Innovative financing through a humanitarian-development-peace lens

Since 2023, more than 50 stakeholders, including States, academics, private sector and faith-based organizations have united around the Multi-stakeholder Pledge to Accelerate and Better Leverage Humanitarian-Development-Peace Nexus (HDP Nexus) Approaches in Forced Displacement Settings.

Seeking innovative, long-term solutions to handle the growing levels of forced displacement and the pressures this is putting on low- and middle-income countries, the Pledge is promoting social cohesion and tackling the drivers of forced displacement. In doing so, contributors to the pledge are working towards three of the four Global Compact on Refugees (GCR) objectives. Pressures are being eased on host countries, including through investment in early development and climate action; refugee self-reliance is enhanced through investment and inclusion in national and local services; and development and peacebuilding efforts are supporting conditions in countries of origin for return in safety and dignity.

At the end of March, the Permanent Mission of Japan in Geneva hosted a roundtable, co-convened with the Governments of Japan and Germany, UNDP and UNHCR on Multiplying Impactful Investments: Enhancing Humanitarian, Development and Peace Financing for Displaced and Host Communities. The round table assessed work being done towards the objectives of the pledge and shone a spotlight on the challenges and opportunities of financial aspects of HDP-Nexus, especially concerning private sector engagement.

Private sector actors have a pivotal role to play in realising the objectives of the GCR. They can provide a vital source of funding, including through concessional financing initiatives, in forced displacement contexts. Additionally, they can supply employment opportunities for refugees and host community members, investing in entrepreneurs and growing sustainable markets and economies leading to long-term social cohesion and self-reliance.

Unfortunately, a number of barriers remain for the private sector to engage. Legal issues exist, such as lack of job permits, freedom of movement and documentation for workers and obstacles to refugees registering businesses. This is coupled with limited market intelligence and know-how on the opportunities such markets provide. Furthermore, the very nature of forced displacement settings, with people forced to flee seeking shelter in often rural and underdeveloped areas produces additional challenges, requiring higher levels of investment for infrastructure. From water, waste, and electricity systems to roads, this means longer periods of time before a return on investment is seen.

And without financial support, host countries are unable to meet the needs not only of refugees, but also the local communities in which they live. When schools and health systems are unable to meet the increased demand, pressures grow, and social cohesion can quickly break down, leading to even greater instability. Meanwhile, the talents and potential of those forcibly displaced often dissipate, with limited opportunities for jobs or entrepreneurship, they find themselves forced to rely on humanitarian aid – a short-term solution, which for too many becomes their daily reality.

But as demonstrated by the members of the HDP Nexus Pledge, refugees, asylum seekers, and stateless people contribute meaningfully to their host communities. Their contributions boost local economies and grow markets, not only for themselves, but for those they live side-by-side with. And just a small amount of investment – when planned carefully – can bring huge returns.

The roundtable heard from a range of speakers, from government representatives, international financial and UN institutions, and civil society actors, who spoke on different aspects of financing in forced displacement contexts, from challenges to solutions and impact.

Michel Botzung of the International Finance Corporation-UNHCR Joint Initiative on Private Sector Solutions in Forced Displacement, and Erin S. Felton of the Asian Development Bank (as a chair of the Multilateral Development Bank Coordination Platform on Economic Migration and Forced Displacement) highlighted some of the aforementioned challenges for private sector engagement. They also provided clear ways in which the private sector can be supported. They called for greater production and dissemination of specific data on market opportunities and for opportunities to build more inclusive regulatory frameworks. Furthermore, both speakers encouraged making such opportunities more rewarding and less risky, for example through utilizing blended finances. This can be achieved by measures including encouraging early investment by financial institutions and private sector actors in displacement situations, bridging the gap between humanitarian and development funding. This would mean that more of the funding at the onset of a crisis is going towards long term development projects. Such measures could be coupled with initiatives such as forced displacement dividends – financial bonuses for companies engaging with refugees and stateless people in an ethical way.

Sarah Zingg of UNDP and Jessica Some from UNHCR presented the work of the Nexus Funding Facility (NFF), a project working in the Lake Chad Basin to address the challenges where more than 11 million people affected by multiple conflicts live. Launched by the Government of Germany, UNDP, and UNOCHA, the NFF is delivering funding across humanitarian, development, and peace sectors with coordinated implementation to address the root causes of conflict and bring about sustained stability and development in the area. In taking this coordinated approach, they are reducing costs arising from duplication. Involving a range of actors, this work has enabled them to reach areas where providing humanitarian and development assistance has historically been difficult. Using a single financing instrument, they are reducing reliance on humanitarian assistance and supporting sustainable peacebuilding with a particular focus on women, girls, and youth.

Also speaking at the round table, Rabih Yazbeck of the Near East Foundation, a non-governmental organization, presented work including Refugee Impact Bonds (RIB) in Jordan. Through support by private funders, such as the IKEA Foundation and the Novo Nordisk Foundation, and by investors such as the United States International Development Finance Corporation, the RIB supported over 5,000 refugees and host population members in Jordan with their livelihoods. The RIB is a unique financial structure as the funders provided grants as a source for the repayment to investors depending on the outcome of the investment. Mr. Yazbeck also highlighted their work in Syria, where displaced people and host communities have received training and support alongside financial products such as loans and grants, which have so far led to the creation of more than 7,000 jobs, and a 73.6% increase in business revenue. The projects have found a much higher rate of loan repayment than the global average, with around 98% of loans performing – that is, likely to be repaid.

In South Sudan, the Foundation established a revolving credit facility to provide seed funding for local businesses to maximize efficiency of the financing. Within the facility, grants are used selectively to support early-stage enterprises. The seed funding is seeing around 33% return to investors over a six-year cycle, not only boosting economic prosperity for the recipients of the funding but providing economic incentive to investors.

These are just some of the projects and programmes being implemented to help achieve the objectives of the HDP Multi-stakeholder Pledge, but they provide insight into the significant returns and life-saving benefits that comparatively small investments can make.

As the High-Level Officials Meeting in December 2025 draws closer, opportunities to match the commitments already made towards this pledge will arise, furthering the holistic approach to deliver on humanitarian and development needs while bringing about sustainable peace. With more support across the international community – from States introducing policies and legislation to make environments conducive for refugees to work and set up businesses and to provide finances to de-risk investments, to academics and organizations providing research and evidence of the markets and investment potential – more businesses might find themselves able to invest in refugees and their host communities. In doing so, they can reduce reliance on humanitarian assistance, fund development of improved infrastructure from schools and hospitals to roads and electricity and establish lasting peace in regions that have suffered prolonged conflict. All while turning a profit. A win-win for everyone.