09/05/2024 | News release | Distributed by Public on 09/05/2024 17:54
Multilateral development banks (MDBs) are increasingly supporting their beneficiary member countries to improve outcomes for economic migrants and refugees. Every year, they provide billions of dollars in grants and loans, as well as technical assistance, policy dialogue, and knowledge exchanges. A new CGD paper with Refugees International, published today, answers what this support looks like, how the issues are viewed internally, and what challenges MDBs face.
For hosting countries, growing numbers of economic migrants and refugees bring benefits and costs. If well-integrated, economic migrants and refugees can earn a living to support themselves, their families, and their communities back home. Both economic migration and forced displacement are therefore integrally linked with development outcomes.
Yet securing the benefits of this integration requires investments. Increasing the physical capacity of infrastructure such as hospitals, schools, and social protection systems is expensive and therefore difficult to achieve, especially for low- and middle-income countries. Addressing other barriers that prevent integration, such as a lack of documentation, a lack of access to capital, and a lack of social cohesion can be even more costly.
But why should MDBs step up to help their beneficiary member countries meet these costs and improve outcomes? We posit two main reasons. Firstly, the priorities of MDBs are largely driven by member country interest; if beneficiary member countries are increasingly seeking support and if contributing member countries are increasingly considering investments in economic migrants and refugees a strategic priority (as they appear to be), MDBs must respond.
Secondly, MDBs' focus on reducing poverty and promoting prosperity entails the inclusion of the most marginalized populations. If MDBs want to tackle issues of economic growth and fragility in their beneficiary member countries, they must grapple with improving outcomes for the large and increasing number of economic migrants and refugees.
In the paper, we looked at the concessional windows, trust funds, and discrete projects that aim to, at least in part, support improved outcomes for economic migrants and refugees.
Concessional windows create a framework to deliver concessional financing to low- and middle-income countries, including a mix of low-interest loans with long grace periods, and grants, to address a certain priority.
Currently, there are seven concessional windows that support improved outcomes for economic migrants and refugees: the AfDB's Transition Support Facility (TSF); the ADB's Expanded Disaster Response Facility (DRF+); the EIB's Economic Resilience Initiative (ERI); the EBRD's Municipal Resilience and Refugee Response Framework (MR3) and Resilience and Livelihoods Framework (RLF); the IaDB's Grant Facility (GRF); and the World Bank's IDA Window for Host Communities and Refugees (WHR).
Some of these windows have a dedicated focus on improving outcomes for economic migrants and refugees. For example, the ERI, MR3, and the RLF were created to support beneficiary member countries in responding to specific refugee crises. Only one (the WHR) was created explicitly to support refugee outcomes for all low-income countries hosting large numbers of refugees. Other concessional windows might include economic migrants and refugees in their programming, but were created to support broader issues. This is the case of the TSF and the DRF+, which focus mainly on tackling fragility and the impact of disasters, respectively.
The windows are also open to different countries for different reasons. The ERI, MR3, and the RLF are open to a predefined list of countries, while the others maintain more complex criteria. For example, the WHR and DRF+'s criteria include hosting a certain number of refugees, having a protection framework in place, and establishing a strategy to foster long-term integration. Indeed, the WHR even has a Refugee Policy Review Framework (RPRF) to identify reform opportunities and inform investment decisions.
Trust funds are financing arrangements set up between an MDB and either a single or multiple donors. While the MDB can use its financing, operational, and technical capabilities to support or even manage a project, its overall goal, design, and decision-making process can be external to the operating MDB. We found three relevant large trust funds, including the Global Islamic Fund for Refugees (GIFR), the Global Concessional Financing Facility (GCFF), and the Global Knowledge Partnership on Migration and Development (KNOMAD). The GCFF is particularly interesting as it helps middle-income countries access unique concessional financing to support the costs of hosting refugees.
We grouped projects that support improved outcomes for economic migrants and refugees into five categories. In these projects, they may be the primary beneficiary (e.g., the project is designed to explicitly support improved outcomes) or a secondary beneficiary (e.g., the project is designed to support citizens but there are spillover benefits, such as the improvement of infrastructure in migrant-hosting areas).
All interviewees noted that any expansion of support would be hampered by a number of challenges, five of which we discussed in our paper:
Overall, we were impressed with the breadth and depth of MDB support for improved outcomes for economic migrants and refugees. There are a range of instruments available, disbursing large grants and loans, and there is much thinking going on internally and between MDBs about how best to address these issues.
But addressing the challenges listed above will be difficult and will require a strong mandate and buy-in from the top. We hope that the increasing willingness within MDBs to engage on these issues will translate into practical approaches to overcome these challenges, thereby improving the lives of economic migrants and refugees around the world.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.