refugee Compact, which was affirmed in 2018, commits signatories to increasing refugees’ self-reliance, including through livelihood initiatives like our own. The more countries that sign the Compact, the greater the opportunity for programs like ours to give refugees throughout the world the possibility of rebuilding their lives.
After years of exponential increases in the number of displaced people, the refugee crisis has become one of the biggest challenges facing our global society today. It’s crucial that our approach is to empower refugees to become self-reliant, not marginalize them further.
Dianne Calvi is the CEO of Village Enterprise.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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