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The Innovative Finance for Resettlement Working Group aims to create more and better opportunities for displaced people to be safely resettled in third countries. The Working Group is developing proposals and setting out practical actions for donors and governments to use innovative financing and related concepts to increase resettlement quantity and quality. Using sources of value from currently untapped resources as financial incentives for resettlement countries and local communities, the Working Group aims to increase agency and choice for refugees and increase the political appetite for accepting refugees.
The Innovative Finance for Refugee Resettlement Working Group published its final report in August 2020, alongside a launch event.
Displacement is growing: the number of refugees is growing because the rate of people becoming refugees exceeds the rate of refugees achieving a “durable solution” through repatriation, local integration, or resettlement. Displacement numbers increase as new conflicts add more refugees and the displaced people from earlier or ongoing conflicts remain in the caseload. The pathways to shrink these numbers and help families reach durable solutions are painfully slow: at the current rate, it would take well over 60 years to move all existing refugees off the caseload if no new people were granted asylum.
Displacement lasts a long time: In 2015, the average time that people who were then refugees had already spent as refugees was roughly a decade. For people who are in protracted situations of having been displaced at least five years, the average is over 20 years.
Displacement is degrading: Displacement situations can be personal tragedies for people: families torn apart; social capital lost; cultural, religious, and linguistic ties diminished; and livelihoods destroyed. Displaced people are usually denied the right to work and earn a living; to exercise civic rights; and to improve their situation. Families often struggle to access reliable public services, such as health care and education, driving a cycle of poverty for the long-run displaced. But refugees have skills and aspirations and can thrive when given the conditions to do so.
Resettlement is very limited: Most displaced people do not want to be resettled: they want to return to their own country, or make a better life in the country in which they have found refuge. But many others seek resettlement as their best opportunity to build a new life. At present only one in 200 refugees is resettled to a safe, stable third country. UNHCR says that there are currently 1.2 million refugees who qualify for resettlement, but plan on submitting only 14% of cases next year because there are too few resettlement spots available.
Opportunities to address the problem
Resettlement creates huge value - for the families who resettle, the communities to which they move, and to the economy of the receiving country. But there are short term costs - though in the long run refugees are net contributors to society and to public services, in the short run they may need assistance with housing, health, education and training. These short term costs may inhibit the willingness to accept resettled refugees, with the result that the long-term benefits of increased resettlement remain unrealized.
The Working Group is focused on how the long term benefits of refugee resettlement can better be applied to help meet the short term costs, thereby increasing political and economic acceptability of resettlement. Our starting point is that mechanisms for financing refugee resettlement can be designed to unlock two key sources of value:
The future long-term costs of maintaining displaced populations that could be harnessed to fund resettlement today. Instead of paying slowly over time for displaced people to live as aid-dependent refugees in host countries that are already overburdened, the money that would be spent by donors over many years could instead be rolled up into an up-front endowment to enable refugees to voluntarily start a new life in a new country. Each refugee could be endowed with a sum of money to offset the short-term costs of resettlement and provide an initial investment in his or her integration.
The lost earning potential of refugees who are locked out of the formal economy or stuck in places without significant labour market opportunities in displaced settings. Resettlement can generate additional value with movement from the informal to formal economy and movement from a relatively poorer country to a relatively wealthier country. Recovering the opportunity costs of displaced people being unemployed, underemployed, or earning lower wages, represents enormous potential for generating value which could be used to facilitate more resettlement of other refugees.
While additional resources will not address all of the impediments to increasing resettlement, there are likely a number of countries and local communities for which the financial considerations may be significant.
Questions for Working Group to answer
Some initial questions to be answered through the working group process are:
What are the key issues in mechanism design?
How can refugee preferences and resettlement countries’ preferences be incorporated?
What are the core financial considerations to making this a viable proposition?
What attributes are necessary to generate interest and commitment from donors and private sector financing?
In discussing these questions, the Working Group will be guided by a set of desirable characteristics for new ways to unlock greater investments in resettlement:
For refugees: Increasing agency and choice, shifting from a humanitarian approach to focus on development, facilitating dignity for the displaced and keeping families together.
For resettlement countries and communities: Viewing refugees as assets rather than burden, increasing politically palatability and engaging local communities.
For donors, investors and the international system: being complementary to the existing UNHCR resettlement system and other mechanisms for supporting refugees in situ, not creating perverse incentives, ensuring value for money and attractive investment opportunities.
Working Group Structure
CGD uses Working Groups to bring diverse actors from the private, public and policy spheres together to develop and promote novel, sell-able, and scalable solutions to difficult problems.
The Working Group is chaired by Owen Barder, Vice President and Europe Director of CGD, and Jeremy Weinstein, Professor of Political Science at Stanford University. It includes representatives from government ministries, frontline humanitarian agencies, academia, and private financial institutions. Members are invited to participate in a strictly personal and volunteer capacity, not as representatives of their employers or organizations. The Working Group is gathering for a series of meetings throughout 2017 and will then produce a final report with recommendations for stakeholders to take these solutions to action.
Although the real value of global aid has grown 9% in the last five years, all of that increase has been eaten up by the rising costs of humanitarian aid and refugees. Instead of condemning more and more people to a long-term future as aid-dependent refugees, what if we turned the support they would receive from donors over many years into an endowment that would enable them to start a new life in a new country?