Breaking Down Silos to Advance Financial Inclusion of Forcibly Displaced People

Every day, forcibly displaced people (FDPs) are compelled to leave their homes in search of safety, fleeing from violence or disasters. Their access to dignified economic opportunities differs vastly depending on their displacement context, the enabling environment and their skills and literacy levels. Yet, all aspire to redefine their futures and regain economic independence and dignity.

Financial inclusion can help FDPs achieve these goals. And FDPs, estimated to number around 120 million, possess specific skills and assets that present business opportunities for financial service providers (FSPs). 

However, FDPs often face numerous hurdles in accessing financial services, including lack of recognized identification, restrictive political and legal frameworks, language, literacy and cultural barriers, and stringent Know-Your-Customer (KYC) requirements from FSPs. These challenges are compounded by intersecting vulnerabilities, as certain groups - such as women and individuals with disabilities - face even greater constraints. 

Coordination is lacking… and needed

A wide range of actors, from humanitarian agencies to fintech companies, work to promote financial inclusion for FDPs, focusing on different areas and bringing different knowledge and expertise to the table. But these stakeholders often operate in silos, preventing the development of cohesive and effective long-term solutions to support FDPs. This lack of coordination makes it hard to scale up successful initiatives and share what works. It can lead to duplication of efforts with wasted resources, gaps in services for FDPs, and a confusing maze of disparate and overlapping systems that FDPs must navigate to access support. 

A coordinated response is needed. To ensure FDPs’ effective and long-term access to useful financial services, the entire financial ecosystem - including humanitarian actors, FSPs, fintech companies, financial regulators and host governments - must collaborate and break down silos. 

What does collaboration look like?

Collaboration for the financial inclusion of FDPs can take many forms, but all should aim to take advantage of each partner’s respective strengths. At the International Rescue Committee (IRC), we have worked on a number of partnerships in different areas, including the provision of non-financial services, developing tailored savings and loan products, and promoting digital inclusion.

For example, with MasterCard funding, we launched pilot projects in Uganda and Cote d’Ivoire that leveraged established networks of Village Savings and Loan Associations (VSLAs) and FSPs. The FSPs worked with VSLA members to adapt and develop savings and loans products that fit refugees’ needs, while the IRC supported VSLA members in navigating the FSPs’ financial services through financial literacy training. Thanks to a tripartite collaboration involving skilled community volunteers, FSPs and humanitarian organizations, we were able to scale up FDPs’ access to financial products. This collaborative effort laid the groundwork for further innovative projects.

The Re:BUILD project is a more than tripartite collaboration, bringing together at least six different local and international organizations to drive its implementation. With funding from IKEA Foundation, we partnered with Equity Bank in Kenya and UGAFODE in Uganda to design a Loan Guarantee Fund that mitigates default risks and offsets the collateral requirements that typically exclude refugees. At the same time, we supported Equity Bank with tailored market insights to help them adapt their products to refugees’ needs. Through this holistic approach, Re:Build aims to increase urban refugees’ access to formal financial services and to mitigate income volatility. If the model proves successful, we plan to scale up this facility with the support of other donors. 

In 2018 and 2021, with support from DFID and KfW, the IRC partnered with Al Majmoua, the leading Lebanese microfinance institution, to support unbanked host community and refugee entrepreneurs with coaching sessions and business training. As part of the collaboration, Al Majmoua was able to learn more about these entrepreneurs’ financial needs and develop a tailored mobile application for them. Through this app, borrowers can apply for loans, request non-financial services and manage their business and household finances. 

Though this collaboration was initially designed to address specific needs for unbanked host and refugee communities for the project’s duration, it was ultimately extended to serve all Al Majmoua’s clients, creating a direct and scalable impact on financial inclusion. Partnerships to invest in digital inclusion - which can help facilitate financial inclusion and economic independence for FDPs - are valuable not only for current FDPs, but also to help enable humanitarian access in future crises.

A community of practice to facilitate collaboration

We share these experiences as examples of how partnerships can work, but we know it can be challenging to keep track of who is working on what in the sector, and to figure out who would make most sense to collaborate with. That is why the Community of Practice on the Financial Inclusion of FDPs (the CoP) was formed - to bring together stakeholders and coordinate actions. 

Members include governments, humanitarian agencies, development organizations, academia and private and financial sector actors. We focus on cross-cutting issues such as digital inclusion, advancing the humanitarian-development nexus and climate change and sustainable financial inclusion. By sharing experiences, data and lessons learned, we aim to help the sector make progress along the Roadmap to the Sustainable and Responsible Financial Inclusion of FDPs (2019). 

From emergency response to long-term inclusion

Breaking down silos across stakeholders and enhancing coordination is critical to leveraging progress, particularly in situations of protracted displacement. For more impactful work, a sustainable approach to financial inclusion is needed, covering each stage of displacement from emergency response to long-term inclusion. Integrating FDPs into the financial system helps them regain their independence and dignity, while also representing a business opportunity for FSPs and boosting the economy of their host communities.

For more information about the CoP on Financial Inclusion of FDPs, please contact daria.fiodorov@rescue.org.