NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

What if the global development sector has been approaching forced displacement from the wrong angle? Instead of seeing forcibly displaced people as passive recipients of aid, what if we recognized them as individuals with agency, ambition and entrepreneurial drive? And what if we acknowledged that while displacement presents immense challenges, it also sparks resilience, ingenuity and economic potential?

According to the United Nations High Commissioner for Refugees (UNHCR), as of June 2024, the number of forcibly displaced people worldwide — including internally displaced people and asylum seekers — had surged to nearly 123 million. If refugees formed a nation, they would rival Japan in size, ranking as the 13th most populous country in the world.

This growing reality, coupled with shrinking humanitarian aid — already under strain even before recent U.S. funding cuts — demands a shift in how we respond. Rather than relying on costly, resource-intensive refugee camps, we must invest in solutions that integrate displaced people into host communities. And nowhere is this approach more urgent — or more promising — than in Africa.

By fostering economic inclusion, we can move beyond short-term aid and unlock the potential of displaced people as contributors to local economies. When given the opportunity, they generate income, create jobs and drive innovation. This not only supports their self-reliance but also channels much-needed investment into host communities, strengthening economies and reducing pressure on humanitarian budgets. The solutions to forced displacement are not distant — they are right here, in Africa, waiting to be scaled.

Changing the Narrative Around Forced Displacement

Inkomoko’s experience very much highlights this potential. We work with micro, small and medium-sized enterprises (MSMEs) in displacement-affected communities throughout Africa. We support these entrepreneurs through capacity building, access to finance, market linkages and advocacy. Working with nearly 100,000 entrepreneurs in the last decade, our mission is to change the narrative by demonstrating that in any displaced community, there are innovators and entrepreneurs — people with grit and resourcefulness — who have the solutions to their communities’ most pressing problems.

We believe that all problems on the continent can be addressed by local solutions on the continent. Unfortunately, this perspective is not always shared by others, particularly in the context of communities affected by forcible displacement. Many assume that forcibly displaced people will be reluctant to put down roots in a “temporary” location, and that they are content to rely on handouts and not take control of their lives.

In reality, very few refugees return to their home countries each year: According to the UNHCR, fewer than 2% of the 20.7 million refugees under UNHCR protection in 2020 were repatriated to their country of origin. Fewer still are resettled to a third country like the U.S. or Canada — in 2023, approximately 158,700 refugees were resettled globally, a small fraction of the total displaced population. On average, displacement lasts 10+ years for internally displaced people and 20+ years for refugees.

In light of this reality, it’s important to recognize the need for solutions that enable displaced people to reestablish their lives and livelihoods in their host communities — for however long they reside there. Many forcibly displaced people had a business prior to being displaced that they would like to rebuild. Others have started a business in their host community that they would like to grow, or have an idea for a business that they wish to start. There are hundreds of thousands of active and aspiring entrepreneurs in displaced communities across Africa.

These businesses are started out of necessity, to supplement humanitarian stipends that do not cover the total food and other supplies needed to sustain a whole family. However, many displaced entrepreneurs lack the tools to grow their businesses and create jobs for their community. Providing them with financing, skills and access to markets can unleash their business potential, helping them start and grow their enterprises and giving them and others in their community a durable pathway out of poverty.

Catalyzing Entrepreneurship in Displaced Communities

The most important catalyst for displacement-affected entrepreneurs is, in many cases, access to finance. Businesses need seed capital to get established and grow. But sadly, Africa’s strict financing laws limit the ability of displaced people to take loans or even open bank accounts.

Banks face regulatory barriers that cause a chronic lack of capital for displaced entrepreneurs and the MSMEs they are trying to build. Stringent “Know Your Customer” and anti-money laundering regulations require detailed documentation and verification processes for borrowers. Displaced people very often do not have the necessary formal identification documents, credit histories or proof of stable residence to fulfil these requirements, making it difficult for banks to assess their creditworthiness and comply with these regulations.

This is why Inkomoko’s services and partnerships with financial institutions are so crucial. Where many see uncertainty and risk, we see opportunities to unlock the business potential of people who are, by their very nature, industrious and innovative. However, we do not just provide financing. We build the capacity of entrepreneurs to start and grow their businesses, prioritizing displaced people, women and youth.

Since Inkomoko began in 2012, we have served more than 100,000 clients, invested more than $25 million in direct financing, helped create over 60,000 new jobs, and contributed to an 85% increase in revenue, on average, among these businesses.

For an example of this impact, take Elizabeth Lueth Nyanluaka, a remarkable businesswoman in Kenya’s Kakuma Refugee Camp, who became an Inkomoko client in 2021 and has gone on to take out several thousand U.S. dollars in loans to grow her retail business. Elizabeth happens to be a person with disabilities, but this has not prevented her from becoming a successful entrepreneur. She has taken advantage of the training and consulting services Inkomoko offers in order to strengthen her enterprise. Since she started working with Inkomoko, Elizabeth has seen an increase in revenue which has enabled her to hire more staff. With the additional income she has earned, she has opted to invest in her business by making improvements in the shop and offering customers a broader range of products.

Our long-term goal is for entrepreneurship and private sector investment to enable displaced persons and local community members to escape poverty and live with self-reliance. We’re dedicated to this mission because we recognize the untapped power that lies in displaced communities.

For an example of this power, look no further than a number of nations in the Global North, where millions of people fleeing persecution and seeking a better life have built some of the world’s largest and arguably most successful economies. By demonstrating success with the entrepreneurs we serve, we aim to unlock similar potential — fostering businesses, attracting investment and driving economic growth.

Mary Mwangi is Chief Program Officer at Inkomoko.

Photo: Adelle Mubalama, a tailor with a shop at Kenya’s Kakuma refugee camp, who launched a business when she got a loan from Inkomoko. (Photo courtesy of Inkomoko)