Over the last few decades, micro-finance has gained a notable reputation amongst donors, policy-makers, and practitioners in international development for its ability to help low-income entrepreneurs expand their economic activities and opportunities. In theory, micro-finance should be able to offer the same possibility to forced migrants. However, a new RSC Working Paper published this week, which reviews the use of micro-finance with refugee populations in the Global South, highlights the specific difficulties of designing and implementing suitable financial services for these populations.
That said, as authors Evan Easton-Calabria and Naohiko Omata state in the paper, “it is important to recognise that, along with the limited number of effective micro-finance programmes, refugees are developing and implementing their own finance mechanisms to pursue their independent livelihoods and economic self-reliance. The financial mechanisms devised and employed by refugees often operate under the radar and therefore very few studies have systematically looked into these bottom-up finance structures… These refugee-led initiatives could serve as potential sources of broader micro-finance programmes.”
While micro-finance is not a solution to all the challenges that refugees in protracted situations face economically, it can make a useful contribution to increasing their self-reliance if designed and implemented well.
Read the working paper here: Micro-finance in refugee contexts: current scholarship and research gaps