No one dreams of displacement, yet unforeseen events can quickly upend lives. Whether it’s the armed conflict in Sudan, the devastating Russia-Ukraine standoff, or the growing incidents of flooding and drought driven by climate change, such crises compel countless people to leave their homes. By 2050, projections suggest that East Africa alone could see as many as 38.5 million individuals forcibly displaced. A 2019 report by CARE International revealed that 33.4 million people globally were displaced, with climate change implicated in 70% of these instances. Alarmingly, the majority of these climate-induced displacements occurred in developing countries — nations responsible for less than 4% of global greenhouse gas emissions. This dichotomy further deepens global inequalities, with women and girls often bearing the brunt of these adversities.

For the displaced, accessing financial services becomes a lifeline in navigating the uncertainties of their situations. Digital financial solutions, in particular, emerge as game-changers. Often, traditional financial institutions become inaccessible during conflicts or climate disasters, leaving digital platforms as the vital bridge to essential monetary resources. 

FSD Africa, in collaboration with FSD Uganda and Access to Finance Rwanda, has spearheaded financial inclusion projects tailored for refugees in both Uganda and Rwanda. As per the data from the United Nations High Commission for Refugees (UNHCR), Uganda hosted an astounding 1,547,981 refugees as of May 2023. Meanwhile, Rwanda provided shelter to 132,305 refugees, asylum seekers, and other displaced populations as of March 2023. These projects have engaged prominent financial service providers: Equity Bank and VisionFund, as well as the Rural Finance Initiative in Uganda, and Equity Bank in Rwanda. Collectively termed as ‘Financial Inclusion for Refugees’ (FI4R), these initiatives resonate deeply with this year’s World Refugee Day theme: “Hope Away from Home: A world where refugees are always included.”

Partners within the FI4R initiative have harnessed the potential of digital solutions to provide financial services to refugees.

Equity Bank Uganda has taken a comprehensive approach by offering fully-fledged bank accounts to refugees, enabling them to access their humanitarian aid payments. Collaborating with a multitude of organisations, including the World Food Programme (WFP), UNHCR, Norwegian Refugee Council (NRC), and others, the bank has facilitated payments through a variety of mediums: debit cards, digital platforms such as mobile money, and bank agents situated in refugee settlements. Beyond humanitarian aid, these accounts are versatile, serving refugees for all their transactional needs. Additionally, Equity Bank offers its agents with loan facilities for working capital and provides point-of-sale (POS) devices to merchants to facilitate digital payments.

Equity Bank Rwanda introduced an Unstructured Supplementary Service Data (USSD) system tailored for refugees in Rwanda. This innovative service allows refugees to not only activate accounts but also manage savings, send and receive remittances through platforms like Western Union and MoneyGram, facilitate payments to vendors, and access mobile money transfer services. The bank is also considering expanding its services to include loans and insurance.

VisionFund Uganda, a microfinance institution, takes a unique approach by offering savings groups linkage loans, advancing up to 50% of a group’s previous share-out amount. The institution leverages mobile money for efficient loan disbursements and repayments. Embracing digital technology, VisionFund utilizes open data kits to assess loan applications and deliver financial literacy education.

Rural Finance Initiative focuses on enhancing the capabilities of savings groups. They digitize financial management and records using a mobile application, ensuring easy access and transparency. Additionally, they provide loans to these savings groups and create vital links with Centenary Bank, allowing the groups to deposit excess liquidity securely.

Engaging with financial service providers has been illuminating, proving the feasibility and merits of catering to the refugee demographic, particularly in fostering their entrepreneurial endeavors. While entrepreneurship isn’t a fit for everyone, this collaborative effort has been instrumental in broadening the perspective of many financial institutions. It’s crucial to understand that refugees, akin to any other group, have pre-existing livelihoods requiring supportive financial services. They possessed vibrant livelihoods before displacement and are entirely capable of leveraging those same skill sets in their new environments. This sentiment is corroborated by an endline survey conducted by BFA Global, which revealed that refugees maintain a diverse array of income sources, utilize a multitude of financial instruments, and have varied needs that can be addressed through comprehensive financial services.

The success of the interventions is evidenced by over 26,300 customers accessing loans worth over £1.9 million ($2.7million), over 262 bank agents recruited in the settlements, and over 93,300 households registered on Equity Bank Uganda’s digital platform out of which 65,400 households received digital payments from 8 humanitarian agencies. There was also a strong gender impact with 73% of loan customers and 15% of bank agents being women. This shows Africa as an ever-evolving landscape teeming with opportunities for impact investors and ecosystem enablers, especially in the realm of financial inclusion for refugees. While significant strides have been made in integrating refugees into financial systems, a vast landscape brimming with untapped potential awaits impact-driven investments and interventions.

The successful cases mentioned above position Africa as an ever-evolving landscape teeming with opportunities for impact investors and ecosystem enablers, especially in the realm of financial inclusion for refugees. While significant strides have been made in integrating refugees into financial systems, a vast landscape brimming with untapped potential awaits impact-driven investments and interventions: 

1. Branchless Banking Expansion: The establishment of more agent networks across diverse locations can dramatically cut down costs and time for refugees accessing financial services. A direct investment here can immediately increase financial access points for displaced populations.
2. Policy Evolution: Collaborative efforts between policymakers and financial institutions have the power to revolutionize financial access for refugees. A glimpse into Uganda’s success story reveals the transformative potential: a mere policy change skyrocketed mobile money usage from 29% to 61%. Impact investors can work alongside policymakers to replicate such successes.
3. Information Sensitization: There’s a tremendous opportunity to fortify refugees’ financial and digital literacy. Investments in educational initiatives about products, services, and transaction fees can empower refugees to make informed financial decisions.
4. Upskilling Initiatives: Almost half of the refugee population engages in agricultural activities. By channeling resources into capacity-building programs, investors can enhance refugees’ agricultural methods, leading to increased productivity and sustainability.
5. Microinsurance Ventures: Given the array of challenges and events refugees face, with hospitalization being notably prevalent, there’s a significant gap in tailored insurance services. Impact investors can step in to create or bolster insurance products that address refugees’ unique needs.
6. Digitization Drive: The digital revolution offers refugees an avenue to transcend traditional financial barriers. By investing in collaborative processes, digital education, and literacy initiatives, the digital financial landscape becomes more accessible to them.
7. Sustainable Energy Solutions: A shift towards clean, affordable, and reliable energy solutions can drastically reduce refugees’ dependency on conventional fuels. This transition not only promotes environmental sustainability but also ensures safer living conditions for refugees.

Conclusion and Call to Action:

In the heart of Africa lies not just a story of survival, but one of resilience, adaptability, and potential. Each challenge faced by the continent, from displacement to economic hurdles, is simultaneously a window of opportunity waiting to be harnessed. Financial inclusion for refugees is more than a strategic investment; it’s an investment in humanity, in stability, and in a future where every individual, irrespective of their circumstances, has a fair shot at success.

To regional and international impact investing ecosystem enablers and investors: Africa calls upon your expertise, your resources, and your commitment. The successful cases presented illustrate the viability and promise of solutions tailored to the African context. Yet, so much remains to be done.

Investing in Africa’s financial inclusion initiatives targeting challenges such as displacement isn’t merely about returns—it’s about crafting sustainable futures, driving transformative change, and creating lasting impacts. These endeavours go beyond financial metrics; they shape histories, uplift communities, and define legacies.

As you chart your impact investing journey, remember that in Africa, every challenge faced is an opportunity unlocked. In the realm of financial inclusion for refugees, the continent offers a fertile ground to sow seeds of change, reap tangible benefits, and most importantly, make a difference.

Embrace Africa’s call. Engage in its transformation. Let’s co-author a story where adversity gives birth to hope, where challenges are but stepping stones to innovation, and where every individual, displaced or not, is a testament to the continent’s indomitable spirit and boundless potential.