Unlocking the economic potential of internally displaced persons in Africa; private sector solutions 

Africa is facing an escalating internal displacement crisis, with the continent now hosting nearly half of the world’s internally displaced persons (IDPs). Tackling this challenge demands a multifaceted, collaborative approach involving governments, international organisations, and the private sector.

Recent reports and events underscore the immense economic potential of IDPs, revealing that targeted support can transform their lives and benefit host communities. Several landmark studies highlight the significant contributions that displaced populations can make to local economies when given the right opportunities and support.

The United Nations Development Programme’s (UNDP) report, Turning the Tide on Internal Displacement, emphasises the resilience and innovation of IDPs. It demonstrates how supportive policies can empower these individuals to drive economic growth and contribute meaningfully to their host communities.

Similarly, the Internal Displacement Monitoring Centre’s (IDMC) and Global Report on Internal Displacement (GRID) reinforces this viewpoint. The report stresses the importance of durable solutions and economic integration, arguing that including IDPs in local markets is essential for sustainable development.

The World Bank’s research into socioeconomic dynamics in countries such as Nigeria, Somalia, and Sudan also advocates for evidence-based policies that address vulnerabilities and promote self-reliance among displaced populations.

This research highlights the need for policies that not only mitigate immediate challenges but also foster long-term economic stability. Another critical study, Forced Displacement and Social Cohesion explores the link between displacement, inequality, and access to services.

It suggests that inclusive policies and targeted investments can alleviate the adverse effects of displacement, fostering social cohesion and facilitating the harmonious integration of IDPs into their new communities.

Together, these reports highlight a clear path forward: with the right policies and partnerships, Africa’s internally displaced populations can become valuable drivers of economic and social progress.

Private sector’s role: bridging futures roundtable  

The urgency of translating these insights into action was underscored at the 2024 Africa Roundtable on Private Sector Solutions to Internal Displacement, hosted by the United Nations High Commissioner for Refugees (UNHCR) in Lagos, Nigeria.

The event, themed “Bridging Futures: Converging for Solutions,” brought together 250 participants from 11 countries, focusing on nations with the highest populations of IDPs.

Attendees included senior government officials, policymakers, industry leaders, representatives from various diplomatic organisations, UN agencies, international development banks, and bilateral institutions. International experts convened to explore private-sector strategies for addressing displacement.

In his opening speech, Dr Tope Fasua, representing Nigeria’s Vice President, highlighted the enormity of the challenge: “Africa hosts half the world’s internally displaced persons, with 35 million lives disrupted by conflict, violence, and climate change. Governments alone cannot address these challenges—we need innovative private-sector solutions.”

He called for regulatory frameworks to attract investment in displacement-affected regions, stressing that economic integration is the key to long-term solutions.

Unlocking economic potential through collaboration  

Companies such as Outsource Global Technologies are already showcasing how the private sector can make a significant impact. Amal Hassan, the company’s CEO, shared the company’s success in training internally displaced persons (IDPs) from Northern Nigeria in customer service and telemarketing.

Through initiatives like Outsource to Nigeria, these IDPs have gained access to global markets, fostering economic self-reliance. Hassan highlighted plans to expand training into sectors such as agriculture quality assurance emphasising that tailored skills development not only empowers IDPs but also strengthens the broader economy.

Adeline Somda, CEO of Anatras in Burkina Faso, also shared how her cashew processing company actively ensures that IDPs constitute 5% of its workforce. This targeted effort demonstrates how businesses can contribute to integrating displaced populations into the local economy.

Olivier Buyoya, Regional Director at the International Finance Corporation (IFC), stressed the importance of partnerships in attracting investment.

He remarked on the need for conflict-sensitive approaches that consider the needs of both displaced populations and host communities. Advocating for sustainable interventions, Buyoya highlighted the importance of creating viable business cases.

The IFC’s collaboration with UNHCR aims to integrate IDPs into local economies, ensuring that support efforts are both inclusive and economically sustainable.

Financial inclusion: a path to sustainable integration and economic growth  

Farouk Gumel, Vice President of the Tropical General Investment Group, highlighted the complex economic realities facing different groups of displaced individuals. He emphasised that IDPs fall into varied categories based on their economic integration and migration circumstances, each requiring tailored solutions for sustainable support.

Gumel noted that economic migrants often relocate for better business opportunities. For instance, bakers or mobile recharge card sellers move to areas where their businesses can thrive. In contrast, those who are forced to flee due to emergencies lack the time to plan and often arrive with little or no resources, making their integration more challenging.

Those who fail to integrate economically risk becoming societal outcasts, especially in urban settings.

Urban vs. rural displacement

Urban IDPs typically engage in sales or manual labour, while rural counterparts often have agricultural backgrounds. “Historically, rural IDPs were farmers or cattle rearers, so our role is to provide resources like fertilisers,” Gumel explained.

However, he pointed out the mismatch that arises when displaced individuals have skills unsuitable for their new environment—for instance, a displaced teacher cannot simply transition into farming. This gap underscores the critical need for targeted financing and economic support.

Effective economic integration requires innovative financial solutions, therefore financing models must move beyond theoretical frameworks to offer practical, real-world solutions.

The role of financing and risk management  

Edward Sterling, another participant, echoed these sentiments, emphasising the importance of sustainable financing over-reliance on grants. “If you receive money for free, you spend it without accountability. However, blended financing models, where loans must be repaid, create a more sustainable cycle of development,” he argued.

The African Development Bank (AfDB) has already embraced this approach, offering blended financing and de-risking options to support private sector growth.

Housing challenges and solutions  

Housing remains a critical issue for IDPs, with calls for innovation in supply chains, budgeting, and financing models. Participants admitted that documentation hurdles often prevent low-income groups from accessing financing. However, IDPs can leverage primary mortgage institutions (PMIs) designed to support low-income earners.

Voluntary savings schemes, backed by federal mortgage banks, also offer a pathway to home ownership.

A suggestion was made noting that banks could incorporate housing schemes into their corporate social responsibility (CSR) initiatives, offering rent-to-own options. Religious institutions, such as churches and mosques, could also play a role by including housing in their social outreach programmes.

Tax incentives for organisations engaging in CSR activities can then further stimulate these efforts. While multilateral development banks (MDBs) like Family Homes Fund provide crucial support, they cannot address all housing challenges.

Gumel and other participants advocated for increased long-term and blended finance instruments to bridge these gaps. Such approaches ensure that financial support translates into sustainable development rather than temporary relief.

Ultimately, behind the statistics and economic models are real people counting on these initiatives for survival and growth. Sustainable integration of IDPs requires a holistic approach that combines innovative financing, targeted support, and a commitment to long-term development.