Pathway to Empowerment: How Inclusive Business Can Help Syrian Refugees Find Economic Opportunity in Turkey

Sep 5, 2019 2:00 PM ET
Blog

By  Michelle T. Lee, MA in Global Thought, Columbia University

Since the Syrian crisis began in 2011, more than 3.6 million Syrian refugees have found refuge within Turkey’s borders.[i]​ Turkey has implemented some crucial measures to ensure their wellbeing, like free healthcare and education, but there is a need to continue building on these efforts. 

This is particularly relevant as Syrian refugees are likely to stay in Turkey for a long time. In a 2017 survey, 61 percent of Syrian refugees said they would only return to Syria if the war ended, while 16 percent said they were “not thinking to go back at all.”[ii] Meanwhile, a 2018 study by Turkey’s ombudsman projected that the Syrian population would likely surpass 4 to 5 million within 10 years.[iii]

Unfortunately, the resources and infrastructure are not yet in place to support Syrian refugees’ integration into Turkey, especially as it concerns their economic opportunity and livelihood. Moreover, refugees are sometimes perceived as being a drain on governmental resources of the cause for rising unemployment by certain segments of the local population. These claims, though inconclusive, have nonetheless paved the way for hostilities between refugees and their host communities.
 
The reality is refugees serve as a crucial source of economic activity, opening up restaurants and shops, starting their own businesses, and meeting the growing labor demand in Turkey, thus reducing costs for Turkish businesses.[iv] Economic inclusion helps counteract the development of a permanent Syrian underclass, which could fall prey to issues of crime, exploitation, and radicalization. Economic inclusion also improves refugees’ access to other services like financial services and healthcare.

Now, more than ever, is the time to incorporate refugees into Turkey’s formal economy as consumers, employees, business owners, and entrepreneurs. This is where inclusive business comes into play. Inclusive businesses engage low-income populations – like refugees – into company value chains as employees, customers, suppliers or distributors, and as such, work to improve lives in a sustainable way while still maintaining profit.
 
Here are three ways that inclusive businesses are already helping Syrian refugees find economic opportunity and empowerment in Turkey:

1. Businesses can offer the right mix of consumer goods and products to refugees.
Refugees are a specific consumer class that requires different products and services than Turkish citizens. For instance, refugees without a formal credit history cannot apply for a loan from the bank. Instead, they require alternative forms of financing—whether to secure a deposit for an apartment or open a business.
 
Tala is one such company that addresses this problem. The mobile application uses nontraditional data from a person’s smartphone to provide fast, personalized loans (as small as 10 USD) and help him or her build a digital credit history. PayJoy addresses both the issue of financial access and the prohibitive costs of owning a smartphone. The company enables a person to purchase a smartphone on installment payments and receive loans using the phone as collateral. If a person misses a payment, the phone locks down.
 
Creating products and services for refugees with their specific needs in mind will not only ease their integration into society, but also open up new market segments and sources of revenue for businesses.

2. Businesses can help prepare refugees for the workforce or hire them as employees.
Garment company Koton, a member of inclusive business advocacy platform Business Call to Action (BCtA), a multilateral alliance among donor governments and the United Nations Development Programme (UNDP), trains and employs Syrian refugee women from southeast Anatolia in traditional embroidery and handicrafts. By incorporating the women into its textile value chain—many of whom are housewives—Koton has opened up access to formal employment and increased household incomes by up to 50 percent. Customers have also reacted positively; the “Handicraft Collection” has generated revenues of more than 2 million TL to 6,500 women in 8 provinces—an economic win for everyone.
 
Refugees Open Ware (ROW) trains refugees in advanced manufacturing and entrepreneurship, providing them with the education and resources to develop their own social enterprises. Refugees have gone on to create businesses like Innovast Technology, which uses robots to provide psychosocial and educational support to refugee children, and Karam House, a community innovation center for Syrian youth in Reyhanli, Turkey.
 
By pulling refugees from the margins of society and giving them the tools to take part in the modern economy, these companies are empowering refugees to find purpose, dignity, and economic mobility, as well as to become leaders in their communities.

3. Businesses and investors can invest in refugee-owned businesses.
Governmental agencies and NGOs have traditionally provided funding for refugee-owned businesses. Kiva is one such powerhouse, providing over USD 13 million in funding to over 15,000 refugees through its crowdfunding platform.[v] As transformative as that has been, private businesses, banks, and investment firms provide an even more powerful source of funding.
 
Since 2013, Syrians have started more companies in Turkey than any other foreign group.[vi] According to a report by the Economic Research Foundation of Turkey (TEPAV), there are about 10,000 registered businesses that are completely or partly owned by Syrian refugees, employing thousands of Syrian and Turkish people.[vii]
 
“Turkey is a bright spot for impact investing,” said Cem Baytok, Managing Partner of idacapital.[viii] Despite the country’s unstable political environment, its venture capital industry has continued to grow, and the most successful investments have been in impact businesses.
 
Kiva’s World Refugee Fund Impact Report reveals that refugee borrowers have an extremely high repayment rate on par with non-refugee borrowers (96.6 percent versus 96.8 percent).
If businesses were to invest as much attention and resources into this underserved group, then Turkey as a host country would certainly bear the benefits.

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Ultimately, by bringing refugees into the formal economy as consumers, employees, business owners, and entrepreneurs, businesses can play a pivotal role in helping integrate Syrian refugees into Turkish society.
 
Inclusive business models can pave the way for greater interactions between refugees and their host communities, and in doing so, counteract negative perceptions and improve community relations. Meanwhile, through the partnerships and opportunities developed through BCtA, refugees can become the protagonists of their own story and of Turkey’s story as well.

[i] Syrian Refugee Regional Response. (2019, July 4). Retrieved from https://data2.unhcr.org/en/situations/syria
[ii] Erdoğan, M. (n.d.). Syrians-Barometer-2017: A Framework for Achieving Social Cohesion With Syrians in Turkey. Ankara: Hacettepe University and others. Pg. 19, table 90-A
[iii] Highlights of the report can be found at: Tartanoğlu, S. (2018, November 5). Gerçekle yüzleşin: Savaş bitse de kalıcılar. Cumhuriyet. Retrieved from http://www.cumhuriyet.com.tr/haber/turkiye/1132275/Gercekle_yuzlesin__Savas_bitse_de_kalicilar.html
[iv] Mohydin, R. (2018, September 7). Media Coverage, Perception and Evidence: The Economic Impact of Syrian Refugees in Turkey (Rep.). Retrieved https://researchcentre.trtworld.com/images/files/reports/EconomicImpactSyrianRefugees.pdf
[v] Kiva Refugee Investment Fund. (n.d.). Retrieved July 31, 2019, from https://refugeeinvestments.org/opportunities/kiva-refugee-investment-fund/
[vi] Ucak, S., Holt, J. P., & Raman, K. (2017, June). Another side of the story: A market assessment of Syrian SMEs in Turkey (Rep.). Retrieved https://buildingmarkets.org/sites/default/files/pdm_reports/another_side_to_the_story_a_market_assessment_of_syrian_smes_in_turkey.pdf. Pg. 9
[vii] Syrian Entrepreneurship and Refugee Start-ups in Turkey: Leveraging the Turkish Experience (Rep.). (2018, November). Pg. 15
[viii] Vitta, S. (2017, August 02). Turkey is a Bright Spot for Impact Investing: Cem Baytok of idacapital. Retrieved July 2019, 31, from https://capria.vc/updates/impact-investments-in-turkey-startups/