Advancing access to financial services for refugees (Part I): Opening

  • Davide FORCELLA, CoopMed
  • Alia Farhat, AL MAJMOUA, Lebanon

    Micol PISTELLI explained the structure of the sessions on advancing access to financial services for refugees, moving from an introduction session, to panels on entrepreneurship support (Part I), to FSP funding and digital solutions (Part II). 

    She presented the state of practice on financial inclusion of refugees, with UNHCR data showing 44,000 new displacements per day and a total 68.5 million forcibly displaced people worldwide, including 25.4 million refugees, 40 million internally displaced people (IDR) and 3 million asylum seekers. Main source countries of refugees are Syria, Afghanistan, South Sudan and Myanmar, while 2018 will bring Venezuela to the forefront. 85% of refugees are hosted in developing countries, in particular Turkey, Northern Sudan, Lebanon, Pakistan and Uganda. 

    She referenced the 2016 New York Declaration for Refugees and Migrants, where states committed to “a more equitable sharing of the burden and responsibility for hosting and supporting the world’s refugees.” A key objective is enhancing refugee self-reliance which also relates to ensuring access to appropriate financial services. Pistelli showed an inclusion pathway, where interventions around services and rules and regulations come together to overcome challenges around access to work, information and services, vulnerability, xenophobia, freedom of movement and poverty in host communities. This pathway requires partnerships, where UNHCR leverages its connection to, and knowledge, of refugee communities with FSP partner funding, technical expertise, technology and scale. 

    In term of emerging best practices, Pistelli mentioned direct engagement of financial service providers with refugees in order to raise awareness and overcome misconceptions, research which shows refugee repayment rates similar to non-refugees, and high impact partnerships for financial and non-financial services. Digital technologies also have potential to improve access. 

    Davide FORCELLA showed first results of EIB-funded research on the use, the impact in terms of inclusion, food security and livelihoods and the business case of providing credit to refugees. The research focused on a diverse group of long-established Syrian refugees in Lebanon who are clients of the MFI, Al Majmoua. He stressed their low financial inclusion. This made them highly fragile and conditioned their use of credit. The method used focused on reconstructing refugee livelihoods, determining what credit they received and how they used it, identifying what changes this brought, and how they perceived the use of credit. It showed that refugees can manage credit and that credit contributed to their financial inclusion and resilience. Most credit was used to meet urgent needs in terms of food consumption, housing and health. In general, livelihood and income results were positive while they remained stable across various social indicators. 

    Alia FARHAT explained that her MFI, Al Majmoua, was the first to serve refugees in the MENA region, and now serves 8,000 refugees, constituting 10% of the client base. She stressed that refugees place a heavy burden on Lebanon, accounting for one out of four inhabitants. Serving this population with financial and non-financial services was a strategic decision. It closely relates to the MFI’s social mission and was based on two assumptions: that access to credit enhances refugee livelihoods and resilience and that this would be a good business case for the MFI. Not only the preliminary results of the study validated both the business case in terms of Portfolio At Risk (PAR) and repayments, but also they were better than expected in terms of livelihood outcomes. While the general conditions of Syrian refugees in Lebanon deteriorated, the situation of their clients improved in terms of access to food and indebtedness. She called for the establishment of a platform to share best practices, experiences and research.