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Today, Uganda is host to over 1.1 million refugees, most of whom are new arrivals from July 2016 as a result of instability in South Sudan. Uganda also has a progressive policy towards refugees allowing them to freely move, work, go to school and access healthcare. The refugee population also forms part of the country’s National Development Plan. According to 2018 figures from UNHCR and Office of the Prime Minister (OPM), refugees are economically active. A total of 45% are engaged in entrepreneurship or formal employment, 24% in farming, 15% receive remittances, and 6% receive assistance from UNHCR/WFP. Despite this, financial inclusion remains a challenge for the refugee population, with few financial service providers (FSPs) aware of or interested, preferring to focus on more traditional banking clients. As a result, most refugees are only able to access financial services through informal savings groups, SACCO linkage banking and mobile money. The limited new FSP activity that does exist tends to focus on mobile-enabled cash transfer services.

With support from us and building upon our work in Rwanda, FSD Uganda orchestrated a series of refugee-orientated engagements with the financial sector in Uganda in 2017 and 2018.

These included: a) December 2017 – a round table with FSPs to highlight the commercial and developmental opportunity of serving refugees, b)  April 2018 – a workshop on mapping the refugee customer journey with six banks and one telecom, and c) June 2018 – a residential design sprint in Kampala and Kyangwali refugee settlements to showcase the refugee finance opportunity first-hand. Six FSPs actively participated and prototyped products.

In November 2018, together with FSD Uganda, we invited proposals from financial institutions intent on extending their services to refugees and host communities in Uganda. This innovation competition received 32 applications from a mix of banks, MFIs and FinTechs. In October 2019, FSD Uganda and FSD Africa funded Equity Bank Uganda Limited (EBUL), VisionFund Uganda (VFU) and Rural Finance Initiative (RUFI) to start offering the following financial services to refugees and host communities.

Equity Bank will use learnings from Kenya, Rwanda and other jurisdictions in which it is present to provide refugees in Uganda with fully fledged bank accounts from which to access their humanitarian aid payments. They will issue each customer with a debit card. The account will be accessible through mobile phones using Equity’s EAZZY banking platform and agents. They will recruit some of the refugee businesses as agents. EBUL will set up their systems and processes to ease refugee verification, facilitate account opening and aid financial literacy. They will also set up the enabling infrastructure for cash outs by extending their existing agency banking network to the refugee settlements and host communities.

VisionFund Uganda will pilot a unique wholesale credit model within savings groups (SGs) in West Nile region. The model will access existing and stable NGO-supported SGs and leverage the repayment and share-out data from previous cycles to determine eligibility for additional loan capital. This way, VFU will boost the availability of credit for SG members, allowing them to invest in income generating activities (including agriculture, trade etc) to boost household incomes in refugee and host communities. VFU will also pilot its group credit guarantee product with host communities.

Rural Finance Initiative will digitise SG records in partnership with Grameen Foundation. They will then use this data to generate credit scores which RUFI will use to lend to the groups. The data will also potentially be useful to other financial institutions that would target the SGs. Other than SGs, RUFI will also target entrepreneurs engaged in business or agriculture to advance loans. This will mainly target young people and women. They will also train and mentor them as part of enterprise development. Lastly, as an agent of Centenary Bank, RUFI will provide SGs with a savings product where they can save excess cash in the group into a bank account instead of having it in a cash box which is risky.

In addition to the 3 financial service provider partners, the project identified BFA Global as the research and learning partner. BFA Global will work closely with the 3 FSPs as they begin to pilot their products and services. They will study the households that take up these products and services to better understand how these services might change their lives compared to other financial services they have been using. A baseline survey was undertaken in January 2020 that provided detailed information about the income, expenses, and financial management of refugees in Uganda which compares their current status with their lives prior to leaving their countries of origin and their journeys to Uganda. This research forms a solid foundation for four rounds of financial diaries collection which will be followed by learning partner/feedback to the FSPs.

The preliminary results of the baseline survey can be accessed below.