Middle East Recovery Plan : Act Now or Pay Later
“Recent events have proven once and for all that the
destruction of whole societies in the Middle East is
not a regional problem, but a global crisis... and it
is a crisis that is not only a humanitarian emergency
but also a political emergency.” 1
Madeleine K. Albright, former U.S. Secretary of State
At the recent “Supporting Syria and the Region” conference in London hosted by the United
Kingdom, Norway, Kuwait, Germany, and the United Nations, international governments, private
sector businesses, and civil society organizations came together to agree on a new approach to meeting the immediate and longer-term needs of those affected by the devastating civil war in Syria.
Participants agreed on the need to support access to jobs and education for refugees and their host
communities. The current lack of economic opportunity in the region is damaging for both local host
communities and refugees and it will hinder stability in the region moving forward.2
This paper presents the case for a sustainable global economic strategy for the Middle East given
the impact of the refugee crisis. A Middle East Recovery Plan (MERP) will work towards long-term
stabilization and will require partnerships and alliances with international and local governments, the
private sector, and civil society. Syrian refugees and organizations must also be partners in designing
this strategy to ensure sustainability.
It is important to note that despite the broad recommendations presented in this report, there is not
a one-size-fits-all model for the region or for one country. Understanding local needs and designing
impactful solutions must be done on a case-by-case basis, taking into consideration local community
dynamics and specific refugee community needs.
We consider this report a living document which will evolve and spur discussion and collaboration
leading to economic recovery and growth in the countries neighboring Syria, contributing to regional
and global stability.
This report is an outline of the key elements we consider essential to a broader economic recovery plan
for the Middle East. Our goal is to lay out tangible action-oriented next steps that lay the foundation
for a broader Middle East Recovery Plan (MERP) and begin to shift away from aid driven models of
development to long-term sustainability. In particular, this report:
1 Viola Gienger, “Europe’s Refugee Flood Shows Urgent Need for Action on Middle East,” USIP, September 22, 2015, http://bit.ly/1kkzT5R
2 Co-Host Declaration of the Supporting Syria and the Region Conference London 2016
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Middle East Recovery Plan : Act Now or Pay Later
•
Encourages long-term, international, and local private sector investment in order to
create sustainable jobs for both refugees and local host communities.
•
Supports a holistic model for direct finance and technical assistance to small
and medium sized enterprises (SMEs), which can strengthen job creation and
economic development.
•
Advocates putting more power in the hands of local change makers to design
effective models for service delivery, especially through direct support of local relief
organizations, social entrepreneurs, and innovators who are in the best position to
reach marginalized communities.
•
Promotes the incorporation of women and youth in every aspect of the long-term
sustainable design and development process.
Background
Since the eruption of protests in 2011, the Syrian civil war has resulted in over 470,000 civilian deaths.3
Military operations by the Assad regime, the metastasis of violent extremist groups, and deplorable
economic conditions have exacerbated displacement accounting for “the largest movement of refugees
and internally displaced people in the last three decades.”4 There are currently 4.2 million registered
Syrian refugees in the world, 98 percent of whom are in Turkey, Lebanon, and Jordan.
Source: ILO, 20145
Approximately half of these 4.2 million refugees are children, 80 percent of
whom are not enrolled in formal education. An International Labor Organization (ILO) survey showed that 47 percent of families in the region cannot
afford to send their children to school. 5 Faced with few opportunities to work
themselves, parents are increasingly relying on their children to earn income
in order to help provide food and shelter for their families. 6 As a result, the region risks a lost generation that, absent intervention, will cause further political and economic destabilization and global ramifications, which we are only
beginning to see.
With the continuation of a violent civil war and no viable political resolution in sight, many
Syrians have little option but to flee their homes seeking refuge in neighboring countries and now
Europe. The ability of local host countries to deliver long-term services is rooted in the strength of
their institutions and economy. A strong economic foundation is critical for long-term peace and
stability. Designing a sustainable economic plan for the region will require the support of the entire
international community. As such, this working paper will outline what we hope will be the beginning
of discussions regarding a Middle East Recovery Plan for the region, particularly Lebanon, Jordan,
and Turkey, which have absorbed the majority of refugees.
3 Anne Barnard “Death Toll from War in Syria Now 470,000” http://www.nytimes.com/2016/02/12/world/middleeast/death-toll-from-war-in-syria-now-470000-group-finds.html?_r=0
4 Testimony of Dr. Michel Gabaudan before the Senate Foreign Relations Committee, “The US Role and Strategy in the Middle East: The Humanitarian Crisis,” Refugees International, Sept. 29, 2015.
5 Salem Ajluni and Mary Kawar, “The Impact of the Syrian Refugee Crisis on the Labour Market in Jordan: A Preliminary Analysis,” International Labour Organization, 2014. http://bit.ly/1L7o2wO
6 “No Place to Call Home: How Syria’s Displaced Millions Struggle to Keep a Roof over their Heads,” Norwegian Refugee Council, June 2015, http://bit.ly/1PyHvgg
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Middle East Recovery Plan : Act Now or Pay Later
Source: UNHCHR7
The region has long faced the highest levels of unemployment in the world due to weak institutions
and a lack of economic opportunity. World Bank projections from 2010 highlighted that 100 million
jobs need to be created by 2020 in order to employ the region’s growing population of young people,
a number the region is ill equipped to meet. The impact of the refugee crisis means that additional strain has been placed on already weak economic institutions and ignoring these economic and
labor market challenges will have severe global security and political ramifications. A coordinated
international strategy involving the financial commitment of international organizations, G20 donor
governments, and the private sector is imperative. Given the current scale of displacement, the potential to lose a generation due to gaps in education and employment, and rising violent extremism,
it is critical that we develop a comprehensive economic plan laying the foundation for future stability.
A coordinated international proposal for a Middle East Recovery Plan is sustainable only if existing
laws and barriers to legal employment and work permits for refugees are addressed. Most refugees
have work experience, skills, and/or entrepreneurial talent that can benefit host communities and contribute to local economic growth. Not allowing refugees a sustainable livelihood is a missed opportunity given the enormous potential they have to contribute to the region and host country economies.
This conclusion is consistent with and addressed further in The Right to a Future, a report published
jointly by Care, the Danish Refugee Council, International Rescue Committee, Norwegian Refugee
Council, Oxfam, Save the Children, and World Vision.8
The Middle East Recovery Plan
A Middle East Recovery Plan, similar to the European Recovery Program or “Marshall Plan” that
followed the Second World War, is needed to address the magnitude of the Syrian conflict and its effect
on neighboring countries, namely Turkey, Lebanon and Jordan. The Marshall Plan pulled post-war
7 “Regional Refugee Response,” United Nations High Commissioner for Human Rights, Updated October 19, 2015, http://bit.ly/1jsBiUu.
8 “The Right to a Future,” Oxfam, November 9, 2015, http://bit.ly/1Qkq4lh
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Middle East Recovery Plan : Act Now or Pay Later
Europe out of ruin -- participating European economies eventually surpassed prewar levels of GDP by
at least 35 percent.9
The Middle East in 2015 is not Europe in 1948, but the general principles of assistance to accomplish a
joint recovery program based on self-help and mutual cooperation still apply. There is a tendency to
shy away from any reference to the Marshall Plan due to its cost (an estimated US $160 billion in today’s
US dollars). But the original Marshall Plan was not entirely based on financial aid. It also strengthened
institutions and focused on private sector economic growth. In the Middle East, aid is needed to deal
with the immediate crisis, but so, too, are measures to promote long-term investment in the economy and security of the region.10 The establishment of strong economic institutions and dynamic
public-private partnerships, key components of the original Marshall Plan, will be critical to long-term
sustainable development in the Middle East as well.
A Middle East Recovery Plan must be holistic, mutually beneficial to donors, investors, and local
communities, and not result in long-term dependency. It should establish strong financial institutions, vibrant local economies, and dynamic public-private partnerships. This approach can foster
long-term political, economic, and social stability in those countries in dire need of infrastructure and
institutional assistance.
Most importantly, a Middle East Recovery Plan must include Syrians as well as Iraqi and Palestinian
refugees as co-designers of the plan. Their ownership in a long-term development strategy is key for
sustainability. Embedding policies and programs that meet the direct needs of Syrian entrepreneurs,
professionals, and laborers will also ensure that the Middle East Recovery Plan empowers them to contribute to the rebuilding and reconstruction of their society, their region, and, eventually, Syria itself.
As we look toward developing resilient and sustainable solutions for local host communities to
absorb existing and incoming refugees, aid and grant funding is insufficient to address all critical
needs. As a result, the international community, including the U.S., Europe, the Gulf Cooperation
Council, and other G20 countries, must commit resources and technical assistance in order to create real
economic growth. The key to sustainability is to build economic vitality from the bottom up, allowing
entrepreneurs to flourish and small and medium-sized enterprises (SMEs) in the region to grow. This
growth requires capacity building and investments in local governments, financial institutions, and
the private sector.
Shifting to a Comprehensive Economic Solution
The immediate need for aid from the international community is key for the short-term relief of
refugee populations. However, a Middle East Recovery Plan should form the foundation for the
future medium-to-long-term stability of the region. Several studies have outlined effective strategies and solutions to address the refugee crisis in the Middle East.11 For example, the United Nations and its partners launched a major new humanitarian and development appeal in Decem-
9 Judith Barnett, “The Middle East Needs a Marshall Plan,” Al Jazeera America, October 17, 2014, http://bit.ly/1WFg30z
10 Ibid
11 Right to A Future. http://www.oxfamamerica.org/static/media/files/right-to-future-syria-refugees-091115-en.pdf
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Middle East Recovery Plan : Act Now or Pay Later
ber 2014. Known as the Regional Refugee Resilience Plan, or 3RP, the strategy represents a shift
in aid delivery for the region. Despite the improved framework, the response itself remains largely
underfunded having reached only 45 percent of its goal. Additionally, the report focused on recommendations for resiliency in local host countries which does not directly target refugees and offers only
limited options for refugee livelihoods. Moreover, most solutions in the report are based on an aid
model, which is not sustainable in the long-term.12
Source: UNHCHR13,14,15
While regional governments in Lebanon, Turkey, and Jordan have developed strong national resiliency plans in accordance with 3RP
parameters, major gaps remain in the funding
and, consequently, implementation of these
plans. In fact, only $2.02 billion (US) of the
total $4.53 billion (US) 3RP total funding appeal has been met, leaving a gap of $2.51 billion (US).13 With respect to individual countries, Lebanon has received 46 percent of its
required funding,14 Turkey has received 32
percent of its request and Jordan has received
45 percent.15 The shortage in funding has limited the ability of these countries to address
sustainable development needs in the areas of
education, health, and livelihoods.
The 3RP report lays out the existing funding gaps for sustainable development goals. Most notably,
“livelihoods” (economic strategies to generate employment) has received only $26 million (US), representing a funding gap of $451 million (US).16 Moreover, these funds are intended to support livelihood
programs for host communities, not refugees. Livelihoods is one of several key components of the 3RP
report, but it fails to underscore both the need to address the barriers to work faced by Syrian refugees
as well as the systemic importance of an economic overhaul in the region.17 Rather than continuing
to rely solely on donor-aid funding, we need to shift toward sustainable financing models, leverage aid
funding, and other forms of financing (such as political risk insurance and loan guarantees), and create
longer-term strategies, which will lead to stronger economies in local host countries.
A Middle East Recovery Plan (MERP) could address this gap, not simply as a long-term humanitarian
response to the refugee crisis but as a fundamental requirement for the development and stability of
the region as a whole. Without an economic foundation, the long-term sustainability of delivering key
services such as education and healthcare, is not viable. This report offers recommendations regarding key areas where governments, the private sector, and local civil society organizations can work
together to ensure the bright economic future the region so desperately needs.
12 “Regional Refugee Response,” United Nations High Commissioner for Human Rights.
13Ibid
14 “Refugee Response Achievements at a Glance: Lebanon,” UNHCR, September 30, 2015, http://bit.ly/1MKYihc
15 “Regional Refugee Response,” United Nations High Commissioner for Human Rights.
16 3RP Regional Refugee & Resilience Plan Funding Snapshot, Top Donor Group Meeting, September 2015. http://bit.ly/1SsHOJg
17 Definition: a means of securing the basic necessities of life including food and shelter.
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Elements of a Middle East Recovery Plan
Identifying a political solution for Syria must be the first priority for the international community.18
Lack of response and an inability to identify a political solution at an earlier stage have created a stalemate increasing sectarian factions and exacerbating violence.19 However, after almost five years of
civil war, a political solution will not be enough to rescue the region from the impact on neighboring
countries of Syria’s civil war. The international community must also make a strong political commitment to share the cost of the refugee influx in local host countries and invest economically in the
future of the region.
The first step in a Middle East Recovery Plan (MERP) is to encourage local host countries to overcome
the legal employment barriers currently in place in refugee communities and begin to leverage the positive potential refugees contribute to host country economies in the form of their own human capital
and transnational connections.20 Indeed, many refugees have the ability to impact host economies
positively and there are numerous political, economic, business, and security reasons for doing so.
Local host governments incur major costs from refugee migration, particularly for additional infrastructure, the delivery of healthcare, and the provision of education services on a large scale. Still,
despite these expenses, World Bank data reveals that refugee migration has led to economic growth in
Turkey, Lebanon, and Jordan. The growth of the Lebanese economy, for example, has exceeded expectations over the past two years with the World Bank estimating 2.5 percent growth.21 This increased
economic activity is due to growing consumption and the purchase of local goods and services by refugees settling in host communities. Refugees are often able to purchase local goods and services from
their own income and savings, remittances of relatives abroad, and international aid.22
This economic growth has prevented near-term GDP decline in Lebanon, Turkey, and Jordan. Nevertheless, the cumulative impact of the refugee crisis and the Syrian civil war will have major negative
effects on these countries if the international community fails to make longer-term plans. Water consumption in Jordan, for example, has risen by approximately 20 percent since the refugee crisis began
and water has always been the Kingdom’s most critical infrastructure need. In addition, over time the
war will impact aggregate incomes, which have increased less than the size of the population. The war
has also hurt the standard of living with per capital average incomes declining 11 percent in Lebanon
and 1.5 percent in Turkey and Jordan.23
The region’s growing youth population – which can be a valuable human resource24 – also underscores the need to create more jobs. Leveraging the talent and potential of this young population –
including both citizens and refugees – will result in a net gain for the region and those who invest in
it. For example, the cost to host a Syrian refugee at the Zaatari camp in Jordan may exceed $10,000
(US) annually, but when these individuals are successfully integrated into host economies, the results
are a net positive. Syrians are productive and entrepreneurial. In the Zaatari refugee camp, residents
have established approximately 2,500 small businesses – including food, haircut and bicycle shops –
18, 19 Remarks from “Middle East Strategy Task Force: Beyond Refugees,” The Atlantic Council, September 18, 2015. http://bit.ly/1L7owD4
20 T. Alexander Aleinikoff, “From Dependence to Self-Reliance: Changing the Paradigm in Protracted Refugee Situations,” Migration Policy Institute, May 2015.
21 “Lebanon Economic Monitor: The Economy of New Drivers and Old Drags,” World Bank, Spring 2015, http://bit.ly/1lkhRR6 , cited in Massimiliano Cali and Samia Sekkarie,
“Much ado about nothing? The economic impact of refugee invasions,” Brookings, September 16, 2015. http://brook.gs/1JmQidP
22 Massimiliano Calì and Samia Sekkarie, “Much ado about nothing? The economic impact of refugee ‘invasions,’” Brookings, September 16, 2015. http://brook.gs/1JmQidP
23 Elena Ianchovichina “The Impact of the Syrian War and the Spread of ISIS.” World Bank, December 18th, 2015. http://blogs.worldbank.org/arabvoices/economic-impact-syrian-war-and-spreadisis-who-loses-how-much
24 Dimitris Tsitsiragos, “Private sector key to development in Middle East, North Africa,” Al-Monitor, December 13, 2015. http://bit.ly/1ff2lO1
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Source: UNHCHR25
generating nearly $14 million (US) per month by one UN report estimate.25 This is further evidence
that many Syrian refugees have tangible, useful skills, which can be leveraged by allowing them the
opportunity to work.
While the region faces significant economic challenges, leveraging this positive trajectory and designing a strategy that further benefits local businesses and the economy must be an essential component
of a comprehensive recovery plan.
Additionally, the international community can play a significant role in supporting economic reforms
in the region, increasing access to job opportunities, and bolstering long-term economic resiliency.
For example, countries in the region need to integrate the massive labor potential of their people into
the formal economy as many unskilled workers and small businesses operate in informal sectors of the
economy. The informal sector accounts for 20 percent and 30 percent of Jordan and Lebanon’s GDPs,
respectively. Reducing bureaucracy, enhancing legal protections, and creating incentives for informal
businesses to enter the formal economy will help governments generate tax revenue, create wage and
job security, and improve services.
To address the long-term funding gaps facing host countries, particularly Lebanon and Jordan, a Middle East Recovery Plan should focus on creating pathways to sustainable economic and job opportunities that serve both refugee communities and local host communities.26
Recommendations
A Middle East Recovery Plan should focus on strengthening economic and financial institutions that
help expand economic opportunity in the private sector in Turkey, Jordan and Lebanon. This report
specifically lays out recommendations that should be included in a broader strategy and are tangible
action-oriented next steps to building out a long-term agenda.
While these policies have been discussed and debated extensively, little has been done to address com25 Jodi Rudoren, “As Others Flee to West, Most Syrian Refugees Remain in Region,” New York Times, September 22, 2015. http://nyti.ms/1L2UUgF
26 HE Mr. Imad Fakhoury, “Jordanian Statement at the Third International Conference on Financing for Development,” Addis Ababa, July 13-16, 2015. http://bit.ly/1l9E7gt
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prehensively the economic crisis in the region and there has never been a greater political, social, or
national security imperative to garner the full-fledged commitment of the international community.
Through this Recovery Plan, suggested recommendations include, but are not limited to, alternative
financing instruments that can support and promote private sector engagement strategies involving
local as well as international private sector partnerships, providing technical assistance and direct financing to micro and small-medium enterprises, and providing direct financing and technical assistance to local organizations and entrepreneurs delivering essential services to refugee communities.
Shifting From Aid Driven Models
With many global priorities and increasing donor fatigue in the region, a Middle East Recovery Plan
cannot rely on governments and the private sector to provide billions of dollars of aid funding over the
next decade. Alternative methods of financing and investment must be explored to meet the growing
needs of refugee and local populations. However, governments and development finance institutions
can be key partners in identifying new and alternative methods of financing, particularly to support
long-term private sector investment in the region.
Encouraging private sector investment is key to long-term economic development in the region and
creating jobs. The international community, especially governments and development finance institutions, can utilize a diverse range of financial products that are not exclusively grants or aid. While
the region presents significant risk for private sector investors, international organizations such as the
World Bank, International Monetary Fund, development finance institutions, and aid organizations
can provide political risk packages, guarantees, first-loss investments, and other products to mitigate
risk and create incentives for investors.
Diversifying the use of financial products can also facilitate stronger private sector engagement and
strengthen the ability of governments to partner with the private sector in the development of key
infrastructure needs across Lebanon, Jordan, and Turkey, especially if the risk of their investment is
mitigated. Some examples of possible financial tools include:
Political Risk Insurance
Political Risk Insurance (PRI) can be an important tool to encourage private sector investment, especially in countries such as Jordan and Lebanon. PRI provides security for wary investors and companies to invest in emerging markets with the benefit of a targeted risk mitigation instrument to encourage the deployment of private capital into sectors and regions that once would have been perceived as
prohibitively risky. Organizations such as the U.S. Overseas Private Investment Corporation (OPIC),
an independent agency of the U.S. government, and the Multilateral Investment Guarantee Agency
(MIGA), part of the World Bank Group, are pioneers in this field and, with international support, can
tailor specific products for the needs of the region.
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Middle East Recovery Plan : Act Now or Pay Later
Bonds
Bonds and other debt instruments have become increasingly important because middle income countries like Jordan and Turkey are not eligible for concessional lending from the World Bank. To encourage investment and infuse much needed money into local host countries, the World Bank and United
Nations have put together special bonds, guaranteed by donor countries, which will leverage financial
markets to raise the funding needed to tackle the refugee crisis.27 These bonds allow for an alternate
form of lending to encourage infrastructure investment in hospitals, schools, etc.
Loan Guarantees
Extremely conservative lending policies have long dominated banking in the Middle East and North
Africa. Credit risk has been managed by minimizing exposure and imposing extremely high collateral requirements thereby restricting credit availability only to large, highly capitalized businesses. To
encourage private sector investment in the development of infrastructure, especially in social sectors
of health, education, affordable housing, etc., loan guarantees can provide backing for international
and local companies to invest in expanding construction of hospitals, schools, and affordable housing
across Jordan, Lebanon, and Turkey. For companies that self-finance and do not take loans, construction of projects at this scale, especially in order to target social sectors, can often take longer and are
seen as riskier investments. In some cases, companies need additional liquidity to complete these
types of projects in a faster timeframe. In the case of the refugee crisis, additional infrastructure is
much needed and loan guarantees can encourage companies to expand the development of these projects, especially in riskier sectors.
Infrastructure investment builds confidence by creating jobs and “putting in place the roads, housing,
utilities, and communications platforms necessary for long-run growth.”28 Historically, the public sector has existed as the main driver of growth for Middle East and North Africa (MENA) economies, but
this cannot continue given the current fiscal situation in the region. To promote private sector investment, governments must level the playing field. A recent World Bank report highlights how regional
policies “are captured by a few privileged firms with deep political connections and that these policies
persist despite their apparent cost to society.”29 Through new laws and policies, MENA governments
need to encourage competition, not curtail it.
Leveraging Jordan’s Economic Zones
The Kingdom of Jordan’s Queen Rania announced the creation of five “economic zones”30 at the 2016
World Economic Forum in Davos. These economic zones will be areas where Syrian refugees are legally allowed to work in private sector jobs focused on industries such as textiles. Jordan is now exploring
and seeking cooperation from the EU to ease trade restrictions for products and goods created in these
economic zones in order to encourage private sector investment. Creating secure jobs in the private
sector through these economic zones will ease the financial burden on local governments, which now
27 http://www.ft.com/intl/cms/s/0/8eecd5ea-6ff9-11e5-ad6d-f4ed76f0900a.html#axzz42ry5LZ1U
28 Estache, Antonio, Elena Ianchovichina, Robert Bacon, and Ilhem Salamon. 2013. Infrastructure and Employment Creation in the Middle East and North Africa. Washington, DC: World Bank.
doi:10.1596/978-0-8213-9665-0. License: Creative Commons Attribution CC BY 3.0
29 Schiffbauer, Marc, Abdoulaye Sy, Sahar Hussain, Hania Sahnoun, and Philip Keefer. 2015. Jobs or Privileges: Unleashing the Employment Potential of the Middle East and North Africa.
Washington, DC: World Bank. doi: 10.1596/978-1-4648-0405-2. License: Creative Commons Attribution CC BY 3.0 IGO
30 Al Arabiya English http://english.alarabiya.net/en/special-reports/davos2016/2016/01/21/Queen-Rania-Refugees-need-economic-independence.html
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employ 70 percent of workers in the formal sector.
While the economic zones may serve as a useful model to address the right to work for refugees, in
order to be effective several issues should be taken into consideration:
•
Jobs must be sustainable and provide wages that are better than what is offered
illegally in the informal sector.
•
Effective vocational training and job placement must be paired with private sector
investment and job creation.
•
Under current proposals, the economic zones are prohibited from including certain
local businesses (such as textile manufacturers). Exploring more ways to include local
businesses willing to work with refugees would help to integrate these communities,
diminish local resentment, and lead to sustainable jobs and greater economic growth.
Vocational Training and Job Placement for the Private Sector
The MENA region has faced persistent high levels of unemployment. Although the numbers vary
across the region, MENA averages 28 percent unemployment among young people31 and certain areas have some of the highest unemployment rates in the world. The refugee crisis has exacerbated
this challenge and increased the need to create near-term jobs. Providing local host communities and
refugees, particularly youth, with opportunities to transition from low-skilled work to sustainable employment requires investments in quality education and training.
Based on the German vocational education system,32 training programs for local workers and refugees
should include two main components:
•
•
Technical classroom training and theory; and
Hands-on experience working directly within a company, which is often in the form
of an internship or part-time job opportunity.
Designing a holistic model for vocational training and job placement should be done in cooperation
with international and local private sector companies willing to invest in training and skills development for new workers. Engaging the private sector to identify training opportunities increases the
chance for job placement success and ensures that skills directly match actual needs.
It is also critical that vocational training programs in Lebanon, Turkey, and Jordan focus on the inclusion of women. Throughout the MENA region, women are a particularly vulnerable population and
an underutilized resource. Despite relatively high levels of education, women make up an average of
25.2 percent of the labor force.33 Without financial independence, many women – particularly refu-
31 Joe Ruiz, Director Humanitarian and Disaster Relief, UPS Foundation, Interview
32 “Tent Foundation Announces Global Pledge” http://www.prnewswire.com/news-releases/tent-foundation-announces-global-pledge-for-companies-to-help-solve-international-refugee-crisis-300205955.html
33 HE Mr. Imad Fakhoury, “Jordanian Statement at the Third International Conference on Financing for Development,” Addis Ababa, July 13-16, 2015. http://bit.ly/1l9E7gt
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gees – are left with few options to support their families. Working with local organizations to reach
marginalized women and target them for vocational training and job placement programs will have
a disproportionately large impact on the economic wellbeing of refugee populations and their host
communities.
Private sector social engagement
As the Syrian civil war continues and the refugee crisis grows, the international private sector has
played a unique role in addressing some of the financing and service gaps facing international and local
NGOs working with refugee communities. The UPS Foundation, for example, has played a key role
in supporting the Office of the United Nations High Commissioner for Refugees (UNHCR) and other
major organizations in logistics and supply chain support for the delivery of humanitarian goods and
relief. They have helped streamline delivery and distribution of essential relief and humanitarian supplies by creating UPS Relief Link, a technology platform that has been implemented in Lesbos and in
Lebanon. UPS Foundation is also engaging its employees to support these operations and has reached
out to other private sector companies involved in relief efforts, providing logistics support, training,
trucks, equipment, and warehouse space.34
Another well-known initiative, TENT Foundation, was established by Hamdi Ulukaya, Founder and
CEO of global food company Chobani, LLC. At Davos, TENT announced that it is convening a group
of leading global companies to focus resources on addressing and solving the refugee crisis. Among the
inaugural partners to the commitment are Airbnb, IKEA Foundation, LinkedIn, MasterCard, UPS, and
Western Union. The initiative plans to unveil up to 100 partners by mid-2016.35
The influx of Syrian refugees has helped some local businesses in Lebanon, Jordan, and Turkey grow
and expand. Increased consumer demand for local services and products has benefited local economies especially in the food, services, and construction industries. Leveraging local businesses to support development and relief efforts is critical to long-term private sector engagement and sustainability of local relief efforts. Local organizations like Sawa for Development and Aid have worked closely
with local private sector companies, which provide money or goods as part of their zaakat, a social
contribution required under Islam. In some circumstances, a small percentage of the local companies’
revenue goes towards supporting refugees or specific goods such as milk and bread are provided at
discounted rates.
In order to build on these and other efforts, companies engaged in these initiatives recommend that:
•
Partnerships with private sector companies need to accommodate roles and
responsibilities that fit within the business models of the participating companies.
This will help build long-term support internally from the partner company. For
example, UPS Foundation has focused on supply-chain, logistics, and transportation,
which matches their corporate expertise and business model.
34 Oxford Business Group http://www.oxfordbusinessgroup.com/news/jordan-finding-financing-smes
35 http://www.ebrd.com/news/2016/the-private-sector-is-the-best-way-to-help-refugeehosting-communities.html
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•
International and local NGOs should engagecoalitions of international and
local businesses to leverage their corp rate expertise and local teams with respect to
specific issues and challenges.
•
Critical to success is involvement of local private sector companies, which are invested
in the community, focused on addressing local challenges, and interested in the
long-term sustainable development of their country.
MSME Direct Financing and Technical Assistance
SMEs in the MENA region represent about
80 percent of all business and account
for nearly 40 percent of employment. Access to finance is consistently one of the
top three growth constraints reported
by SMEs in the region. Risk averse commercial creditors or growth-oriented private
equity (PE) firms are not meeting the financing needs of these SMEs resulting in high demand for finance in this
significant market segment. Creating
opportunities for SME financing by strengthSource: www.ilo.org36
ening the banking sector36 through loan
guarantees and flexible direct financing
schemes that meet local needs will help businesses expand and create more opportunity for regional
business growth.
Supporting development of micro small and medium size enterprises (MSMEs) is critical to long term
economic resiliency in countries such as Jordan and Lebanon. In Jordan, for example, there are more
than 100,000 SMEs representing approximately 97% of all companies, according to the Jordanian Department of Statistics. These enterprises are vital to the national economy, which, according to the
Organization for Economic Cooperation and Development,37 contributed to an estimated 60% of the
Jordanian workforce and created up to 70% of new job opportunities in the economy.
The European Bank for Reconstruction and Development (EBRD) advocated strongly at the London
Donor Conference on Syria in February 2016 that strengthening small business development is a pillar of supporting economic resiliency and financial inclusion of marginalized communities, including
refugees in the Middle East.38 In addition, the International Labor Organization (ILO) runs pilot programs focused on direct financing and technical assistance support to SMEs and start-ups in Jordan,
specifically Mafraq and Irbid.39 This is part of a long-term strategy to develop sustainable job creation
36 http://www.ilo.org/wcmsp5/groups/public/---dgreports/---exrel/documents/publication/wcms_357159.pdf
37 “Women and Girls in the Syria Crisis: UNFPA Response: Facts and Figures,” The United Nations Population Fund, 2015. http://bit.ly/1Hz43we
38 http://www.theguardian.com/global-development-professionals-network/2016/mar/01/the-aid-localisation-debate-five-issues-for-the-world-humanitarian-summit
39 https://www.norad.no/en/front/thematic-areas/education/innovation/eduapp4syria/invitation-to-eduapp4syria/
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and encourage more entrepreneurial approaches to financial inclusion.
In addition to financing, SMEs need technical assistance support. SMEs tend to lack best practices corporate governance, financial disclosure and transparency, human resource practices, marketing, etc.
The majority are small, family run businesses that are not particularly sophisticated and do not have
substantial growth prospects absent additional capital and improved business practices. Therefore the
growth potential for the SME (and economic impact in the community) is dramatically increased when
a combination of technical assistance (TA) and capital is made available.
Target women and youth through MSME development
Source: Huffington Post40
Women, especially between the ages of 15 and 49, represent one million of the over four million refugees and are often required to be the
bread-winner for their families.40 It is critical that a comprehensive
economic development strategy address issues specific to this population. At the local level, organizations such as Basmeh and Zeitouneh
have taken the initiative and are providing small grants to refugee women to start small businesses. These microfinance loans and grants have
helped start businesses such as the sale of cooking gas, a phone booth,
selling women’s accessories, and a kindergarten.
In addition to the work of local organizations, supporting and investing in Microfinance Institutions
(MFIs) focused on refugee populations and their host communities can have a disproportionate impact. Across the region, many of these MFIs have limited capital and lack technical support. Providing
additional capital and technical assistance to the region’s existing MFIs will help strengthen their capacity to support many of the emerging refugee micro-enterprises (especially among women) in Lebanon, Jordan, and Turkey. Microfinance can provide much needed capital to microscale entrepreneurs
trying to sustain themselves during this period of transition.
Direct finance to local organizations, entrepreneurs, and social innovators
providing essential services to refugees
Given the risky nature of investing in the Middle East, particularly during a period of massive migration and upheaval, it is important that financing in the region be adaptable and fit the needs of
local communities on the ground. Because of guidelines and restrictions placed on largescale donor
funding, flexibility to finance local organizations and social entrepreneurs is limited, even though they
often have efficient operations and excellent local connections. Local organizations are facing several
challenges:41
•
Because they are often viewed as less sophisticated than international NGOs, they are
sometimes seen as less capable and at risk for corruption.
40 Nick Robins-Early, “This Language Startup Connects Arabic Learners With Syrian Refugees,” Huffington Post, September 16, 2015. http://huff.to/1LyD0gb
41 Nada Homsi, “Making Friends with Syrian refugees while learning Arabic,” Middle East Eye, October 7, 2015. http://bit.ly/1OpmKF3
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•
As a result, they are often not included in the project design phase and are only
consulted after the project is underway. Because of this, projects often miss out on
local insights necessary to fully address the needs of refugee communities.
•
International NGO contracts are often for short periods of time to implement specific
project objectives and provide “deliverables.” With limited time and resources,
the ability of these organizations to make substantial impact is often lost.
Donor countries should explore ways to allocate funding for local organizations that are most in tune
with the needs of refugees and are reaching them effectively. By directly supporting the program designs of local organizations, donors can incubate good, “bottom-up” ideas which once proven can be
leveraged and expanded, particularly in critical sectors such as health and education.
Even with sparse funding, however, many local social enterprises have emerged in Lebanon, Jordan,
and Turkey. These organizations are developing innovative ways to create and deliver health and education services and provide employment opportunities for refugees. Some donor governments have
recognized that the entrepreneur and technology communities can produce results, sometimes more
efficiently, effectively, and at lower cost than traditional refugee service agencies. Norway, for example, has begun to allocate small amounts of funding to support local innovation in areas such as education. Most recently, the Government of Norway has launched EduApp4Syria to solicit innovations
and ideas for technology applications that promote education for refugees.42
One example of a social enterprise that is addressing the lack of livelihoods among refugees is NaTakallam, a virtual (online) exchange platform that “aims to provide employment for Syrian refugees
in Lebanon by pairing them with Arabic language learners over the Internet.”43 Through NaTakallam
(which translates to “we speak Arabic”), launched in 2015, English speakers who want to learn colloquial Arabic can pay Syrian refugees living in Lebanon to chat with them, while also raising awareness
about the crisis. Seventy percent of NaTakallam’s revenue goes back to the Syrian Arabic tutors and
30 percent goes towards additional development of the platform. Though the startup is in its infancy,
there are already 80 students matched with 15 conversation partners. NaTakallam has requests for 500
additional sign ups and is developing its platform to accommodate increased demand.44
In Jordan, the tech community has embraced Syrian entrepreneurs. Technology accelerators such as
Oasis500 have actively recruited Syrians to their programs, helping to attract early stage funding from
local venture funds like Wamda Capital.45
Crowdfunding is also a potential source of financing for local social innovation and creative ideas.
Increasingly popular in the MENA region, new online platforms are helping entrepreneurs raise funds
from a wide range of individuals in the region and around the world, particularly diaspora communities. For example, Zoomaal, a crowdfunding platform based out of Lebanon, serves artists, filmmakers,
and social innovators to fund new solutions to local community challenges. Zoomaal has been able to
42 Patrick Clark and Sarah Topol, “Syria’s Tech Startups Find a Refuge in Jordan,” Bloomberg Business, April 29, 2013. http://bloom.bg/1No6DBT
43 Tariq Ali Ahmed. Start-up Aims to Provide Cheap Medical Care to Refugees in Lebanon. http://english.alarabiya.net/en/perspective/features/2016/02/03/Startup-aims-to-provide-cheap-medicalcare-to-refugees-in-Lebanon-.html
44 Francisco Yermo, “Why UN humanitarian agencies are getting more than half of the funding,” Action Aid, October 22, 2015. http://bit.ly/1MAKs
45 Patrick Clark and Sarah Topol, “Syria’s Tech Startups Find a Refuge in Jordan,” Bloomberg Business, April 29, 2013. http://bloom.bg/1No6DBT
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crowdfund over one million dollars US for hundreds of projects throughout the region. Partnering
with crowdfunding platforms like Zoomaal can help leverage small amounts of funding from people
all over the world, strengthening local innovation and civil society.
One of Zoomaal’s many projects, What’s Up Doc,46 is an online startup, which aims to provide affordable frontline, quality medical aid, especially to refugees and low-income families. In addition to
online medical consultations, mobile medical units can reach marginalized communities with little
access to health care. What’s Up Doc raised over $8,000 (US) using Zoomaal’s crowdfunding site.
In short, members of local organizations and local entrepreneurs are better poised to impact positive
change in their respective communities. While strategic planning and operational expertise from the
UN, international NGOs, and donor countries are important, tactical execution from local leaders
generates goodwill among recipient populations. The UN, international NGOs, and donor countries
must actively engage those who are on the ground in Turkey, Lebanon, and Jordan, working to build
resilience in their communities by providing both direct financing and technical assistance to empower local talent.47
Conclusion
As the international community looks at economic development in the MENA region, it must find
ways to relinquish short-term, aid driven models in favor of more efficient and sustainable financing
mechanisms. A political commitment to share the challenge of the refugee crisis and invest in Jordan,
Lebanon, and Turkey will benefit the region and the global community over the long term. This commitment to sustainable development must also come with an understanding that there is no one-sizefits-all model that can be adapted to address the current crisis. We must find, fund, and scale local,
inventive and flexible solutions; identify alternative models for financing to accelerate the creation of
businesses and jobs; and empower local innovators and social entrepreneurs – including women and
youth – to take the lead in designing their future and building their own communities.
46 Tariq Ali Ahmed. Start-up Aims to Provide Cheap Medical Care to Refugees in Lebanon. http://english.alarabiya.net/en/perspective/features/2016/02/03/Startup-aims-to-provide-cheap-medicalcare-to-refugees-in-Lebanon-.html
47 Francisco Yermo, “Why UN humanitarian agencies are getting more than half of the funding,” Action Aid, October 22, 2015. http://bit.ly/1MAKsfk