Time for refugee investments to size up


Helen Avery
Published on:

The first refugee investment impact bond is poised to launch in 2019.

Belgian impact finance firm Kois Invest began working on an impact bond for job creation for refugees in 2016 in response to the refugee crisis, funded through a grant from non-profit Convergence in Canada.

The goal is to create a bond structure in which private investors supply working capital to service providers that are delivering evidence-based livelihood programmes to Syrian refugees. Investors are paid back if and when social outcomes are achieved, with a financial return that varies with the level of social impact.

Kois is now in the final stages of structuring the multi-service provider bond and hopes to launch the deal early to mid next year.

Despite large amounts of private-sector money being committed to financing refugee-related investments, very few deals have taken place. This is now beginning to change.


Justin Sykes,
Innovest Advisory

Justin Sykes is the founder of Innovest Advisory, a boutique impact investment firm that has been looking at matching private clients with refugee-related investments over the last three years. He says that momentum seems to be growing.

“We’ve had a period of inertia and frustration where large, high-level commitments to refugee investments haven’t translated into deals,” he says. “Now, however, we are seeing some capital being put to work and a pipeline building.”

Sykes says people are beginning to understand that seeking market rate returns and advanced due diligence may be counter-productive to seeing refugee-inclusive ventures flourish.

Innovest looks both at source countries – helping to create economies that allow individuals to remain – and at host countries. An example of a project that Innovest has invested in is a microfinance institution in the horn of Africa, KIMS Microfinance, which offers a small-business financing programme for refugees returning from Kenya to Somalia.

“We are also working with a garments manufacturer called the First Syrian Exporters Group, which is a consortium of 10 businesses formerly from Aleppo which have re-established operations in southeast Turkey,” adds Sykes. The group employs 700 people – 60% are refugees – and has raised money as it looks to grow its business to create 1,500 new jobs.

Another example is Pawame, a Kenyan off-grid solar company that helps refugee households transition to solar from costly and dirty energy supplies such as diesel and kerosene and engages refugees as their sales agents in the refugee camps.


Beatrice Delperdange, who is managing the project at Kois, says one reason some investments have been slow is simply the complexity of structures, but it’s not for lack of interest that the launch has been slow in coming.

“To define the metrics, how to achieve the goals and measure the output, and construct an independent audit – it’s a very different ball game to a traditional grant,” says Delperdange.

Smaller investment opportunities are plentiful, however. Take ReBootKamp (RBK), which trains local unemployed and refugees in Amman, Jordan as software engineers and places them in high-paying jobs. Half of its graduates and those employed are refugees from Syria, Iraq, Yemen, Palestine, Somalia, Sudan and Libya.

The cost of the training and a return is paid from a percentage of the graduate’s first-year salary. To date, RBK has graduated four cohorts – some 115 engineers. All of the first three cohorts are now in employment – 98% within six months of graduation. Hugh Bosely, RBK’s founder, says it is particularly impressive, given there are 30,000 unemployed information and communications technology graduates in Jordan competing for the same few jobs. The fourth cohort is expected to be at full employment within two months.

At present the programme is financed by selling loan agreements to scholarship organizations, but Bosely says he is hoping, given track record and potential, that international development banks will offer working capital either as a loan, impact investment or equity share.

“There is just so much demand for skilled labour, and not just here in Jordan,” says Bosely. “Saudi Arabia, for example, lacks the intellectual infrastructure to fulfil its ambitions of being the centre for data systems and we could easily be exporting 1,000 refugee engineers there a year. If Neom [a planned transnational city and special economic zone] happens, you can add a zero to that.”


Other financial industry participants and agencies are hoping for more scalable projects to arrive soon, as both the UN’s Global Compact on Refugees and Global Compact for Migration are enacted this year.

Gary Kleiman has been running his analyst and advisory firm specializing in emerging markets for 30 years, before which he was a refugee officer in southeast Asia. Since the European refugee crisis he has been in talks with banks, agencies and NGOs on how to bring private-sector finance to the refugee sector. He says momentum for a larger-scale initiative is growing as more refugee-based events and organizations emerge, such as the Tent Foundation and the UN’s private-sector summit on the refugee crisis.

Kleiman has a two-fold proposal. Firstly, to raise funding to create a platform where bankers, fund managers and institutional investors can discuss how to cooperate with humanitarian and development lenders. Secondly, to consider existing financial instruments as suitable for refugee-specific financing.

“We need to look at more conventional ways of bringing finance to solve the refugee crisis, such as cross-border lending, sovereign bond proposals, private and public debt, private and public equity,” he says. “Emerging markets already have instruments that are working to solve challenges, and we could use these instruments but focus on refugees in places such as Bangladesh and Venezuela, for example.”

Kleiman says it would mean building on an existing foundation, rather than having to invent new and smaller products.