Sustainable Development

Here’s how community lending could help refugees find their feet

A man works at a sweet shop at the main market in Al Zaatari refugee camp outside the city of Mafraq in Jordan, near the border with Syria, July 17, 2017. Picture taken July 17, 2017. REUTERS/Darrin Zammit Lupi - RC13BA636B30

Encouraging enterprise and providing access to funds can help refugees achieve financial independence. Image: REUTERS/Darrin Zammit Lupi

Rya G. Kuewor
Executive Director, RIO
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Entrepreneurship is often proposed as the ideal way for refugees to achieve financial independence; while others say savings and lending services is the key. The ideal solution may, in fact, be a blend of those two approaches working in tandem.

Apart from political and policy complications from certain refugee host nations, geographical restrictions, or the lack of adequate infrastructure, one major roadblock to helping refugees become economically independent is the dependency on aid, especially in the form of refugee camps, which incorporate services that meet refugee needs and are usually funded by large organizations and governments.

Aid and the refugee camp structure is not a sustainable method of financial inclusion or integration. It was meant as a short-term solution until refugees could return to their countries of origin. Refugee and displacement issues are not getting better; they are on the rise, and more innovative ways will be needed to cater for many of them as the process of receiving aid from donor organizations and governments is not the most suitable method.

Imagine a setting where aid that would originally have been spread across a refugee camp would be dedicated solely to the refugees who are children, elderly people, or those in need of medical attention – in short, refugees who are unable to work for tangible reasons. It would mean saving funds to be used to help such refugees in other settings.

The question now would be, how do we create a refugee community beyond aid – one that uses the remaining population of refugees who are well and willing to work?

In several situations, when we hear about refugees, the assumption is that they are naturally dependent because they have no skills. It is important to recall that refugees are people who had lives, jobs, and responsibilities before they became displaced. Thus, creating a refugee community beyond aid is not a reinvention of the wheel, as the solution has been implemented either in independent situations, in non-refugee settings, or on a much smaller scale.

The proof in numbers

To arrive at a place where this method is successful on a wider scale, simple assessments are necessary. We know from history and statistics that only a small percentage of refugees will return to their countries.

Kiva’s success with no-interest funds for refugees and Internally Displaced Persons (IDP). Image: Kiva

As a rule, not everyone who is able to work wants to do so. Not everyone will become an entrepreneur, and not everyone will work well with money on the condition of starting a business. In light of this, pre-programme assessments are important for successful applications. The assessments may include:

• Orientations to enable the creation of proper familiarity between supervisors, the host community, and projects.

• Grouping, which involves helping participants to settle into peer groups in which they feel comfortable. This is important because certain communities within refugee settings do not work well together.

• Idea-networking within the separate groups (taking market analysis of needs into account).

• Direct discussions on implementation with the refugees to ensure that ownership by the participants is installed and reiterated where necessary.

• And self-reflection exercises to ground the participants into their individual or group decisions. The grouping is important for accountability amongst each other.

The Windmill Refugee Loan Program, a character-based community lending programme that requires no collateral, is one such programme that has already had some success.

In countries where refugees are permanent or long-term residents, and where they have the right to work and own properties, for example, the blend of enterprise and access to low or no-interest funds would be appropriate as a more sustainable way to achieve financial independence.

Refugees who, by default, have come to be financially dependent, are feasible and tested candidates for this sort of trust and character-based funding because they seldom have collateral to submit for funding.

Mohammed Yunus and the crisis in Venezuela

Professor Mohammed Yunus and his Grameen Bank have a process to help people out of (extreme) poverty, which is also more effective than individual entrepreneurship or business training and self-funding.

Recently, due to the crash of the Venezuelan economy, 2.3 million Venezuelans – 7% of the population – according to UN estimates, have fled the country; most of them to neighbouring Colombia. What would the economic independence solutions be for these migrants who very well need to be fed, housed, and otherwise cared for, especially considering an estimated 4 million Venezuelans may live in Colombia by 2021?

The need for innovation and a different sort of thinking in this field of integration and economic development has become jarringly apparent. The interrelation between the 6.3 million Syrian refugees, the 2.4 million South Sudanese refugees, and the 2.3 million Venezuelan migrants, for example, is the fact that they are people who possess useful skills and need to be economically integrated.

As of 2017, the Global Trends Report from the UN refugee agency, the UNHCR, recorded an estimated 70.8 million forcibly displaced people, telling us that our solutions need to be able to reach more people faster. The graph below sheds more light on the number of displaced people from 2009 to 2018.

UNHCR Global Trends Report, 2018 Image: UNHCR

Implementing the fusion of micro-credit and business in applicable refugee and migrant settings would remove the burden of funding from refugee and migrant-focused organizations like the UNHCR and the International Organization for Migration, as well as governments.

The present go-to methods of camps, skills training, and small-scale donor funding for small numbers of refugees, or migrant initiatives for long-term or permanent residents, are no longer the most effective because of the terrible increase in displaced people around the world.

This “new” approach has already been piloted by the likes of the Grameen Bank, RIO (Refugee Integration Organisation), Kiva, and the Windmill Micro-Lending company. By exponentially implementing this, we would not be reinventing the wheel – we would simply be scaling up an already successful solution.

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