On a cold night in November, Alexander Betts gave his guest lecture at the Saïd Business School entitled “Transforming a Broken Refugee System”. Audience member and Oxford MBA student, Sagar Doshi, shares the key takeaways from the talk.
When Professor Alexander Betts takes the stage at the grand Nelson Mandela Lecture Theatre at the Saïd Business School, he doesn’t waste time. He just smiles at the audience and lays out his argument. His first point is a shot across the bow to the mostly European audience before him.
“Europe is not the centre of the refugee crisis today,” he asserts.
What? Really? A casual consumer of recent news might find this suspect. But Betts backs up his statement. Yes, Europe has significant problems of migration, he says, but these are primarily political and social problems. The actual challenge of dealing with refugees in Europe, while difficult, is nowhere near as acute as elsewhere.
Imagine you’re a Syrian refugee, fleeing Homs or Damascus or some other place of conflict in the civil war. Generally speaking, you have three choices:
First, you could bring your family to a refugee camp, expecting stigma and stagnation.
Second, since you are likely an urbanite yourself, you could move to another city, facing limited rights to work and a potential life of destitution.
Third, you could commit to a dangerous journey over Turkey or across the Aegean Sea into Europe.
For years, many refugees—especially from Syria—opted for the third choice. Unfortunately, this occurre just as Europe’s political situation became increasingly delicate. As nationalism and xenophobia increased among European populations, refugee policies followed suit.
Famously, Germany, took a different path. But the environment, even for Germany, was caustic. By the time Angela Merkel gave her “Wir Schaffen Das” speech, she had to make her bold stand in a very muted way: “Germany will manage,” she announced to her people and to the world. She hoped, of course, that other countries would follow suit.
They didn’t. “There was collective action failure,” notes Betts. The UK, Denmark, Austria, and Europe as a whole took pains to limit refugees, so much so that by 2016, Merkel had to make an about face. Betts reminds us that although the door to Europe hasn’t completely closed today, “it’s very difficult to cross Turkey without the right documentation.”
So far, Betts is sharing a known story. It’s a sad and unfortunate story, but it is known.
But then Betts reaches the predicate to his lecture: “We need moral clarity about who we protect and how” he says. In other words, we need to understand what refugees really, actually need and provide that.
“I would argue that there is no moral right to migrate,” says Betts. “What’s needed isn’t migration per se, but rather a safe haven, where they can get access to their most fundamental rights.”
So what provides that safe haven, and what do refugees need? For Betts, those needs come in three categories:
Rescue – safe havens in host states, basic assistance
A route out of limbo – reimagined resettlement policies, updated visa systems, spontaneous arrival as last resort
Consider where refugees get to live. Today, many refugee aid regimes conceive of refugees as living in camps. Camps can provide rescue—though those on the Turkish side of the Syrian border might contest even that point—but they typically do not offer refugees autonomy or a route out of limbo. It’s not surprising that today’s refugees often opt to avoid encampment.
Office of the United Nations High Commissioner for Refugees —the international organisation meant to focus directly on this population—is struggling to adapt to this new paradigm. UNHCR is not present in urban areas, even though that’s where many refugees are . Take Turkey, which is host to more refugees than any other country in the world. UNHCR supports only about 10% of refugees in Turkey. Why? Simply because UNHCR is set up to support camps, whereas most refugees in Turkey are in what Betts calls “urban or peri-urban areas.”
So what are we to do? What can governments and aid organisations change to make these situations better? For one thing, all our assumptions should be checked. For instance, many refugees aren’t necessarily looking for permanent resettlement. A large number of Syrian refugees, for example, have tried to return to areas of conflict when their home regions appeared to quiet down. Indeed, when Canand’s Justin Trudeau offered a hand of welcome to refugees in the Gulf, his government targeted those in Lebanon and Jordan. Refugees were contacted by phone and SMS to ask if they wanted to resettle to Canada. 70% of those contacted declined. They preferred to stay close to their region of origin.
The refugees of today’s conflicts are distinct from those of the past. There’s a political implication here. Today, most countries have complex and differing notions of what separates a refugee from a voluntary migrant. The 1951 Refugee Convention that gave UNHCR its mandate doesn’t provide all the answers to today’s challenges. This could be updated to reflect more modern realities of the refugee experience.
And clarifying that refugee experience is critical. Sitting with many of these refugees, Betts found that a very small number are unemployed. Many, in fact, are self-employed. They have built their own forms of autonomy and have contributed to their host country’s economy at the same time. Even governments who are wary of allowing rights to work for refugees en masse might see the benefit of taking advantage of a skilled, available population of idle workers.
Could host country governments “help refugees help themselves”? By making the refugee environment as human as possible, governments can think of refugees as a resource, rather than as a burden. If host country governments are going to organise camps for refugees, and if many refugees do live in those camps, then at least governments should provide some physical connection to the rest of society. Some properly human, interactive environment for a micro-economy to thrive. That means offering rights to work when possible, even if only on a limited basis.
This is a complex problem, and Betts doesn’t claim to offer any simple solutions. Nor is he blind to the lessons of modern geopolitics that underscore the fact that the refugee crisis and the west’s new nationalism are intertwined. But that doesn’t mean that progress isn’t possible. The 65 million forcibly displaced people—and our own consciences—demand it.
Good ideas tend to cross borders quite easily. This is especially the case with technology. We can easily observe the convergence of new technologies across borders in almost any part of the world. And the reason is simple – the convergence of technologies is empowered by technology itself. Furthermore, technological breakthroughs increase productivity while lowering costs and this quality makes them easily adoptable by new geographies. One such technological breakthrough is FinTech – which is simply to say technologically empowered financial services. Just to give you an idea, technology today can do most of what banks or other financial service institutions do. A basic example is balancing your check book online instead of waiting in line in a bank.
The Power of FinTech
The idea of technology powered financial services has the main quality of a technological breakthrough – it increases productivity while lowering costs. And this is just the tip of the iceberg. FinTech is literally revolutionizing finance – from new scoring models, to giving opportunity to regular people to take part in what only Investment Banks were allowed to partake. As such it has been spreading geographically on exponential basis. Every day a new FinTech product becomes available that changes the way we interact with finance. Everyone, from the general public to investors are hooked on this new industry. However, if you look the map of Europe, there is one region that has had zero activity in the FinTech space. This is the Western Balkans, or more precisely, Ex-Yugoslavia countries. Two members of our team being born and living in the Western Balkans their entire lives found it curious why this phenomenon, that is positively influencing the rest of the world, has overlooked this geography. With the help of the Skoll Centre of Social Entrepreneurship and the Said Business School, the team spent six months in Serbia, conducting in-depth analysis of the Serbian financial market and its readiness to accept FinTech innovations, specifically P2P lending.
The research focused on the P2P Lending industry as a global phenomenon, the history and the current state of the financial industry in the Balkans, the ways P2P Lending can be introduced in the region, the barriers that have kept it out, and the benefits that these countries can have from it. During the six months the team did hands on research, engaged with some key stakeholders in the Serbian finance sector (such as banking professionals, government officials, high net-worth individuals, etc.), and took part in the LendIt Conference in London, the largest P2P conference in the world where it had chance to meet industry experts from all around the world. The key findings will be outlined bellow, accompanied with an infographic for the more visual readers.
Global P2P Lending Findings
P2P lending is a global phenomenon that has experienced enormous growth over the past five years. It can be established as one of several operating models all of which have a more cost efficient structure than traditional banking. The regulation for P2P lending varies across different countries. Finally, P2P lending offers many benefits including: no inherited systematic risk, access to finance, and it Is a new asset class.
Analysis of the financial sector in the Balkans
The financial sector in the Balkans remains to be hugely underdeveloped and it lags behind the financial sectors in developed countries. Commercial banking is the only developed sector in the financial industry in the Balkans. The key challenges to the development of the financial industry in the Balkans are:
Low level of saving
Conservative lending by commercial banks
High borrowing costs and low deposit returns
The legislation in the financial sector in the Balkans is set up to protect the banking industry
P2P Lending in Serbia
Given the local landscape and the key factors to P2P lending two operational models can be set up in Serbia
Partnership with a bank
Fee based model
The revenue model for P2P Lending in Serbia should not be much different than that in the US or the UK. The borrowers market can be split in consumer and business, while the consumer market consists of all the household loans issued by commercial banks, in addition to all the loans not issued due to conservative banking. The business market should focus on working capital financing – invoice trading. The research has shown that the following are the essential areas of activity that must be performed well if P2P lending is to be introduced in Serbia:
Credit risk modelling
The matter of trust
Overall, our view of the market is a positive one and our assessment is that there is space for the FinTech industry. We expect that some form of alternative finance will emerge in the Western Balkans in the near future, and in expectation of this we will continue our work on bringing P2P lending in the region.
This post was written by SBS MBA Nikhil Neelakantan, who has just returned to Oxford after 3 days at SOCAP/Europe.
Courtesy of twentytwentystudios
Last night’s six-member panel brought SOCAP/Europe to an appropriate end.
The panel consisted of social entrepreneurs, volunteers and the founding members of SOCAP/Europe, Kevin Jones and Frank van Beuningen. This was typical of the conference: people from all backgrounds brought together by an interest and passion for impact investing.
This resulted in conversations that frequently needed translation (No, structured banking does not deal with the architecture of banks!) but it also meant that people were exposed to different points of view.
This also meant that there was space for a deep-dive into the details of impact investing as well as an opportunity to learn about innovative organizations using SMS technology in developing countries.
Another feature of the conference were the participant-driven Open Space sessions. I was able to attend two of these sessions, which were “held” in an Unconference format. The first described the work of the World Bank in creating the Development Marketplace. The World Bank Institute created the Development Marketplace over 12 years ago to provide grants to innovative social ventures. Now it is looking to help these social entrepreneurs get commercial investments.
The second Open Space session that I attended was built around the question of providing financing to SME’s trying to build businesses in rural India. We had participants who were eager to start asking questions of those who had already built these links in India. The consensus was that there was lots of opportunity but that one had to proceed by developing partnerships with Indians who were already working in this space (this includes government agencies such as IDBI).
The conference also brought some reflection on the future of SOCAP/Europe. Where is it going next? It seems logical that it will stay physically in Amsterdam (The Dutch have $7bn invested by retail investors in social enterprises through organizations like Triodos Bank and Oikocredit. They are surely the world’s epicenter in social investment).
However will the format remain the same? Will more policy makers and government entities get involved? Despite the lingering questions, we left the conference buoyed by the fact that we were setting the foundation for a larger group of people who were willing to venture forward into the brave new world of impact investing.
This post was written from SBS MBA Nikhil Neelakantan, dosage live from SOCAP/Europe in Amsterdam.
What does a recipe for a layered cake have to do with impact investing?
I would have said “nothing”. That is, healing until I attended the session titled “Layer Cake Deals”. This panel featured speakers from organizations like Triodos Bank (old hands at impact investing) and ABN Amro (a relative newcomer to the field).
According to the panel, medical “layer cakes” are created by putting funders with different priorities in the mixing bowl. That means funders providing grants, subsidies and soft debt can work with risk-taking venture impact investors to create bigger, faster and more scalable solutions to some of the world’s biggest problems.
Triodos Investment Management has developed a fund that adopts this structure to fund agricultural entrepreneurs in the developing world. Governments and social investors form the first layer of the cake, providing external guarantees against default. Social investors seeking lower returns form the second layer, providing subordinated debt. Triodos Bank provides the final layer with a commercial credit line (which it is comfortable doing, partly because of its confidence in the other layers).
However there is a darker side to layer cake deals. The senior debtors are those who often receive the lowest returns. This can partly be explained by the fact that donor agencies and other social investors are willing to fund high-risk ventures in order to bring in more mainstream funding, therefore providing a “multiplier effect”. Thus, how to balance the different “ingredients” of the layered cake is a discussion certain come up at impact-investing conferences and offices of funders across the world.
SOCAP has made realize once again that Saïd Business School is extremely well represented in the impact investing space.
I have met practitioners, speakers and leaders of social enterprises who are alumni of the Business School. Some of my “networking time” was spent swapping stories with other SBS’ers about everything from rowing to exams (Am I glad that we don’t have to come back for exams in August that cover material taught over one year!)
My classmates – including budding entrepreneurs building social enterprises in Chad and India – are also representing SBS at SOCAP. I am impressed by the reach of this strong and cohesive group of former and current students – and I am looking forward to being part of this contingent in the years to come.
We’re thrilled that several of our Oxford MBA students and faculty have the opportunity to attend the event and help out our friends over at SOCAP. They’ll be keeping us posted on all the latest and their perspectives on the gathering.
We’re excited to see what comes out of the gathering – a few hours in, and already looks like exciting things. For one, check out the newly released Social Investment Manual by the Schwab Foundation. Looks like a must read.
For more on the event, here’s Nikil Neelakantan, an Oxford MBA who is taking it all in live.
SOCAP, the conference at the intersection of money and meaning, came to Europe last night at the Beurs van Berlage in Amsterdam. Since I was volunteering at the conference, I was unable to witness the keynote speech by HRH Princess Maxima, UN Secretary General’s Special Advocate for Inclusive Finance for Development.
The speech and the plenary session, “This moment in Europe, This moment in the World” were attended by a crowd of over 600 people.
Also, over 50 social entrepreneurs were recognized for their achievements with the SOCAP scholarship. The Innovation Showcase was a venue for these entrepreneurs to present their work. The most popular one seemed to be a model of a Sustainable dance floor from Enviu, a Dutch social enterprise!
I am definitely looking forward to tomorrow’s lineup of talks now!