A new report released today has shown there is increased use of cash at home as refugees seek easy access to money in case of emergencies, despite the growth of phone ownership which supports mobile money transactions. According to the study, refugees found the use of cash convenient in responding to emergencies, especially those that are health related.
The study which sought to examine the financial strategies employed by refugees attributed increased phone ownership to the 2019 legislative changes which allowed refugees to access SIM cards in their names. Ownership of smartphones is 9% higher among female refugees compared to men.
In a statement, Douglas Asiimwe – Commissioner for Refugees in the Office of the Prime Minister in Uganda, said: “The seminal data created by the Financial Inclusion for Refugees (FI4R) initiative is critical for planning and delivering aid, creating insights about the demand for products and services from marginalized groups, and identifying new markets that the private sector, including financial service providers, can innovate for. The OPM is confident that the outcomes from FI4R serve as a call to action for both humanitarian actors and the financial sector community to explore ways to serve this population in a responsible and sustainable way”
The report dubbed, Rebuilding Livelihoods in Displacement, further revealed that while refugees have a wide range of income sources, self-employment remains one of the primary sources of income. However, proceeds from agriculture are on the rise with more people paying attention to the sector because of reduced food rations.
The joint report from FSD Africa, FSD Uganda, and BFA Global communicated an urgent need to improve access to formal financial services. Access to banking agents was found to be low which limited the use of formal financial services. Most agents are stationed at the administrative center which is far from some of the refugees.
With about 30 million refugees on the continent, the findings could provide insights for other refugee populations outside of Uganda.
The project partners (FSD Africa, FSD Uganda, and BFA Global) are recommending the development and refinement of financial products to cater to the needs of refugees. These could include branchless banking to make financial services more accessible and microinsurance for medical emergencies. Additionally, the partners recommend renewable energy solutions for lighting and cooking, and upskilling for economic self-sufficiency.
“Our research on refugees’ financial lives and their uptake of different financial products has proven they are a viable and bankable segment. We look forward to seeing stakeholders in the financial and humanitarian ecosystem applying the insights provided to help displaced communities rebuild their lives,” said Michelle Hassan, Principal Consultant and Kenya Country Manager, BFA Global.
Between 2019 and 2021, the researchers worked with refugees to detail their income and expenditure patterns and their coping strategies for financial shocks. Insights gathered from this research is expected to guide the project partners, beyond the life of the intervention, on the development of products and services offered to refugees. They will additionally be used to demonstrate the economic viability of the refugees while deepening and broadening access to and usage of financial services among refugee and host communities in Uganda.
Additional insights from the research are as follows:
Finance: There is the dominance of community organised savings and credit approaches through Rotating Savings and Credit Associations, and Accumulating Savings and Credit Associations. Households cut back their contributions to these groups during the COVID-19 pandemic due to reduced income. However, contributions have started to pick up now, especially since refugees need access to credit due to reduced food rations and cash-based transfers.
Income and livelihoods: Refugees in Uganda have a wide range of income sources. Several of the respondents relied on more than two income sources. The number of respondents that were engaged in some type of self-employment was 56%. This ranged from tailoring and selling vegetables to running restaurants, bars, or wholesale businesses. Just under half of the respondents (41%) depended on agricultural income, 28% were casually employed and 7% had regular employment.
Mobile phone usage: There has been an increase in the number of refugees owning or having access to mobile phones with mobile phone usage among female refugees increasing by 10% since 2019. This is largely because of recent changes in legislation for SIM registration in Uganda which allows refugees to buy and register SIM cards in their names. Mobile money usage has also increased by 32%. The rise can further be attributed to the Covid 19 pandemic which drove the preference for digital means.
Health: Majority of refugees kept money at home to cater for medical emergencies and for buying medication. Just over half, (55%) of the respondents purchased medication out of pocket.
By mapping the financial lives of refugees, the research aims to inform the financial services sector of the impact of financial services on refugee livelihoods in Uganda and highlight wider implications for related ecosystems.
Commenting on the report:
David Darkwa, Manager, Competitive Strategies, FSD Uganda, said: The two-year FI4R intervention has validated the effectiveness of key business approaches such as agency banking and digitized VSLAs in addressing the identity, distribution, and marketing challenges faced by financial service providers who wish to serve forcibly displaced community. We expect this seminal project to facilitate a coordinated entry of more actors into this space over the next few years.
Kuria Wanjau, Manager, Forcibly Displaced People, FSD Africa, said: “I am proud to note the efforts of various partners who are introducing customized products and adding extra features to existing products to formalise financial systems in the refugee settlements. Through enhanced collaborations, I do not doubt that these will scale to impact more populations in these areas.”
