World Bank Financing to Support Refugees and Their Hosts: Recommendations for IDA19

Introduction

In its 18th replenishment of the International Development Association (IDA18, covering 2017–2020), the World Bank made a game-changing decision to create a US$2 billion financing window to support low-income countries hosting large numbers of refugees.^[1] This financing is significant for two key reasons. First, in its scale and scope, the Refugee Sub-Window (RSW) is responsive to both the programmatic and policy needs of protracted refugee crises. Second, in supporting both refugees and their host communities, the RSW aligns refugee responses with host countries’ national development plans. 

Within its first three years, 14 countries became eligible for RSW financing,^[2] 10 of which have projects that have been approved by the Bank’s Executive Board.^[3] Although it is still too early to say what impact the financing is having on the lives of refugees and their hosts, a number of other progress measures are evident. Beyond establishing new and expanding existing projects, this financing has incentivized, enabled, and supported significant changes in refugee policies in several countries: Ethiopia’s Refugee Proclamation, which creates a path for refugees to move freely outside of camps, attend primary school, and gain access to the labor market; Pakistan’s move to allow refugees to open bank accounts; and Chad’s first-ever national refugee policy that reflects the rights of refugees as laid out in the 1951 Refugee Convention. These policy shifts show the promise of the RSW.

Still, there remain areas where implementation of the financing could be strengthened. In some countries, financing has not been adequately leveraged to support shifts in the policy environment. Humanitarian and other development actors have valid concerns about the World Bank’s ability to address the unique needs of refugees, and about the Bank’s willingness to partner and meaningfully consult actors beyond its government clients. Success of the Bank’s engagement in these contexts ultimately needs to be measured in improvements in the lives of refugees and their host communities; however, these measurement frameworks remain absent. 

The 19th replenishment of IDA (IDA19) offers an opportunity to renew and adjust the RSW to better ensure impact and measure progress. Drawing on observations to date, this policy note outlines changes that should be made to the RSW operating framework to inform World Bank practice in refugee contexts moving forward.

There are four areas where adjustments should be made: linking financing to policy reforms; defining and focusing on a common set of outcomes, targets, and indicators; engaging systematically and predictably with partners and beneficiaries; and investing in programs that are sensitive to refugees’ protection needs. To bolster outcomes, other donors, UN agencies, and the private sector partners will also need to more systematically coordinate and align their responses with the World Bank’s efforts in refugee contexts. Compact approaches, which bring a diverse set of stakeholders together to work towards shared outcomes based on comparative advantages and which bring policy and programmatic solutions to bear, hold the most promise for transformative change.^[4]

Areas for reform in the IDA19 Refugee Sub-Window

1. Link financing to policy reforms.

Sustainable improvements in refugees’ lives depends on a legal framework and administrative practices that enable refugees to rebuild their lives and to support themselves and their families. There are a range of legal and regulatory policies that are critical to refugee self-reliance and socioeconomic inclusion: freedom of movement; access to quality education; access to decent jobs; and protections, including from forced returns and gender-based violence. These policies are also key to successful implementation of World Bank projects that seek to build the capacity of, and integrate refugees into, local social service systems, such as education and health, and into formal labor markets. And they can have benefits for refugees as well as host communities. When refugees have access to the formal labor market, they can find a decent job, earn higher incomes, avoid negative coping strategies, and provide for themselves. At the same time, they can fill labor shortages, create new employment opportunities for other refugees and for host community members by increasing productivity or opening their own businesses, and contribute to the economy through taxes.

Many refugee-hosting countries are unable or unwilling to implement, and/or face significant political barriers to implementing, more progressive refugee policies. The RSW funding, along with World Bank technical assistance, can play an important role in supporting countries to develop and implement policy reforms. We have seen how the RSW has supported critical reforms to refugee policies: in Jordan and Ethiopia, refugees now have some access to the formal labor market, and in Pakistan refugees have access to bank accounts. In other instances, RSW financing has helped hold governments accountable to their own policy commitments. In Cameroon, the World Bank suspended its programs when UNHCR reported cases of forced returns of refugees to Nigeria. While UNHCR should lead on refugee protection policy, the World Bank can help bring a level of accountability to governments’ adherence that UNHCR may not be able to employ.

World Bank staff engaging with governments on RSW projects should discuss policy reforms to enable self-reliance among refugees and marginalized host communities and determine which reforms can or should be implemented in concert with RSW financing. Discussions should center on policies that ensure refugee protection and enable self-reliance, as well as policies that can drive broader economic growth and development (e.g., trade and private sector access). The goal should be to identify policies that lead to shared outcomes in the livelihoods of refugees and host communities.

Governance of the RSW should more strongly and clearly prioritize policy commitments. Under the RSW in IDA18, governments are required to have an adequate protection framework and an action plan towards long-term solutions, which may or may not include policy reforms. The adequacy of a country’s protection framework is determined by the World Bank and UNHCR, and depends heavily on whether the country has adopted the 1951 Refugee Convention and its 1967 Protocol, or enacted national policies that reflect these instruments. This approach has seemingly been inadequate, as some countries that have been deemed eligible for RSW financing do not have policies that align with international protection frameworks and have not yet provided a public action plan for putting better policies in place. For instance, in Bangladesh, Rohingya refugees do not have freedom of movement, they do not have access to the labor market, and they are prohibited from attending formal schools. There is little indication that these policies will shift in the short or medium term.

In some cases, discussions around refugee policies may require difficult conversations with government counterparts and even slow the disbursement of funds. However, these risks are worthwhile as policy reforms are the backbone of sustainable change and can lead to improvements in refugees’ lives that will extend and last beyond World Bank-funded projects. 

It would be instructive for the World Bank, in collaboration with partners like UNHCR and other protection actors, to develop a policy framework to support World Bank staff and governments in these discussions. This could serve as complementary and as a corollary to the World Bank’s existing toolkit for determining constraints and opportunities for inclusive growth (e.g., growth diagnostics). An objective framework would evaluate key country policies and the legal, physical, and material status of refugees relative to host communities. Some World Bank staff may feel ill equipped or inexperienced to advise on refugee policies, as this is not typically an area where the World Bank has expertise or has traditionally been involved. A framework or typology would provide staff with a starting point and identify possible reform pathways, as well as enable a discussion around which policy reforms should be prioritized. It would also add value to discussion at the Executive Board level, as projects come up for approval. 

This framework could take a couple of forms:

• Refugee Policy Index. The World Bank and UNHCR could develop a universal refugee policy index, as IRC and CGD have recommended in the past.^[5]   The index would include all countries. At a minimum it would include de jure national-level refugee and asylum laws related to livelihoods and self-reliance (e.g., right to work, right to move, right to education, etc.), and at a maximum, it would include de facto refugee policies (i.e., extent to which the laws are implemented). It would allow comparison of refugee policies across contexts, highlighting places that exceed and fall behind global standards. Especially if tied to additional financing, the index could motivate countries to implement more progressive policies. However, there are some risks with an index, namely, that it could create a “race to the bottom,” whereby countries see that countries in similar situations have more restrictive laws regarding refugees and do not see the benefits of implementing more liberal policies. 
• Refugee Policy Assessment. The World Bank could amend the RSW to require a refugee policy assessment for countries that are, or want to become, eligible for RSW funds. This would be beyond the “protection framework” note that is supplied by UNHCR during the eligibility process. The World Bank would select a set of policy areas such as documentation, freedom of movement, or access to education and jobs, and assess them de jure and de facto. Such an assessment would lead to a deeper evaluation of the policies and identify opportunities and government capacity for reform. Through this deeper analysis, the World Bank could take the additional step of identifying which reforms would have the greatest impact on refugees and host communities, and thereby help prioritize those policy reforms. Ideally, the assessment would be made public, similar to project documents. 
  The downside of a refugee policy assessment, compared to an index, is that it would only be done for countries that are, or will become, eligible, and therefore would not be a universal tool (i.e., would not be done for all host countries regardless of whether they meet the eligibility threshold and/or are seeking additional financing). There is also a risk that, based on experience with World Bank processes, these assessments would be considered too politically sensitive to release publicly. This would limit the public good and broader utility the assessments could serve, such as in holding governments accountable.

Whether through an index or assessment, some RSW financing could be tied to the quality of the host country’s refugee policy, its commitment to reforms, and/or actual progress towards more liberal policies. If the host government elects to receive RSW financing through a Program for Results (PforR) scheme, tranches of financing could be aligned with progress, as has been done with the Ethiopian Refugee Proclamation through the Ethiopia Jobs Compact. This structure could motivate change within a specific timeline, and also emphasize a country’s ownership of setting its own path towards reforms. 

In addition to a formalized framework, the World Bank should seek to conduct impact evaluations of policy shifts where they take place. This type of evidence can help illustrate the benefits of liberalizing refugee policies for local economies and communities, and for refugees, and motivate more countries to do so. It can also create lessons for how to make future reforms even more effective. The World Bank-UNHCR Joint Data Center could go beyond its initial mandate around producing microdata and lead on this effort.

2. Define a common set of outcomes, targets, and indicators.

As suggested in the IRC-CGD brief that evaluated the IDA18 RSW ahead of the Mid-Term Review,^[6] the RSW should outline clear objectives in terms of the changes it seeks to bring about in the lives and livelihoods of refugees and host communities. The IDA18 RSW results framework failed to include goals, targets, or indicators that measure progress toward self-reliance among populations. Some, but not all, RSW-funded projects include outcome-level indicators. A set of outcomes, targets, and indicators would allow the World Bank to measure progress and aggregate the impact of its financing in these contexts—which could help make the case for further investments by host governments and donors in refugee contexts. They could also serve as a guide for a policy index or assessments, which should seek to determine which policies facilitate and/or impede progress towards shared goals. 

It is critical that the World Bank align the outcomes defined for the RSW with other global frameworks to ensure that they are shared priorities with governments and development and humanitarian actors. In particular, the World Bank should seek to align its outcomes with the Sustainable Development Goals (SDGs), which already offer a set of outcomes, targets, and indicators that all 193 UN member states have agreed to work towards. However, the SDGs do not, for the most part, include refugee populations in their progress measures, and countries typically do not include refugees in their national plans for achieving the SDGs. Aligning RSW financing to the SDGs, and providing technical support to governments to include refugees in national development plans and progress reports, could help close this gap. In addition, the World Bank should work with UNHCR to drive towards a set of out outcomes and indicators that align with the indicators being developed to measure success of the Global Compact on Refugees. Table 1 illustrates how an SDG target and its indicators could be adapted for refugee populations. 

Table 1. Proposed SDG-aligned targets and indicators for refugees

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Measuring progress towards these shared outcomes will require a more robust and coordinated effort to collect socioeconomic data on refugees and host communities—which are often marginalized or in hard-to-reach areas, and not always included in national statistics. The World Bank has already started to generate new data on refugees, such as on their income, poverty, education, and skills. It should dedicate RSW resources to expand this endeavor to other countries and ensure that data is collected regularly (e.g., annually). The World Bank-UNCHR Joint Data Center should take on responsibility for this work moving forward to ensure that not only socioeconomic data, but data related to protection and other issues specific to displaced populations, is collected and reported.

3. Engage systematically and predictably with partners and beneficiaries.

The World Bank has done an admirable job of consulting with humanitarian NGOs at headquarter and capital levels (i.e., in Washington, DC and Geneva), although this process remains ad hoc. The World Bank should consider creating an NGO reference group for the RSW that it would regularly meet with to share observations, discuss challenges, and exchange expertise. The reference group would be consulted during the RSW eligibility process, to gather information about protection and other concerns or barriers that refugees are facing, and during the project design phase, to draw on the programmatic expertise of humanitarian NGOs that have been working in refugee contexts for long periods of time. This group could also serve as a good point of entry as the World Bank and its government clients move from project design to a procurement phase; NGOs may have the right skills, knowledge, and infrastructure to implement World Bank-funded projects.

In addition to a reference group at the headquarters level, there needs to be more robust and regular consultation at the local level with NGOs and affected populations. The Comprehensive Refugee Response Framework (CRRF) might have solved for this problem, bringing together national and subnational government representatives, including from line ministries, humanitarian and development actors, donors, and others key stakeholders. However, to date, the CRRF has not been adopted by all countries—including countries where there is RSW financing—and where it has been implemented, it has mixed success in regularly bringing these actors together to make decisions about policy reforms or how RSW funding should be spent. In addition, although the World Bank has created new regional staff roles to oversee RSW-funded projects, this practice has not been adequately scaled-up and the few existing staff seemingly do not have enough capacity to fully engage with nongovernmental partners.

The sidelining of NGOs and affected populations in decision-making creates a risk that solutions will not meet actual needs. The World Bank has taken some steps to be more inclusive in its consultation process to mitigate these risks. In Ethiopia, initially, World Bank programming for refugee livelihoods focused heavily on generating employment through industrial parks. However, a survey of refugees found that the majority were not interested in these jobs because salaries were low. The parks were also far from refugee populations and could thus be difficult and unsafe to access (especially for women).^[7] Understanding these barriers and the low appetite for industrial parks work led to a shift in programming that emphasized a variety of other pathways to self-reliance in addition to jobs in these parks.^[8] Having incorporated the needs and desires of refugees, this programming is more likely to create viable livelihoods opportunities and have an impact. The experience in Ethiopia also illustrates that the World Bank has learned from its prior engagement in Jordan, where there was a lack of consultation with humanitarian actors and refugees, and subsequently a mismatch between solutions and needs, which has led to slow progress.^[9]

At the regional and country levels, the World Bank should ensure there is sufficient staff capacity and issue guidelines to ensure consultation with refugees and host communities, as well as the NGOs that work closely with them, occurs regularly and predictably. Where a CRRF does not exist or is not fully operational, the World Bank should engage with the humanitarian coordination infrastructure, such as Humanitarian Country Teams (HCT) and NGO fora. Using existing channels will prevent the creation of another coordination mechanism on the ground that may be duplicative. While it is unreasonable to expect World Bank staff to attend every HCT or cluster meeting, given limited staff on the ground, it should engage with these groups on a predictable basis. At the same time, where the World Bank is working with subnational governments to make decisions about financing and projects, it should bring in refugee representatives to ensure their perspectives are reflected. An encouraging example is the work the World Bank is doing to incorporate refugees into commune-level planning in Cameroon. ^[10]

4. Invest in refugee-sensitive programming.

The World Bank needs a more rigorous approach to understanding and responding to refugee needs in order to achieve shared outcomes. It cannot assume that projects that meet the needs of host communities, while often also marginalized, will also address the needs of refugees. Refugees experience unique traumas during displacement—they are forced to leave their homes, their livelihoods, and sometimes family members behind, and are often fleeing violence and persecution. Projects must be designed to address these traumas. For example, education programs cannot just aim to provide an academic curriculum; they will need to provide social-emotional learning alongside lessons on reading, writing and math, and may need to provide remedial education to make up for years of lost schooling. 

The majority of programs approved to be funded by the RSW have been additional financing to ongoing projects, meaning existing projects are simply being extended to include refugee populations. This practice of “topping up” projects has, in some places, allowed the World Bank to disburse funds from the window more quickly, allowing for a faster response to acute needs. Cameroon, which has three projects allocated additional financing and one new project, was the first country to have its projects approved by the Board of Directors in May 2018, while Chad and Niger, which each have a new project, did not receive approval until nearly a year later. Although the World Bank should aim to work on a faster timeline, aligning more closely to the speed required in humanitarian response, this should not be at the expense of getting the projects right and ensuring they are refugee sensitive. Topping up and expanding existing programs to refugees creates a risk that the project will not adequately consider or respond to the unique needs of refugees. 

If the World Bank needs more time to create refugee-sensitive programs and develop a foundation for a robust policy dialogue, it could consider working in a staged manner. It could use other IDA resources, such as from the Crisis Response Window, to support an initial response where it tops up existing projects, and then it could deploy RSW funds towards enabling the implementation of more progressive policies and towards new projects that are specifically designed to meet refugees’ unique needs. This tiered approach could have been taken in a context like Bangladesh, where there was an opportunity to provide immediate support for the refugee response but an unfavorable policy environment and different set of needs for refugees as compared to host communities. Some of the financing provided to the government of Bangladesh could have been initially disbursed from another window. This could have then been followed by a tranche of funding from the RSW, once agreement on policy progress was reached and programs were designed to adequately meet the needs of refugees and hosts. 

To ensure programs meet refugees’ needs, the World Bank should bring in experts who have worked with these populations to help design projects and create internal resources for staff who are less familiar with how to address the unique traumas experienced by refugees. The World Bank should work with humanitarian organizations to generate these tools so that they are evidence-based and accurately reflect the political, economic, and social constraints that refugees currently face. 

Recommended IDA19 RSW Implementation Arrangements

As the World Bank and IDA deputies negotiate the framework for the IDA19 replenishment, they should recognize that the work of the RSW is just beginning. Working in refugee contexts and towards solutions that promote socioeconomic inclusion is difficult and long-term and requires a higher risk tolerance. But early progress of the IDA18 RSW indicates there will be significant payoffs: national development goals are more likely to be achieved and the lives of marginalized people—refugees and host communities—are more likely to improve. 

The IDA19 RSW should reflect what has worked so far and where changes could drive greater impact. Building on the governance of the IDA18 RSW implementation arrangements,^[11] Sand recognizing that most of the recipients of an IDA19 RSW will be countries already be eligible for this financing, the IDA19 RSW should require country governments seeking approval of new projects to provide:

1. Evidence that the government’s action plan to address the refugee situation is being implemented;
2. A description of the government’s refugee policies and an outline of how the government will further progress policies to enable and support refugees and host communities to become self-reliant;
3. An updated analysis on the needs of refugees and host communities, and related constraints to enabling refugees’ self-reliance;
4. A commitment to include refugees in national development plans and in national reports on progress (Voluntary National Reviews) towards the Sustainable Development Goals;
5. Description of the proposed project objectives, including outcome-level objectives for the populations the project will benefit, indicators for measuring those objectives that are disaggregated by age, sex, and status;
6. Description of the proposed project activities and how they will address different beneficiary groups (refugee and host community) needs;
7. The financing terms for the projects and national contributions; and
8. A strategy for consultation, coordination and joint planning and analysis with other development and humanitarian partners, including UN agencies and civil society organizations, and with beneficiaries.

Conclusion

It is vital that the World Bank get its response in protracted refugee crises right, not only for the people it seeks to assist but also because it has an outsized impact on the global stage. How the World Bank uses its resources in refugee contexts can have ripple effects. World Bank financing to refugee crises that are often forgotten—such as in Cameroon, Ethiopia, and the Democratic Republic of Congo—can bring much-needed attention to the needs of refugees and host communities, and potentially motivate other donors to deploy resources in support. Some donors, like the UK’s Department for International Development (DFID), have already started to align their financing behind the World Bank’s efforts.

In addition, the World Bank, through its household surveys and data analysis in refugee contexts, is shedding a light on the fact that refugees are being left behind in the world’s commitment to the SDGs. By orienting itself around the global goals and focusing on enabling refugees to become self-reliant, the World Bank is driving host governments towards including refugees in their national development plans—a key step to ensuring refugees are included in SDG planning and progress measures. The recommended adjustments to the IDA19 RSW offered in this policy note are critical to ensuring that the World Bank’s engagement in refugee contexts exhibits a gold standard for other development actors in the global system, and ultimately improves the lives of refugees and their host communities.