A new report by Financial Sector Deepening (FSD) Uganda and Africa in partnership with Bankable Frontier Associates has revealed there is an increase in keeping of cash at home as refugees seek easy access to money despite the growth of phone ownership which supports mobile money transactions.
Presenting the findings during the launch of the report at Sheraton Hotel in Kampala, the BFA Global Country Manager- Kenya, Michelle Hassan said the study done 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 per cent higher among female refugees compared to men.
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.
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 the 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, disclosed the research on refugees’ financial lives and their uptake of different financial products have proven they are a viable and bankable segment. And they look forward to seeing stakeholders in the financial and humanitarian ecosystem applying the insights provided to help displaced communities rebuild their lives
“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.”
The Commissioner for Refugees in the Office of the Prime Minister, Douglas Asiimwe welcomed the report and promised to put the recommendations in practice.
“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.”
In their joint communication, FSD Africa, FSD Uganda, and BFA Global recommended an urgent need to improve access to formal financial services because agency banking was found to be low which limited the use of formal financial services. Most agents are stationed at the administrative centre which is far from some of the refugees.
They also recommended 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, they recommended renewable energy solutions for lighting and cooking and upskilling for economic self-sufficiency.
Some of the findings from the research include:
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 per cent. This ranged from tailoring and selling vegetables to running restaurants, bars, or wholesale businesses. Just under half of the respondents (41 per cent) depended on agricultural income, 28 per cent were casually employed and 7 per cent 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 per cent 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 per cent. The rise can further be attributed to the Covid 19 pandemic which drove the preference for digital means.
Health: The majority of refugees kept money at home to cater for medical emergencies and for buying medication. Just over half, (55 per cent) 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.
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