Micro-finance in refugee contexts: current scholarship and research gaps

Strengthening refugees’ livelihoods and supporting their economic self-reliance is one of the most pressing and daunting challenges in the forced migration arena. Most refugees are obliged to become ‘entrepreneurs’ due to the dearth of formal employment opportunities in their place of asylum, underscoring the importance of financial assets (Jacobsen 2005). UNHCR (2011a) recognises that access to financial capital is a vital element in the pursuit of self-reliance for refugees and highlights the crucial role of micro-finance in providing access to credit and loans for refugees, who are usually excluded from mainstream financial services. Compared to more conventional humanitarian hand-outs, the provision of financial services to refugees is viewed as a more dignified way of assisting displaced populations, and one that empowers people to engage in their own income-generation activities (Azorbo 2011). Thus, the UN refugee agency now situates micro-finance as part of its comprehensive livelihood support strategy for refugees (UNHCR 2011a). The field of micro-finance and poverty reduction has generated a substantial body of knowledge and best practices for the design, implementation and assessment of micro-credit and other loan programmes. However, developing successful micro-finance interventions for refugees necessitates a reflection on the specific characteristics and situations of refugee populations (Nourse 2004). Although literature on micro-finance in international development has been well-developed, little is known of the success and failure of these financial programmes for refugee populations (Bagula 2011). Furthermore, despite the widespread use of financial terminology in the field of forced migration, the actual conditions that enable entrepreneurs – refugee and otherwise – to successfully form enterprises have been largely ignored in development literature, including in field manuals for practitioners. Against this backdrop, this paper surveys the existing literature on the use of micro-finance with refugee populations in the Global South and identifies some gaps in current scholarship. Both authors have worked as researchers and practitioners in forced migration and possess extensive experience running and evaluating micro-finance programmes for refugee populations in the Global South. Thus, the paper also draws upon our personal observations and field experiences regarding micro-finance assistance.