Refugee lens investing arrives

Systemic barriers

The fund will work initially with MFIs in the Middle East, South America and Central America and expand to Africa. Investors in the fund so far are from foundations and faith-based organizations. Plaves says that the fund has impact- reporting methodologies that will allow for data collection that will hopefully attract more institutional money.

The International Rescue Committee’s (IRC) Centre for Economic Opportunity is also looking for partners for consumer finance for refugees in the US.

“In the US as in other developed countries, resettlement is often deemed as successful when the client gets their first job or has an income that can cover basic expenses,” says Kasra Movahedi, director of the centre. But there are systemic barriers that serve to limit upward mobility, the impacts of which are often more sharply felt by refugees.”

The centre currently offers refugees loans to help build credit, buy cars, pay for training or start businesses in 10 regions of the US. These loans, averaging $2,000, help newcomers meet critical financial needs while costing only a fraction of what would normally be available to credit-thin borrowers like refugees.

The benefits of investing with refugee entrepreneurs and entrepreneurs supporting refugees are very real, and the costs of not doing so are simply too great

– John Kluge, Refugee Investment Network

The organization has helped to refinance loans with interest rates as high as 180% down to 9%. To complement the loans, the IRC offers financial education.

“It’s an invaluable service because consumer financing options in the US are very limited,” says Movahedi. “We also anticipate income volatility for newly arrived families who may be doing shift or hourly work, so we can help smooth those out and be a safe alternative to predatory lenders. Nothing can make it easy to get ahead in America, but we hope to make it at least a little bit easier.”

Again, repayment rates are high – between 94% and 98%. The IRC has made about $2.1 million in loans so far, and is now looking for partners who may be able to invest in a loan fund targeting between zero and 2%.

Framework

For impact investors, RIN’s Kluge says refugee lens impact funds make sense.

“More than half of refugees are women, and more than half of refugees are people of colour, so refugee investments could be part of gender lens portfolios for example or portfolios focused on opportunities for minorities,” he adds.

“It’s not different really to many of the funds already in existence, but the story has often been misunderstood. We’re hoping to change that through bringing the private and public sector together to share the story, and to match investment opportunities with investors.”

Another fund within the network is being developed by 17 Asset Management (named after SGD17 – partnerships) to advance development in southern Mexico, which is part of the Initiative for Inclusive Investment in Mexico, a cross-sector, cross-border partnership which the RIN developed as a model for how countries can proactively address large-scale forced migration.

There are so many opportunities for investment within a larger refugee lens, says Kluge, pointing to income-sharing programmes and work around accelerators and refugee start-up networks such as that being done by the Miller Centre for Social Entrepreneurship in Santa Clara, and TERN (The Entrepreneurial Refugee Network) in London.

“These are in addition to the three or four micro-finance funds in various stages of development,” says Kluge. “It is no longer valid for banks and investors to say there is no pipeline potential. It’s just a new field so needs some elbow grease, structuring support, and intentionality.

“The benefits of investing with refugee entrepreneurs and entrepreneurs supporting refugees are very real, and the costs of not doing so are simply too great.”