ALEY — Mohammad left his home on the outskirts of Damascus in 2013, gripped with a mix of guilt and anxiety. Though he was fleeing violence that is still ongoing in his hometown of Jobar, the 39-year-old father of four worried about how he would provide for his family.

He had lived his whole life in the historic neighborhood that hems the walls of old Damascus, where he owned a thriving business — a workshop that pressed aluminum. But when the conflict broke out in 2011, he watched his enterprise shutter and his community unravel. Two years into the war, he made the decision, overnight, to leave his homeland in search of safety and stability in Lebanon.

"It became quite violent and conflict-riddled," Mohammad said. "It was impossible to walk to work, even though I lived only a few hundred meters away. We were lucky to get out alive."

While refugees like Mohammad need emergency aid to meet their immediate needs, without long-term solutions that promote self-sufficiency wherever they are, they can spiral into destitution and dependency.

Considering that the average length of displacement is 26 years — and that protracted crises are becoming the norm — we need a new approach to the global refugee crisis, one that is focused on long-term livelihood opportunities and inclusive economic development. We must also invest in entrepreneurs from both refugee and host communities for tangible development and social cohesion.

Getting started

When he first arrived in Lebanon, Mohammad sought work in other companies but soon realized that restarting a business was his best option to provide for his family. Through Kiva, an international nonprofit that crowdfunds loans for low-income entrepreneurs, 36 people contributed to a $1,000 loan that enabled Mohammad to set up an aluminum press business. He hopes to take out another loan soon to scale his production and send his children to school.

This month, as the world celebrates World Refugee Day (June 20), there is hope that success stories like Mohammad's will soon materialize on a larger scale. People across the globe are coming together on Kiva’s online platform to crowdfund some $500,000 in loans for refugees, internally displaced people and host communities that will be used to start or expand businesses, increase incomes and create jobs.

In 2005, Kiva began with a simple question: Would strangers lend over the Internet to create economic opportunities for people they will never meet? The answer is yes. In the last 12 years, our growing global community of 1.6 million lenders has crowdfunded nearly $1 billion in loans to 2.4 million entrepreneurs in 82 countries.

Over the years, the global community of lenders that Kiva has partnered with has become a powerful force for change and opportunity for vulnerable populations. This is the core of the World Refugee Fund, developed by Kiva, the Alight Fund and our founding partners, the Tent Foundation and USA for UNHCR. The long-term fund aims to go beyond emergency aid to assist those displaced in regaining their financial footing and building a shared future for hosts and refugees.

Long-term rotating financing will support the fund’s goal of crowdfunding $9 million in loans for refugees and host communities by the end of the year in countries such as Lebanon, Jordan and Turkey. The fund is also working to mobilize additional corporate matching dollars to magnify the impact of individual lenders through Kiva.

Nour invested in her local grocery store in Aley, Lebanon – Photo: Preethi Nallu/Kiva

We created the fund based on the obstacles to financial stability facing displaced populations. Though many refugees were successful entrepreneurs in countries like Syria and have unique skillsets that highly qualify them for micro-finance loans in neighboring countries, few financial institutions are willing to serve them.

Barriers to entry

Achraf El Jawhari, a 30-year-old salon owner from southern Syria who now lives in the Aley district of Lebanon, is a prime example. After learning his trade in London, he set up his own business in Sweida. But the conflict took a heavy toll on the local economy, and soon, many from his community migrated to other cities and countries. He closed down his shop and moved to Lebanon with his wife.

Lending to refugees is considered risky, and there can be resentment from local residents who worry that refugees will compete for resources or overwhelm the government’s capacity. As a result, refugees often aren't able to establish small businesses, create savings accounts or invest in income-generating ventures, despite their desire and ability to work and contribute to local economies. This in turn creates more pressure for host communities and chronic dependency among refugees.

The World Refugee Fund is a way to fill this lending gap. Because it is risk-tolerant and low-cost, Kiva’s crowdfunded capital is uniquely positioned to allow the local financial institutions we work with to experiment with lending to populations that they are traditionally reluctant to support.

After taking a loan from one of Kiva's local lending partners for products and equipment, Achraf's business has started picking up pace. His passion and skill brought success, and he was able to repay his loans without any difficulties. "I still have all my things as they are in my salon back in Sweida," he says. "Someday I will return and re-open it, but for now I will invest in this business."

Loans are raised in $25 increments and are collected until the borrower's full request is crowdfunded. Kiva's network of in-country partners, often local financial institutions, then facilitates the actual lending. Our lending program for refugees is still new, but our partners on the ground have found that refugees repay at the same or higher rates as non-refugee borrowers. Kiva has an astounding 97% repayment rate.

Helping host communities

So far, Kiva lenders have crowdfunded $4.3 million in loans to over 4,500 refugee borrowers across the globe. More than 60% of these loans have gone to women, many from traditional households, like Rana, a 28-year-old Syrian woman living with her family in Aley.

She did not think she would ever become an entrepreneur, but she is now a part-owner of a grocery shop, and is hoping to save the revenue to open her own bakery. The idea evolved when she started baking bread at home to support her husband who was working around the clock to meet their needs. Encouraged by her Lebanese neighbors, she hopes that combining her income with her husband’s will help provide her daughter a better future.

Rana's story is one example of how the fund is working to support not just refugees and displaced peoples but also host communities. Kiva’s partners in Lebanon have facilitated many mixed-group loans made up of both Lebanese nationals and Syrian refugees. This innovative approach helps encourage collaboration and social trust between host communities and refugees in a country where tensions between the two have been on the rise.

By fostering lending in different displacement contexts in the region, the goal of the World Refugee Fund is to create a new sustainable paradigm for addressing long-term displacement — one that mobilizes investment from the capital markets. These efforts will rapidly accelerate our understanding of which financial products work where, for whom and how.

By providing capital to local financial institutions to reach refugees and host communities, we aim to prove that individuals like Mohammad, Achraf and Rana are viable clients for them. If we demonstrate that lending can be done to meet the scale of need, we can unlock capital resources from impact investors, socially responsible funds and even pensions.

In the end, it will transform the experience of refugees from one of disenfranchisement to inclusion.


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