World Refugee Day: How an innovative approach is helping build sustainable livelihoods

The refugee crisis has never been more acute. The UNHCR, the UN Refugee Agency, estimates that at the end of 2023, there were more than 43 million refugees in the world, three times as many as a decade ago.

In the face of this escalating challenge, the aid budgets we rely on to meet the needs of refugees are in decline, creating an urgent need for the development sector to be more innovative in how it uses limited funds.

Much of the media reporting on the refugee crisis in the West concentrates on refugees travelling across continents and oceans to find a new home. This obscures the fact that most of the world’s refugees (69%) are hosted by neighbouring countries, where they are immediately and indefinitely placed into refugee camps. These camps are created as a short-term solution, but protracted crises mean that often, they become home to entire generations.

For instance, in the Bidi Bidi Refugee Settlement in Uganda – where Mercy Corps and Village Enterprise jointly run a project supporting refugees to start small enterprises – most refugees arrived in 2016 after the civil war erupted in South Sudan. It quickly became one of the largest camps in the world, and the majority of refugees are still there today, eight years later.

The refugee crisis demands a stronger international response, but aid and development budgets are going in the wrong direction. The World Food Programme (WFP) has warned that its 60% funding shortfall in 2023 was the highest in its 60-year history.

Meanwhile, some of the world’s biggest donors to aid programmes that support refugees, including the US, UK, France, and Germany, have recently announced plans to cut development budgets.

For refugees living in camps, the impact of aid cuts is stark. The WFP estimates that every 1% cut in food assistance puts more than 400,000 people on the brink of starvation.

Politicians in the US, UK and France will all face their electorates in the coming weeks and months. And while it is understandable that they must tackle priorities at home, the refugee crisis cannot be simply swept under the carpet.

We must send the message that we don’t want to live in a world where refugees, who are fleeing violence, war and the climate crisis, can’t access their most basic needs. And the development sector must take the initiative to become more innovative and adaptable, to prove that aid will deliver a return on investment.

The development sector has not always ensured that interventions are evidence-led, especially in a constrained funding environment. Non-governmental organizations (NGOs) must take more responsibility for demonstrating the impact of the funding they receive.

The traditional model for supporting refugees in camps is a good example of an outdated approach. People need food and basic provisions when they arrive in a settlement, but as a long-term approach, it encourages dependency rather than supporting refugees to become self-reliant.

Working together in refugee settlements in Uganda and Ethiopia to help refugees set up small businesses, Mercy Corps and Village Enterprise demonstrate that a new type of effective and impactful model is possible.

We’re bringing two evidence-led approaches together, combining poverty graduation — a proven approach for overcoming extreme poverty — with the development of market ecosystems in local communities. By connecting refugee enterprises to local markets, we expect their businesses to have an even greater chance of growth and success.

The programme is called DREAMS, and we’re testing this new approach with a high-quality, independent study measuring income and net wealth increases.

Innovation and self-reliance should be the thread that runs through interventions to support refugees, empowering people to rebuild their lives. We, therefore, must adapt our approaches to different situations and circumstances.

The DREAMS programme targets refugees and people living in extreme poverty, but it is not the only innovative initiative in this space. Talent Beyond Boundaries is working to change immigration systems so that skilled refugees can be treated in the same way as skilled migrants. Meanwhile, the Global Education Movement is supporting refugees in accessing higher education.

These approaches support refugees directly, but they also aim to boost economies and help refugee populations integrate into their new communities.

The number of refugees is growing every year, and there are no signs of this trend abating. The impact of climate change will displace many more people, the demands on aid budgets will grow and the calls on global governments to do more will get louder.

In our conversations with refugees in Uganda, it was clear they desperately wanted to support themselves and their families. Traditional aid alone isn’t solving the problem. We must take their lead and offer support in their journeys, providing the skills and tools to help set refugee families on a pathway to self-reliance.

As a sector, we must continually innovate, measure success, and adapt to the needs and aspirations of those we work with. We need to know if our interventions are working and be willing to change course if they aren't.

The refugee crisis is one of the biggest challenges facing our society. The answer isn't handouts, it's self-reliance and dignity.