Giving Compass' Take:

• German Institute for International and Security Affairs identifies funding challenges and shortfalls in the global effort to protect refugees.  

• This paper is written from a perspective of German leadership, but the problems and solutions identified within are relevant to other players interested in supporting refugees. 

• Read a donor's guide to addressing refugee crises. 

The willingness to accept refugees has declined globally. Many industrialised countries in particular have tightened their asylum legislation, making the process more restrictive and worsening the living conditions of asylum seekers. Governments have been working to reduce refugee numbers and restrict new arrivals through agreements with transit states and stricter controls at external borders. The advocates of a harder line allege that the right to asylum has been abused for purposes of immigration and assert that refugees create unacceptable economic and social burdens. Critics of the restrictive line accuse their governments of violating the Geneva Refugee Convention, other international norms and national laws, and call for a more humane approach. In the course of these developments, refugee policy (and immigration as a whole) has become a central political conflict in Europe and elsewhere.

One result of the contentious political debate is a lack of coherent and sustainable approaches to international responsibility-sharing and its funding. The actions of the members of the United Nations have been contradictory: In the New York Declaration of December 2016 they agreed to seek closer cooperation and burden-sharing in refugee and migration policy, and concretised this in December 2018 with the Global Compact on Refugees and the Global Compact for Migration. But the Compact on Refugees has not to date led to any fundamental improvements in permanent resettlement in third states or voluntary return, nor has there been any meaningful increase in funding. The few pilot projects have been restricted to just a handful of countries. In view of the large numbers of refugees, it is obvious that financial aid to the (mostly poorer) countries that host most of them needs to be increased. No refugee policy can be effective without adequate funding.

The figures for refugees and internally displaced persons are indeed at historic highs. More people are seeking refuge from violence, persecution and war than at any other time since the end of the Second World War. At the same time the duration of refugee situations is increasing. While the humanitarian funding provided by the international community has increased in recent years, the needs have increased even more strongly in the same period. Aid organisations often find themselves able to acquire only a fraction of the required funds, leaving a growing gap between needs and available means. So new funding possibilities need to be sought.

Three questions must be answered:

  1. Why is there a need for international action on refugee protection in the first place?
  2. Is there really a funding shortfall or are existing resources being used inefficiently?
  3. How can additional funds be mobilised?

These are questions the German government should also be addressing. As the only high-income country among the main destinations for refugees, Germany attracts international attention and enjoys special legitimacy. It is in Germany’s own interests to advance the search for new funding instruments.

The German government should advocate both an increase in the amount of available funding and improvements in its effectiveness. Financing instruments should be transparent and configured in such a way as to strengthen ownership and participation of refugees and internally displaced persons and to facilitate close coordination between the central actors in humanitarian aid and development cooperation. They should also ensure long-term funding. No single funding instrument can address such a diversity of requirements; various approaches therefore need to be combined and applied in parallel.

Direct payments and micro-finance services for refugees and internally displaced persons are especially suited to promoting self-reliance and should be expanded in the interests of efficacy. New financing instruments need to be sustainable and also benefit the host communities.

In order to generate additional funding for refugee assistance, the German government should press for all members of the OECD to meet the agreed target of spending 0.7 percent of GNI on development cooperation. Germany could set a good example by doing so itself. As a major donor it could also ensure that the financial resources it provides for refugees and internally displaced persons are more needs-oriented, untied, long-term and timely. This could be accomplished through pooled funds, which also offer possibilities to optimise the coordination of humanitarian aid and development cooperation.

Other potential sources of new funding include leveraging private finance using public resources, especially in the scope of the European Union’s next Multiannual Financial Framework, reducing the costs of financial transfers, and creating “refugee bonds”. Additionally, the potential of concessional loans and grants has yet to be exhausted.