Innovative financing a long-term solution to the world’s migrant crisis

Every day, for more than two years now, some of the poorest people in Africa have risked their lives trying to get to Europe. Others have trekked even further in the hope of treading upon the soil of the United States, the Eldorado, after crossing South America and a large portion of Central America. On the way, they have met Haitians, companions of misfortune with only one idea in mind: escape, at all cost, the abject poverty that prevails in their country.

Against all odds, the measures adopted by the countries that are swamped by these waves of migrants on a daily basis are more likely to aggravate the crisis than to manage it efficiently. Europe’s policy to counter this kind of desperate immigration has been to mobilize its armed forces and the Police. The United States, on its side, has recently decided to deport all undocumented migrants arriving at their border, particularly Haitians, back to their country of origin. In time, these measures taken downstream will prove inefficient in the fight against this uncontrolled immigration, since the latter has its origin not only in armed conflicts, but also in the flight from a devastating, extreme poverty that destroys any hope of a better future.

Considering the weak results that have been obtained until now, there is no doubt left that we need to look for solutions elsewhere: upstream. We need to find solutions that will create the necessary conditions to eradicate extreme poverty in the zones that have become hotbeds of clandestine immigration. The wealthy countries must assist the developing ones in the creation of new financing mechanisms aiming to fight against extreme poverty. Innovative financing, which has already proved its worth by contributing to the development of numerous African countries, will play a crucial role in this fight.

The innovative financing model consists of levying a low-impact micro-contribution on various transactions. This micro-contribution generates additional revenues that make it possible to provide populations with universal access to global public goods such as drinking water, food, vaccinations and medicine, education and sanitation.

For example, levying only one euro or one dollar on each flight ticket in 12 countries over the past eight years has enabled the collection of more than $2.2 billion. This sum was used to save the lives of hundreds of thousands of children suffering from infectious diseases, while the countries and airlines concerned did not even feel the microscopic levy.

In parallel, Philippe Douste-Blazy, the UN’s Under-Secretary-General, has cited the need for the European Union (EU) to impose a tax on financial transactions with a view to financing a “Marshall Plan” that will help tackle the continent’s worst refugee crisis since the Second World War. According to his calculations, the EU could collect up to 59 billion euros (or $66 billion) per year through the levying of a 0.1 percent tax on transactions involving stocks and bonds and of a 0.01 percent tax on derivative contracts.

Douste-Blazy, former French Foreign Affairs Minister, suggested that 25 percent of the revenue generated by the tax should be channeled to the refugees’ host countries in the form of financial and technical aid; 50 percent to developing countries to help them alleviate extreme poverty, and the remaining 25 percent to the EU’s national budgets.

Mr. Douste-Blazy, Special Advisor on Innovative Financing for Development to the UN’s Secretary General, M. Ban Ki-Moon, added that this innovative financing mechanism was the only solution to hosting political refugees with dignity and to integrating them in our societies, in accordance with European values and with the international law to which all European countries have subscribed.

If Europe and the United States want to reduce the influx of millions of poor and desperate migrants at their border, levying a micro-contribution, particularly on financial transactions and on extractive resources, seems to the a viable solution in the long term. Announcing enormous sums of foreign aid for African countries will not solve the crisis in any way. The countries that have been made dependent on international aid have never managed to overcome poverty and its consequences – malnutrition, infectious diseases, illiteracy, etc.

In this respect, LSL World Initiative (LSL) offers a particularly interesting example. This international company, dedicated to the socio-economic empowerment of emerging countries, is determined to step away from the path beaten by traditional foreign aid to find tried and tested solutions that identify new sources of revenue through innovative financing mechanisms.

LSL is aware that information and communication technologies (ICTs) are one of the key means to reach autonomy through innovative financing mechanisms, and thus recommends the implementation of technologies and micro-contributions with a view to financing large development projects.

For instance, the wealthiest countries’ financial input toward innovative financing for development for the benefit of the poorest countries may prove crucial if the former levy a micro-contribution on the international voice traffic.

The international voice traffic increased by 6 percent in 2013, reaching 540 billion minutes on the global scale. In 2014, it was supposed to reach 569 billion minutes, according to Telegeography’s projections. Based on these figures, levying a micro-contribution of the voice traffic could bring in billions.

Besides, according to the forecast of the Organization for Economic Cooperation and Development (OECD), 1 million refugees will arrive in Europe this year. Some of the estimates used by the United Nations Food and Agriculture Organization (FAO), which considers that migration should be a choice and not a desperate, last-resort act, tally 244 million migrants in the world in 2015, or a 40% increase compared to 2000. More than half of the rural households in several African countries have confirmed that at least one family member has emigrated, the FAO reports.

During the United Nations summit for refugees and migrants, which took place from 19 to 23 September in New York, in the wings of the 71st UN’s General Assembly, Mr. José Gaziano da Silva, Director General of the FAO, said that the first vital step consisted of fighting against the factors that lead to migration issues. He added that we needed to create opportunities for the rural populations living in developing countries to stay at home.