The business opportunity in Africa’s refugee crisis

The June 20th World Refugees Day was marked without much official fanfare in Africa except for a number of tweets and newspaper articles published, yet the continent is the   largest host to displaced people globally.

There are over 80 million displaced people around the world, an increase of over 20 per cent from 2016. Africa is home to over 45 per cent of this population, the biggest share of any continent. The region’s governments face budget deficits that limit their ability to cover the costs of hosting displaced people.

Moreover, relying heavily on highly variable humanitarian aid is a poor solution for a protracted crisis. The private sector is positioned to play a pivotal role in providing economic opportunities to displaced communities through employment or investment. 

Private sector support for refugees is not without precedent. Across Africa and at the global level, businesses have rallied around displaced people to provide financial and other essential services, jobs, and investments that enable refugees to pursue various economic opportunities.

For example, Safaricom and Equity Bank collaborated with the World Food Programme to develop and facilitate Bamba Chakula, a cash-based assistance program for refugees in Kenya.

Displacement crisis

Additionally, 12 organisations, including Mastercard, Microsoft, and the World Economic Forum, have already responded to US Vice President Kamala Harris’ recent call to join forces with the government to address issues of displacement in the Northern Triangle. As we enter this new era of private sector engagement in humanitarian issues, it is important to interrogate how African companies can emulate their peers in other parts of the world and address the displacement crisis while creating value for their businesses. 

In 2019, my colleagues and I founded the Amahoro Coalition to mobilize African private sector organisations to catalyse refugee economic inclusion. Our ambitious goal was made even harder by the Covid-19 pandemic that struck the world in the following year. While enterprises struggled to stay afloat, we advocated for a seemingly risky move: expanding businesses into refugee-hosting areas to integrate and support displaced communities. 

Private sector engagement in economic inclusion for refugees is underdeveloped on the continent. Although many companies have the capacity to contribute to solving the refugee and other similar crises, making the business case to justify the move to shareholders remains a challenge. However, refugee communities and their host areas hold untapped economic potential, making this lack of engagement a missed opportunity for businesses.

With the right investments and policies, refugee host communities have the potential to transform into thriving markets with an active consumer base, presenting new opportunities for African businesses.

The role of business in society is rapidly changing, and African executives must decipher how they can maximize the impact of their work amidst this shift. The shareholder capitalism of previous decades has given way to the new ethos of stakeholder capitalism and heightened focus on contributions to Sustainable Development Goals (SDGs) and Environmental, Social and Governance (ESG) issues. 

Already, private sector organisations in other regions have adopted and publicly committed to these principles. For instance, the Business Roundtable, an association of CEOs from America’s leading corporations, released a statement in 2019 redefining the purpose of a corporation to affirm that businesses are committed to all stakeholders, not just their shareholders.

Social responsibility

Companies have much to gain from contributing to the displacement crisis across the continent - from enhancing their social responsibility profile to driving social inclusion in their communities, and owning meaningful business strategies.

 Investing in long-term business growth also offers businesses the opportunity to innovate solutions that can be applied beyond the displacement context. For instance, lack of access to education and high levels of unemployment are challenges that face both displaced and native youth across the continent.

Only one per cent of eligible refugees have access to tertiary education, and comparably, the average enrolment in tertiary education in Africa falls below ten per cent. An educated population provides a skills force that the private sector can tap into to fill their resource needs and contributes to greater social stability.

Businesses can collaborate with donors and non-governmental organisations to develop and test solutions that promote broader access to education. In the long-term, these solutions can be scaled to address crises in other sectors and contexts around the continent, including for other vulnerable groups. In the long-term, solutions generated from this collaboration will have positive spill-over effects on other sectors and contexts across the continent, including for other vulnerable groups. 

Businesses that develop deep economic ties with refugees can leverage these relationships in future when the refugees’ home countries regain political and economic stability. Former refugees can serve as agents and key employees to these businesses facilitating market entry into the refugees’ countries of origin.

Destructive conflicts

There are many examples of countries across the continent that have recovered from destructive conflicts to become leading economies. For instance, the genocide in Rwanda led to the displacement of nearly two million citizens who fled to neighbouring countries, but over two decades later, the country ranks second in Africa on the World Bank Ease of Doing Business index.

 The country has also attracted investment from regional and global organisations such as the Kenya Commercial Bank and Volkswagen. Similarly, in the 1980s, over 7 per cent of Uganda’s population fled the country due to political instability. Today, Uganda is one of the top-performing economies in East Africa and hosts the largest number of refugees in Africa, welcoming close to 1.5 million displaced people with progressive policies.

These stories of recovery show that in the long term, economic ties cultivated between refugees and their host countries' businesses can be leveraged to support market entry and business set-up when the refugees’ countries of origin regain stability. 

African corporates need to revise their business strategies and examine their role in catalysing economic opportunities to address humanitarian issues on the continent. Meaningful and sustainable impact can only be achieved if businesses extend their support beyond one-off financial donations, and instead provide long-term, strategic, and systemised contributions.

In addition to financial contributions, businesses should lend their expertise and work collaboratively with humanitarian and development organisations to co-create solutions to address these crises. This year, the Amahoro Coalition and UNHCR will host the first African Private Sector Forum on Forced Displacement, which will convene multi-sector actors to discuss the growing role of the private sector in addressing the displacement crisis.

This event is critical for businesses keen to implement innovative strategies but lack the expertise as they will have an opportunity to learn from peers from diverse geographies who have successfully built businesses with a strong social impact. 

Isaac Kwaku Fokuo is Co-Founder, The Amahoro Coalition,

[email protected]