Displaced people are not just refugees; they are employees and employers, consumers and suppliers, and business and political leaders.
In our latest publication with the Amahoro Coalition we explore how the private sector can empower refugee communities, developing commercially-viable programs in refugee settings that:
These solutions not only empower refugee communities, but they also create a pool of talent, a thriving market place and enhance partnership opportunities within the private sector.
Read the full publication here
About the Amahoro Coalition
Amahoro Coalition is an African-led initiative convening business leaders from the region to spearhead the engagement of the private sector in transforming refugee communities. Focusing on education and livelihoods, the Coalition amplifies existing refugee initiatives, stimulates awareness and interest among businesses across the region, generates solutions by facilitating concrete private sector commitments, and serves as a dynamic hub to catalyse policies that encourage companies to integrate refugees within their supply chains.
The Responsible Finance Podcast provides access to the leaders behind innovative approaches to creating positive social impact in responsible finance. In their latest podcast, Justin Sykes, Managing Director of Innovest Advisory, speaks about an Islamic microfinance institution that links impact investors with high-impact Somali micro & small businesses – Kaah International Microfinance Service (KIMS). KIMS delivers Shariah-compliant microfinance across urban areas in Somalia and was recently awarded the Ethical Finance Innovation Challenge & Award (EFICA) by Thomson Reuters and Abu Dhabi Islamic Bank.
KIMS has grown rapidly from its first branch in Somaliland and now covers most of the country, with 11 branches in Somaliland, Puntland and South Central with a cumulative loan portfolio of $8 million that has supported 8,500 micro and small businesses since its launch in 2014. Customers each receive financing of between $1,000 and $10,000, with portfolio-at-risk rates under 2%. This is in line with international standards despite a challenging and changing security situation in the country.
The origins of KIMS are also unique, being launched as a social enterprise with support from Kaah Express, a money transfer business based in Dubai which helps the Somali diaspora to support family at home via remittances. Although the remittance business has developed a wide connection between Somalis and the financial sector, the degree of financial inclusion was shallow since few sources of Shariah-compliant financing were available to micro and small businesses before KIMS launched.
Prior to KIMS’ launch, it conducted a survey of small and micro businesses and found that fewer than 5% had regular access to formal enterprise financing. The unmet need for finance is at least 250,000 and perhaps upwards of 1 million micro and small businesses, which would represent hundreds of millions of dollars in assets, if the financing was available. Until today, KIMS has been financed through donor financing, cash and in-kind support from Kaah and some zero percent loans from philanthropic sources, but it has an ambitious plan to raise $25 million from Islamic social investors and others who are willing to provide financing to KIMS on Shari’ah compliant terms (equity or profit-and-loss sharing) to support continued growth.
Listen to the full interview with Justin Sykes to find out how KIMS has been built to date and how shifting from donor funding to commercial sources can help to expand its social impact.
We, as humans, are causing the problem of climate change. Whereas science cannot give us an exact indication of the predicted consequences, climate change has already started to amplify existing risks, and is creating new ones for us and for natural systems (like food production) upon which we rely. A clear conflict of interest is part of this super-wicked problem as economic development does not equal climate change mitigation. However, as changes will become irreversible and as climate change will disproportionately affect disadvantaged people and communities, addressing inequality (and poverty) is absolutely crucial. Unfortunately, poverty alleviation, often disappears as an explicit priority in the wider concepts like socioeconomic, low-carbon or sustainable development.
“The context in which we must tackle the problems of development and climate is through fighting poverty and inequality”
As Naomi Klein put it: “fighting inequality on every front and through multiple means must be understood as a central strategy in the battle against climate change” (Klein, 2014). However, no single mitigation or adaptation option is likely to be sufficient by itself. This is a collective responsibility that requires collective action.
“We need collective action from across all levels of governance, institutions, organisations, in combination with innovation and impact investments at scale.”
The only solution to the wicked problem of Climate Change is for all parties to participate in the solutions, while ensuring that the poor, who are least responsible for the problem, do not suffer the negative impacts. All who have the capacity to solve the problem should act to do so. This brings us back to addressing equity, which is one of the key principles underpinning the United Nations Framework Convention on Climate Change (UNFCCC) (United Nations, 1992: Article 3).
The well-known political philosopher, Henry Shue, has pointed to the simple but deep roots of equity: ‘All over the world parents teach their children to clean up their own mess.’ He goes on to point out that if one learns that one cannot walk away from the mess one has created, ‘one is given a strong negative incentive against making messes in the first place’ (Shue, 2009). Climate change is a problem of the concentration of GHG emissions in the atmosphere, which is caused by the stock of cumulative emissions. Cleaning up the ‘mess’ of climate change requires both that states take responsibility for past emissions, which have caused the problem, and that they (and others) do not repeat the mistake.
“The importance of collective action on climate change through the simultaneous alleviation of poverty, promotion of innovation and greater financial inclusion in developing markets remains underestimated.”
At Innovest Advisory, we work at the nexus between innovative finance and environmental impact in the Impact Investment field. We go beyond negative screening and ESG assessments to look at the true impact of investments and advise both ‘Impact Funders’ and ‘Impact Enterprises’on how capital can address climate change through greater financial inclusion and improving livelihoods in developing markets and fragile contexts.