(Loan) cycles of innovation: researching refugee-run micro-finance
Robert Hakiza, Evan Easton-Calabria
Refugees across the global South are increasingly choosing to venture into cities rather than staying in camps. Currently, approximately half of the global refugee population now lives and pursues their livelihoods in non-camp settings. Increasingly, these urban refugees are undertaking their own entrepreneurial initiatives, often in sectors in which they have no prior experience. Most also lack access to the micro-loans that could help them start businesses. Few refugee-serving organisations have comprehensive loan programmes, and micro-finance institutions (MFIs) rarely target refugees as beneficiaries. Lack of legal status often prohibits refugees from becoming MFI clients or opening bank accounts in host countries, and lenders’ fears of refugees leaving the host country increase uncertainty about loan repayments and sources of collateral. Refugees in receipt of free assistance have sometimes perceived loans as handouts, and may not have adequate community or other support to successfully repay loans. Despite these obstacles, and the fact that the majority of urban refugees survive without institutional assistance, little research exists on whether and how they access micro-finance. In particular, refugees’ own micro-savings and micro-lending groups (termed here refugee-run micro-finance) have not been comprehensively researched. This means that, despite an awareness of these groups, there is no real understanding of how they operate within communities, how they interact (if at all) with outside capital providers and the main challenges they face. Our research project, funded by the Humanitarian Innovation Fund (HIF), aims to illuminate not only the current state of micro-finance for urban refugees but also how refugees’ own communities and networks can act as sites of innovation for bottom-up micro-finance programmes. We are currently mapping existing initiatives and programmes in Kampala, and have already identified 25 refugee-run micro-finance programmes. Our work aims to expand upon the existing micro-finance structures refugees have created within their own communities, and to learn how these could be linked to MFIs (both Ugandan banks and MFIs and international non-profit lenders such as Kiva). We aim to provide evidence-driven recommendations for micro-finance providers and develop a model that builds on refugee-run micro-finance initiatives. In this way, we hope to provide avenues for urban refugees to directly access capital. To do this, various questions must be more comprehensively answered. What degree of access to financial tools is available to refugees? From a lender’s point of view, what conditions would enable refugees’ access to micro-finance? Are refugee- run micro-loans and micro-savings groups successful and, if so, how could these be expanded?