The largely untapped entrepreneurial potential of refugees

Capacity Building, General News and Opinions, Non-Profit Organisations

“Design Thinking with Refugees, project with SOWERS Exchange, Royal Bank of Canada and Christian Action Refugees” by cesarharada.com is licensed under CC BY-NC-SA 2.0

By Bonnie Chiu, Aureliane Froehlich and Gordon Tsui

In Europe, refugees tend to be described in two antagonistic ways: either they are a burden on the host country which ‘welcomes’ them, or they are much needed immigrant workforce for an ageing Europe. 

There have been a lot of organisations, governmental or non-governmental, helping refugees to be job seekers. But we should not stop there – can refugees also be job creators?  Across the ideological spectrum, while there are many disagreements, perhaps we could agree on the imperative of unleashing the economic potential of refugees. 

A research from April 2019 demonstrates the entrepreneurial potential of refugees. In Australia, refugees were the most entrepreneurial migrants and were twice as likely to be entrepreneurs as the wider Australian population. Refugees may start a business out of necessity, or may start businesses because they noticed opportunities that locals did not. 

However, there are major barriers for refugee entrepreneurs. Lack of networks is often the biggest problem. Not only are refugees disconnected from the networks they have built back home, they face a myriad of challenges building networks with local populations, compounded by the policy which allocates the refugee population all across the country.  In the UK, a social enterprise, the Entrepreneurial Refugee Network (TERN), seeks to address this by matching refugees with mentors and experts. TERN also collaborates with businesses such as Ben & Jerry’s to provide part-time employment for refugee entrepreneurs. Many businesses already recognise the potential of engaging with refugees, such as the Hong Kong and Shanghai Hotels which provides a hospitality training and employment programme for refugees in Hong Kong. 

The second obstacle is limited access to capital. Most entrepreneurs in the idea stage commonly seek capital from their networks — friends, families and ‘fools’. This is not available to most refugees. Moreover, they tend not to have any credit history and collateral to apply for bank loans in their host countries. Another initiative, the Refugee Investment Network, seeks to address this by matching investors with refugee ventures and building the field of refugee investment, defined as the deployment of private capital toward refugees and the communities hosting them.

The third major set of challenges come from the government. Even if a refugee overcomes the network and capital challenges, he or she will face regulatory challenges. The bureaucratic requirements for refugees to start their own business can be daunting. Moreover, government policies often do not take entrepreneurship into account. In Germany, which currently hosts more than a million refugees mainly from Syria, regulations surrounding refugees’ right to work and study do not include their right to start a business. Yet, as initiatives supporting refugee entrepreneurship gain traction, conducive policies may start to follow. 

According to the UN Refugee Agency, refugee entrepreneurship has many transformative benefits not only to refugees themselves but also the local population. The business and investment community can do much more to help refugee entrepreneurs overcome these barriers to entrepreneurship. 

TSIC looks forward to collaborating with organisations in this space as we focus on how our expertise in social enterprise and impact investing, and resources can help advance the agenda of refugee entrepreneurship. For anyone interested please e-mail info@tsiconsultancy.com 

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