Financial Education, Digital Finance, and Refugees

  • September 19, 2017

  • Dar es Salaam, Tanzania

UNCDF MicroLead Financial Service Provider partners have developed and built linkages with informal savings groups (SGs) in Africa, reaching 900,000 group members with formal financial services over the past four years. In many instances, MicroLead utilized digital financial services and education to reach these groups, which are predominantly made up of rural women smallholder farmers.

Leveraging off MicroLead’s experiences and lessons learnt, UNCDF Tanzania has developed a pilot programme to extend financial services to refugees via SGs, digital finance and financial education. Below is a report from MicroLead intern Maren Castro-Villagrana, who traveled to western Tanzania to understand the financial needs of refugees from DRC and Burundi and then helped to develop our newest programme on financial inclusion of refugees.

This summer, I worked as a Programme Development intern for UNCDF in Tanzania. UNCDF’s aim was to get a programme for financial inclusion of refugees piloted by the end of 2017. This pilot programme will expand access to finance for refugees through savings groups, digital and financial education and advocacy. After months of research, in August, I had the opportunity to visit Nyarugusu refugee camp as part of a research mission to understand what the key stakeholders and partners wanted to get out of the programme we were designing. At the time, UNCDF and Fundación Capital were exploring the possibility of partnering on the financial education and digital literacy part of the programme, so Fundación Capital offered to lend us a few tablets with their financial education application so we could try it out with refugees.

With a population of 142,000 people, Nyarugusu is the biggest refugee camp in Tanzania, and the third largest in the world. It hosts both Congolese and Burundian refugees, some of whom have lived in the camp for over 20 years. In Tanzania, refugees are not allowed to leave the camp or be employed. However, they are allowed to work either for NGOs and Government departments or by starting their own business inside the camp. Nyarugusu is run by UNHCR , which does a great job of coordinating all the different programmes inside the camp. Most programmes are focused on humanitarian assistance, for example WFP (World Food Program) distributes five staple foods, and refugees get free access to health care (from the Tanzanian Red Cross), education (from IRC) and a determined quantity of water (from UNHCR). But it is hard to imagine anyone spending 20 years eating the same five things every day.

In response, many refugees have found ways to start small businesses that give them extra income to complement their food intake. These small incomes, which can range anywhere from a few cents to up to 30 US dollars a month, are mostly used to buy lake fish. They also use the funds to buy clothes, shoes, household tools, or school supplies for their children and credit for their phones, to communicate with friends and relatives in their home country or with other people inside the camp. Many organizations, UNCDF included, have picked up on the importance of implementing developmental programmes to complement humanitarian assistance and thus positively impact refugees’ livelihoods, making them more resilient.

During our time at the camp, we led focus group discussions with refugees and interviewed staff of UN agencies and other organizations currently working inside the camp. We found that refugees are not only resilient, but ingenious and hard-working. For example, Meshack is a 21-year old Congolese refugee who has been in Nyarugusu for 20 years.

When he finished high school, he realized he had no possibilities of continuing to higher education or getting into the formal job market. But he did not want to sit idle at home, so he started looking for other options. He first started selling part of his food ration – whatever he earned from these sales, he would save inside a jar at home, until he’d saved enough to buy shares in an informal SG. At the same time, he started taking tailoring classes in the vocational training center inside the camp. When it was his turn to receive the money from his SG, he invested in a sewing machine and began making and selling clothes. Now Meshack sells inside the camp and has also expanded his client-base to include people from the host community through a “common market” at the border of the camp that is visited by both locals and refugees. Meshack has increased his monthly income enough that he can afford to buy non-staple foods such as vegetables and fish, increasing his food consumption to two meals a day compared to the camp average of one meal per day.

Meshack and nine of his friends talked to us about what it was like growing up in a refugee camp, how they had all found a way to be economically active and how that had opened up doors to an increased quality of life by letting them afford things such as mattresses, vegetables and warm clothes for the winter. However, they often worry that a bad decision in their business or spending could have lasting repercussions for them and their families. So when we showed them the Fundación Capital tablet, they loved its financial education application. They crowded around the tablet and discussed what the best possible answer was to the predicaments faced by the businesswoman in the story who was trying to save money. Most of them mentioned how important it was that the content was relatable, and they could keep up with the financial lessons without getting bored.

Peter, who works as an Education Officer for IRC and has to constantly move around the 28-square kilometer camp, mentioned that the application had given him the idea of saving a little each week so that he could one day have enough to buy a used bicycle for his work. Others called to our attention the importance of the tablet being portable, as it would allow people, especially women with children, who live far away from the community centers, to access the content. At the end, they emphasized that they felt it would be a great tool to help them when they made financial or business-related decisions and asked us where they could get it and if they would be able to also download it into their phone. We showed it to two more focus groups and received similar positive reactions; it was definitely the highlight of the discussion as well as a nice break from the refugees’ everyday lives.

About MicroLead

MicroLead is a UNCDF-managed global initiative challenging regulated FSPs to develop and roll-out deposit services which respond to the rural vacuum of services. With the generous support of the Bill & Melinda Gates Foundation, The MasterCard Foundation and the LIFT Fund in Myanmar, MicroLead works with a variety of FSPs and technical service providers to reach rural markets, particularly women, with demand-driven, responsibly priced products offered via alternative delivery channels such as rural agents, mobile phones, roving agents, point of sales devices and group linkages. This is combined with financial education, so customers not only have access but can effectively use quality services.

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