Following nearly a year of limited direct access to the lives of the vulnerable people who are the subject of his research, Prof. <a href="https://wagner.nyu.edu/community/faculty/jonathan-j-morduch" target="_blank" rel="noopener noreferrer">Jonathan Morduch</a> -- economist, co-founder of the <a href="https://www.financialaccess.org/" target="_blank" rel="noopener noreferrer">Financial Access Initiative</a> (FAI), scholar of the lives of the poor and <a href="https://centerforfinancialinclusion.org/about/advisory-council/" target="_blank" rel="noopener noreferrer">CFI Advisory Council</a> member – has been working beside a white-hot forge of projects, continuing to help shape the global body of knowledge about the lives that inclusive finance seeks to improve.

“It’s been a very busy time, even though we haven’t been able to do what we really want to do, which is being in the field: doing surveys, doing research, getting to know people and better understand problems.”

For Prof. Morduch and his <a href="https://www.financialaccess.org/about" target="_blank" rel="noopener noreferrer">team</a>, co-led by Timothy Ogden, that’s meant building partnerships and assembling teams for four different projects focusing on people from a range of backgrounds: from ultra-poor workers migrating to Dhaka from northwest Bangladesh, to families in Compton, California, struggling in a pandemic-scarred economy.
<h2>Small Firm Diaries: Applying the “Portfolios” Model</h2>
Perhaps the most visible of these so far is the <a href="https://www.smallfirmdiaries.org/" target="_blank" rel="noopener noreferrer">Small Firm Diaries</a> project. Morduch, co-author of “<a href="https://www.amazon.com/Portfolios-Poor-How-Worlds-Live/dp/0691148198" target="_blank" rel="noopener noreferrer">Portfolios of the Poor</a>” and <a href="https://www.usfinancialdiaries.org/" target="_blank" rel="noopener noreferrer">U.S. Financial Diaries</a>, is part of a team that will apply the financial diaries model -- collecting data from hundreds of poor households frequently and regularly over a long period of time (at least a year) -- to firms with 1 to 20 employees, in contrast to CFI’s <a href="https://centerforfinancialinclusion.org/covid-19-and-msmes-data-and-analysis-to-understand-impact/" target="_blank" rel="noopener noreferrer">research</a> on MSMEs, which has been focused on collecting and analyzing survey data on COVID-19's impact on the financial health of owners of a broader range of business sizes.

“There’s a lot of great research available on small firms from different angles – liquidity, gender, how they use digital services... The diaries instead present a chance to look at firms holistically, without imposing a particular agenda from the start. The diaries are a way to understand the lives of firms and whom they employ, whom they serve – and whom they are served by – and try to understand them on their own terms.”
<blockquote>The diaries present a chance to look at firms holistically, without imposing a particular agenda from the start.</blockquote>
With financial support from the Mastercard Center for Inclusive Growth, the Bill &amp; Melinda Gates Foundation, and the Argidius Foundation, the team will collect data for one year from firms in Colombia, Fiji, Indonesia, Kenya, Ethiopia, Uganda and Nigeria. In addition to following cash flows, the researchers will also complete qualitative interviews in roughly 100 households per country from a variety of sectors.
<h2>From South Asian Cities: Researching Digital Remittances Back Home</h2>
A second project Prof. Morduch is leading is digitally connected and builds on a <a href="https://www.aeaweb.org/articles?id=10.1257/app.20190067" target="_blank" rel="noopener noreferrer">pilot in Bangladesh</a> that connected ultra-poor families – whose working-aged children were employed mostly in garment factories in Dhaka and who were largely excluded from technology -- with digital networks to send money home easily. This pilot intervention revealed a 25 percent boost in money going to home villages; the team also found that consumption was smoothed during the lean season and increased overall. The project was spearheaded to fill a knowledge gap in the impact of domestic remittances. Beyond the numbers, it has also changed the way Prof. Morduch has viewed microfinance interventions, which have traditionally been about bringing resources like microcredit to grow businesses in villages.

“This project shows other ways to improve rural conditions. One is to make it easier for younger people to move to cities where they can be more productive and earn higher wages. What about the people who are left behind in rural areas? They can benefit if migrants have reliable ways to send money home.” In addition to introducing the technology to urban migrants and their rural families, the team translated the digital interfaces (which were mostly in English) and gave users hands-on experience. The initial result? Active use of the product went from 20 percent to 70 percent.

The team hypothesized that urban-to-rural remittances would become more frequent as a result of the digital ease of transacting. Surprisingly, the frequency remained largely the same, but the amounts grew.

While the financial and usage results were positive, the treatment group of migrants reported worsened physical and emotional health. The team suspects that migrants started working longer hours as expectations to remit were increased by the digital technology.
<blockquote class="pullquote--left">The team suspects that migrants started working longer hours as expectations to remit were increased by the digital technology.</blockquote>
“It’s a reminder that digital financial services can disrupt social relationships. All of a sudden, migrants are available to their families all the time, both to talk and to send money. This changes how we go through life. These technologies can be powerful, but they disturb a social balance.”

With support from the Bill &amp; Melinda Gates Foundation, the team will replicate the work in six other sites in India, Pakistan and Bangladesh.
<h2>To the Homes of Compton: A Guaranteed-Income RCT</h2>
Prof. Morduch is also part of a group that’s working on a guaranteed-income randomized control trial in Compton, California, involving several hundred families whose incomes are below twice the U.S. poverty line. The purpose of this RCT is to test a premise about <a href="https://www.youtube.com/watch?v=Yw4jRO5rYf8" target="_blank" rel="noopener noreferrer">being poor and facing instability</a>: while financial services’ role in smoothing consumption via saving and borrowing is critical, the poor also need a “<a href="https://www.microsave.net/files/pdf/BN_13_Money_Managers_The_Poor_and_Their_Savings.pdf" target="_blank" rel="noopener noreferrer">usefully large sum</a>” from time to time.

As Morduch says, families need to both “smooth” and “spike” during the year.

“These are different savings problems. We tend to focus on smoothing, but both smoothing and spiking are really hard for poorer households, and they call for different solutions.” So for the duration of the experiment, some families will get a check every couple of weeks (smoothing), and another group will get a larger disbursement of funds less frequently, which Prof. Morduch and his collaborators hope will allow them to support important purchases.

Morduch points out that even though the U.S. has the Earned Income Tax Credit (a <em>de facto</em> lump sum payment in the form of a tax refund) and programs -- like SNAP -- to support food purchases for low-income families (a smoothing mechanism), “we never really step back and think about them as financial mechanisms, and that’s what the Compton project is all about.”

Indeed, thinking about stability’s role has been a common theme throughout his planning and executing of projects. “One of the great inequalities in life is that people who have better paying jobs also have more stable jobs. People who earn the least have the least protection and stability.”
<blockquote class="pullquote--right">"People who have better paying jobs also have more stable jobs. People who earn the least have the least protection and stability.”</blockquote>
With that instability and seasonality of employment for the poor, there needs to be more frequent measurements to understand poverty, be them quarterly, or monthly, as opposed to yearly. And the kind of instabilities we saw in "Portfolios of the Poor" are also faced by American workers as the power of labor (i.e., declining unions, <a href="https://www.investopedia.com/terms/m/monopsony.asp" target="_blank" rel="noopener noreferrer">monosponies</a>) falls away, Morduch points out. The Compton project could help inform ways to better collect data frequently.
<h2>A New Primer on Financial Inclusion</h2>
As if that weren’t enough to keep them busy, a new book is also in the works. "Financial Inclusion: What Everyone Needs to Know," by Prof. Morduch and Ogden, will be an explainer organized in Q &amp; A form, a chance for the pair to “pull together ideas and evidence that we talk about all the time, but that may be new to readers.” Prof. Morduch pointed out that while organizations like CFI implicitly explain topics by offering solutions, a book that explains the problems for a broader audience will help advance financial inclusion objectives even more. The book is slated for fall 2021 release.
<h2>CFI’s Strategic Shift</h2>
In some ways, Prof. Morduch’s strategizing and planning is similar to that undertaken by CFI, for whom he has advised for many years. And the excitement is shared.

“CFI’s strategic priorities show an organization that’s truly looking forward, while also looking back. CFI is not losing sight of unfinished agendas in women’s financial inclusion and consumer protection while looking forward to challenges like climate risk, where there doesn’t yet exist a well-formulated agenda.”
<blockquote>"CFI is not losing sight of unfinished agendas in women’s financial inclusion and consumer protection while looking forward to challenges like climate risk, where there doesn’t yet exist a well-formulated agenda.”</blockquote>
For the latter topic, Morduch urges CFI to make it clear why climate risk is important for people concerned with financial inclusion. “If everyone worried about finance also understands why they should get excited about climate risk, then they will follow CFI, and they will push CFI to push harder, and I am excited about that possibility.”
<h2>Wanted: Closer Public Sector Involvement</h2>
Whether it’s CFI, FAI or other organizations advocating for inclusive finance, Morduch believes that public sector interventions need more prominence.

“The microfinance ethos, in some sense, got us off on the wrong foot. It seemed very anti-government in the beginning -- a private sector intervention. Politically, that was aligned with the moment, but it cut off important conversations. Instead of minimizing connections to public action, financial inclusion should be coming alongside steps by governments to support citizens. That’s one of the great omissions of the financial inclusion conversation: it has been too optimistic about the power of finance alone to address inequality.”

We at CFI agree that the conversation must go beyond private sector interventions: “How are public policy, social safety nets, systemic discrimination or other underlying issues influencing people’s financial health circumstances?” Mayada El-Zoghbi, CFI Managing Director, <a href="https://centerforfinancialinclusion.org/covid-19-reveals-the-limits-of-individual-action-and-market-based-solutions/" target="_blank" rel="noopener noreferrer">asked</a> readers of this blog last June.

And we’re looking forward to learning and comparing what we’ve discovered.

Prof. Jonathan Morduch’s Four New Projects

Bangladesh

South Asia

Colombia

Latin America and The Caribbean

Ethiopia

Sub-Saharan Africa

Fiji

East Asia and Pacific

India

Kenya

Nigeria

North America

Pakistan

Uganda

United States

Advisory Council Spotlight

Behavioral Insights

Financial Capability

Enabling Environment

Entrepreneurs of MSMEs

Underserved Groups

Financial Health

Payments

Policy, Regulation and Government Initiatives

Refugees and Migrants

Remittances

Saving

Blog Post

In recent years, practitioners have touted the link between migration and technology for increasing financial inclusion, <a href="https://reliefweb.int/report/world/role-technology-addressing-global-migration-crisis#:~:text=When%20refugees%20and%20IDPs%20use,their%20autonomy%20and%20self%2Dreliance.&amp;text=New%20digital%20platforms%20connect%20displaced,greater%20capacity%20to%20support%20themselves." target="_blank" rel="noopener noreferrer">integration</a>, and livelihoods support. Migrants themselves have developed applications to support integration, in what some call the “<a href="https://www.weforum.org/agenda/2018/12/social-media-is-casting-a-dark-shadow-over-migration/" target="_blank" rel="noopener noreferrer">app-ification of migration</a>” or “migrant tech.” Humanitarian and development agencies have <a href="https://oxfamilibrary.openrepository.com/bitstream/handle/10546/558591/rr-new-technologies-cash-transfer-010111-en.pdf?sequence=6&amp;isAllowed=y" target="_blank" rel="noopener noreferrer">helmed the push for migrant tech</a>, especially with regard to mobile cash transfers.

Also stepping into the “technology gap” — perceived or real — are developers, who create applications for <a href="https://techcrunch.com/2018/10/27/here-are-25-of-the-most-innovative-new-projects-using-tech-to-help-refugees-and-ngos/?guccounter=1" target="_blank" rel="noopener noreferrer">every use under the sun</a>: <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf" target="_blank" rel="noopener noreferrer">returnee integration</a>, mobile “game-ified” bilingual education, <a href="https://www.elrha.org/project/mobile-tech-gbv-syrian-adolescent/" target="_blank" rel="noopener noreferrer">gender-based violence prevention</a>. The International Organization for Migration (IOM) recently joined the game with its <a href="https://www.iom.int/migapp" target="_blank" rel="noopener noreferrer">MigApp</a>, which provides information, a money transfer service, and translation. Governments and organizations like the <a href="https://www.oecd.org/migration/mig/migration-strategic-foresight.pdf" target="_blank" rel="noopener noreferrer">OECD</a> have been quick to laud such interventions as efforts to make humanitarian aid future ready.
<blockquote class="pullquote--right">The most useful digital tools for migrants are not migrant tech at all.</blockquote>
Few doubt that mobile technology occupies a key role in migrant life. Yet our research with migrants in Quito, Ecuador, suggests that in spite of efforts to “app-ify” migrant integration, the most useful digital tools for migrants are not migrant tech at all. Instead, migrants take off-the-shelf applications such as WhatsApp and flex them to fit their needs.
<h2>The “WhatsApp Bank": Stories from Migrants in Quito</h2>
In Quito, the “Bangladeshi Club” meets once a week, rotating through different Bangladeshi restaurants. Only about 25 Bangladeshi migrants live in the city, so it is easy to stay in touch. They take advantage of a WhatsApp group chat to coordinate their weekly meetings where, between food and conversation, everyone has the chance to benefit from a communal fund. Each week all members contribute to the fund and should anyone fall on hard times, they can petition the club for a loan.

Formal financial inclusion is unavailable to many migrants in the Ecuadorian capital, not just ones from Bangladesh. As of 2016, the country had among the <a href="https://www.afi-global.org/sites/default/files/publications/2019-07/AFI_FILAC_SP_AW_digital.pdf" target="_blank" rel="noopener noreferrer">lowest number of users of mobile money</a> services in Latin America. The dearth of reliable and robust digital financial services (DFS) in Ecuador pushes migrants to adapt.

Nowhere was the inventive use of WhatsApp clearer than among Venezuelan migrants in need of remittance services. Runaway inflation in Venezuela, coupled with tight DFS regulations in Ecuador, encourages creative thinking among migrants hoping to send money home. Remittances to Venezuela take three forms: in-kind, cash, or via wire or bank transfer. Migrants least preferred the latter option. Due to severe inflation and perceived corruption in Venezuela, money transferred to Venezuelan banks immediately loses value. Thus, alternative options that rely heavily on WhatsApp, and whose legality might be in question, have gained traction.

In one typical example, a Venezuelan migrant wishing to send remittances will connect with a Colombian runner through WhatsApp word-of-mouth networks. Over WhatsApp, the migrant tells the runner how much they would like to remit. The runner responds with a price for services rendered, plus extra for the border bribe they will certainly pay. The migrant then wires money to the runner in Colombia, who performs one of two actions: withdraw cash or buy goods.

In the first scenario, the runner takes out cash and smuggles it into Venezuela. They then transport the package to the intended recipient. In the second, more common case, the runner uses the remittance money to purchase essential goods in Colombia. They then ferry the goods across the border or tap agent networks to make the delivery. In both cases, WhatsApp plays an essential role.
<blockquote class="pullquote--left">WhatsApp supports business growth, marketing, and development for migrants in Ecuador.</blockquote>
WhatsApp also supports business growth, marketing, and development for migrants in Ecuador. Venezuelan migrant Rosa operates her direct-to-order Venezuelan restaurant via WhatsApp. Her clients communicate their home-country cravings directly to her, and Rosa shops for the ingredients and prepares the meals made-to-order. In this way, she fills a very specific community niche and has built a loyal base of clients who depend upon her customizable Venezuelan food. WhatsApp enabled her business to boom.
<h2><strong>What's Next?</strong></h2>
The centrality of WhatsApp to migrant social and economic life in Quito begs the question: Is it really necessary to “app-ify” migration?

Our research offers a simple response: no. This thinking aligns with a small but growing chorus of concerned researchers. A <a href="https://www.rand.org/pubs/research_reports/RR4322.html" target="_blank" rel="noopener noreferrer">RAND Corporation study</a> of refugee technology use in the Middle East and Greece confirms that migrants rely “mainly on mainstream technology developed for more general audiences,” and concludes that the influx of applications and “innovations” is simply “too much.” In the Mediterranean, research at <a href="https://sites.tufts.edu/journeysproject/the-financial-journey-of-refugees-evidence-from-greece-jordan-and-turkey/" target="_blank" rel="noopener noreferrer">The Fletcher School of Law and Diplomacy confirmed</a> those findings. Migrants frequently deployed applications used for maps, currency conversion, language translation, and weather. Notably, none of these applications were created specifically for migrants.

The RAND researchers recommend that humanitarian and development agencies invest more in working within mainstream platforms and less on developing niche products. This includes removing access barriers, scaling internet connectivity, managing data privacy, promoting digital literacy, and improving mobile phone penetration. These are all productive activities that agencies can do—and already do well. Why reinvent the wheel when already-popular migrant platforms exist? Our answer: don’t.

Migrants are the ultimate connectors. They have been using technology for years and will continue to do so, but in their own way and at their own pace. Humanitarian agencies claim that new technologies strengthen migrant autonomy, yet community-developed online systems already lend migrants voice.

Technology will continue to transform how migrants work, move, and connect. No doubt, off-the-shelf technology has made migration a bit more straightforward. Our job as humanitarians is not to invent new technology. Our job, on behalf of migrants, is to help existing technology go the distance. Let’s get to work.

There’s (Not) an App for That: Taking a Hard Look at the “App-ification” of Migration

Ecuador

As it has done to much of the world, COVID-19 has shaken India and created a public health crisis that is testing the state’s capacity for emergency response. This response, in part, includes an 8-week, nation-wide lockdown. Soon after the lockdown was announced, India started to witness huge <a href="https://news.un.org/en/story/2020/04/1060922">migratory flows</a> from several cities.

Early estimates from the <a href="https://www.livemint.com/news/india/covid-19-lockdown-impact-unemployment-rate-rises-to-23-4/amp-11586202041180.html">Center for Monitoring India’s Economy</a>’s weekly tracker indicate that there has been a steep rise in the unemployment rate, with the overall rate rising to 23.4 percent and urban unemployment clocking in at over 30 percent. Coupled with a resource crunch, this has added to the migrants’ woes following the lockdown announcement. This has, in turn, lead to an exodus of migrant labor, particularly to the northern states of Uttar Pradesh and Bihar. While reverse migration of this nature is quite common during the annual harvest season, the current surge is a consequence of the lockdown, which has left the migrants worried, fearing a loss in livelihoods and a disruption to their income.
<blockquote>Migrant workers have been severely impacted by the lockdown and restrictions on their mobility.</blockquote>
Additionally, migrant workers – who constitute a <a href="https://www.livemint.com/Politics/8WPPsZygqR7Mu6e3Fgy55N/A-million-migrations-Journeys-in-search-of-jobs.html">significant chunk</a> of the labor force in India – have been severely impacted by the lockdown and the accompanying restrictions on their mobility. Loss of livelihoods, uncertain job prospects post-lockdown, and an arrested income flow have affected both migrants and their households who rely on these remittances.
<h2>Government Measures to Help Vulnerable Groups, Including Migrants</h2>
Thirty-six hours after the lockdown announcement, the finance minister announced a relief package worth $24.4 billion and accompanying measures to help alleviate the adverse impact on the most vulnerable segments of the population. Foremost among these was the decision to provide relief to “<a href="https://economictimes.indiatimes.com/news/economy/policy/view-govts-relief-measures-will-help-those-worst-affected-by-the-lockdown-but-will-it-do-the-trick/articleshow/74836029.cms?from=mdr">80 crore poor Indians</a>” under  <a href="https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1608345">Pradhan Mantri Gareeb Kalyan Yojana</a> (PMGKY), which aims to provide food security via the government’s public distribution system (PDS), and social security benefits including cash-based aid via Direct Benefit Transfers (DBT).

In addition, a slew of other relief measures have also been announced, such as <a href="https://www.thehindu.com/news/national/kerala/now-withdraw-cash-on-doorstep/article31260166.ece">home delivery of cash</a> and <a href="https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1608075">pensions</a> by India Post in some states, and further livelihood support. These measures constitute the first of potentially many <a href="https://www.sakaltimes.com/coronavirus-nation/indian-government-unveils-inr-170000-crore-coronavirus-relief-package-weaker">relief packages</a> announced by the government, with a focus on widening a safety net for the poorest of the poor.
<h2>Potential System-Wide Stumbling Blocks</h2>
While schemes like PMGKY are expected to bring relief to some segments, a significant proportion of beneficiaries are at risk of being excluded as a consequence of systemic inefficiencies and leakages. Let us take a look at potential stumbling blocks, and attempt to identify which segments of the population are at risk of getting excluded.
<h3>Accurate Information</h3>
The provision of relief measures is only as effective as the level of awareness surrounding them. Relief measures must be communicated clearly and widely, and easy access should be facilitated by the central and state governments. In the context of migrants, this will have positive public health ramifications associated with curbing unregulated mobility. As a result, provision of essentials such as income and nutrition – as well as effectively disseminating the means to access these benefits – are instrumental to managing the pandemic.

Different state governments in India have dealt with the risk of migrant exodus in markedly different ways. In <a href="https://www.thehindu.com/news/national/kerala/migrants-in-a-bind/article31140312.ece">Kerala</a>, a focus on prompt and multilingual information dissemination using popular media like WhatsApp has been considerably effective, a testament to the importance of creating awareness around state response and relief efforts, which can help in reducing misinformation and thereby curbing migrant discontent. NGOs and community-based organizations that work closely with migrant workers, as well as agents from programs like the Haqdarshaks can play an instrumental role in the timely dissemination of information on schemes, as well as faster take-up, since they are often viewed as reliable by the people they service.
<h3>The JAM Trinity</h3>
The successful implementation of direct benefits under PMGKY hinges on the seamless functioning of the <a href="https://en.wikipedia.org/wiki/JAM_Yojana">Jan Dhan-Aadhar-Mobile (JAM) trinity</a>, and other digital infrastructure such as the Aadhar-enabled Payment System (AePS), <a href="https://www.goodreturns.in/classroom/2014/12/who-is-bank-mitra-how-do-they-help-opening-pradhan-mathri-jan-dhan-account-326032.html">bank mitras</a>, adequate cash in ATMs and the capacity to continually service ATMs, and banks. This presents a <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/relief-package-for-the-poor-via-dbt-may-face-hurdles/articleshow/74878731.cms">massive operational and logistical challenge</a> for the government and the financial services sector, especially given the restrictions on mobility.

Additionally, despite 1.1 billion operational bank accounts in India, nearly <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/relief-package-for-the-poor-via-dbt-may-face-hurdles/articleshow/74878731.cms">500 million</a> are not Aadhar-seeded. The JAM-reliant DBT approach, by design, fails to service those individuals and households without bank accounts, several of whom could be <a href="https://www.business-standard.com/article/economy-policy/coronavirus-lockdown-govt-mapping-migrant-workers-for-relief-measures-120040901787_1.html">migrants or migrant households</a>. Even among those that possess active accounts, it is often the case that <a href="https://www.aljazeera.com/ajimpact/banking-india-people-don-accounts-190621093947054.html">access does not lead to usage</a>. Moreover, with extremely <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/relief-package-for-the-poor-via-dbt-may-face-hurdles/articleshow/74878731.cms">low take-up levels of digital payments</a> among these segments, this could result in their large scale exclusion from accruing any social security benefits.
<h3>Cash in the Bank Not Being Cash in Hand</h3>
Access to ATMs and bank mitras are both constrained by the pandemic and restrictions on mobility, as well as location. According to the <a href="https://www.rbi.org.in/Scripts/StateRegionATMView.aspx">Reserve Bank of India</a> (RBI), only 45,000 out of India’s 230,000 (less than 20 percent) ATMs are in rural areas. Combined with a much lower than usual inflow of cash to rural branches (a source of cash for ATMs), rural India faces constraints to accessing benefits even when schemes are well-targeted. In addition, only <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/relief-package-for-the-poor-via-dbt-may-face-hurdles/articleshow/74878731.cms">30 percent</a> of the 1 million bank mitras in the country are currently operational, due to the travel restrictions accompanying the lockdown. Reports indicate that even though their services have been declared essential, <a href="https://yourstory.com/2020/03/rural-india-cash-shortage-bcfi-coronavirus">local authorities have imposed restrictions on their movement</a>. Many households in these rural areas are often migrant households, whose ability to access their benefits and remittances will be constrained by these logistical issues.
<h3>Migrants’ Unique Characteristics</h3>
<blockquote>Social security schemes run by state governments are often subject to domicile restrictions, resulting in the exclusion of migrant workers from benefits.</blockquote>
Social security schemes run by state governments are often subject to <a href="https://www.business-standard.com/article/companies/migration-will-resume-when-urban-economy-restarts-india-migration-now-120040401400_1.html">domicile restrictions</a>, resulting in the exclusion of migrant workers from availing benefits. In addition, while federal schemes like the PMGKY are universal, migrant workers are more likely to be excluded due to the mobility associated with their livelihood, their participation in the informal sector, and their absence from associations’ rosters, which work towards ensuring outreach to the migrants. Furthermore, to complement the efforts of <a href="https://www.weforum.org/agenda/2017/10/india-has-139-million-internal-migrants-we-must-not-forget-them/">various NGOs</a> working towards improving migrant visibility, substantial improvements in the collection and compilation of credible data on migrants is required from the government. This is also an important step towards <a href="http://www.aajeevika.org/labour-and-migration.php">making economic growth more inclusive</a> for migrants.
<h3>The Long Run</h3>
The COVID-19 crisis presents us with problems that have implications beyond the lockdown and the health crisis. These questions pertain to the uncertainty surrounding employment prospects for migrant labor in the near term, compounded by a slowdown in the economy. <a href="https://www.business-standard.com/article/current-affairs/43-of-msmes-will-close-if-covid-19-lock-down-exceeds-eight-weeks-expert-120032300461_1.html">The MSME sector is one of the worst hit</a>, which affects both enterprises and employees, many of whom are migrant workers. Recent estimates indicate that over <a href="https://economictimes.indiatimes.com/small-biz/sme-sector/measures-that-can-boost-msmes-during-covid-19-lockdown/articleshow/74945278.cms">26 percent</a> of MSMEs have been impacted due to the pandemic and are left facing issues like a downturn in sales, liquidity concerns, and low cash flow. The gig economy and the tourism industry, which <a href="https://yourstory.com/2019/03/job-blue-collar-gig-econom-w132hse8o8">employs millions of migrant workers</a>, has also been severely hit. These workers are <a href="https://theprint.in/opinion/covid-19-puts-burden-on-gig-economy-workers-but-can-they-deliver-without-social-protection/386329/">largely excluded</a> under health insurance and social security benefits.
<h2>The Way Forward</h2>
Addressing these issues would be a good starting point for the government in its efforts to support migrant workers and their dependents through this crisis. We outline some measures aimed at fixing these cracks in the system below.
<ul>
 	<li>Firstly, the PMGKY has been announced as the first of multiple relief packages by the finance minister. While relief packages and social security systems must be strengthened, substantial efforts should be made to <a href="https://www.business-standard.com/article/companies/migration-will-resume-when-urban-economy-restarts-india-migration-now-120040401400_1.html">disseminate information</a> about these schemes and utilizing service points such as bank mitras, community stores as cash in/out points, digital financial touch points, and PDS delivery agents to facilitate access for those individuals and households that are not formally included in the financial system, such as migrants.</li>
 	<li>Secondly, the government must work more closely with private sector entities such as fintech companies and technology solution providers (TSPs) to facilitate the smooth functioning of the architecture that enables cash transfers and other forms of aid. For instance, AePS, the payment system used for state-run DBT, is reported to have a higher error rate than other payment systems, and is clocking a <a href="https://thewire.in/government/covid-19-aadhaar-dbt-and-a-reminder-of-the-issues-with-transaction-failure-data">high rate of failure in DBT transfers</a>, necessitating better solutions.</li>
 	<li>Thirdly, migrant workers must be brought under the aegis of state-level social protection schemes by (temporarily) lifting domicile restrictions, and be assisted in availing benefits from central government schemes. In the short run, this requires a step up in efforts to identify migrants, by leveraging social networks and local organizations that work with migrant workers. On the systemic level, this calls for increased visibility of migrant labor through <a href="http://www.aajeevika.org/services.php?servicename=identity-solutions-for-migrant-workers">improved documentation</a> as well as <a href="http://www.aajeevika.org/labour-and-migration.php">amendments to existing regulations</a>.</li>
 	<li>Fourthly, the government response in the coming months must outline a stimulus package to rejuvenate enterprises, and incentivize employers that typically employ migrant workers once economic recovery commences.</li>
</ul>
Finally, the crisis has also raised some interesting questions about crisis-induced migration trends, and lessons to be learned therein that merit further exploration. The current crisis has raised pertinent questions on the impact of reverse migration on the rural economy, changes in remittance flows, and household finance dynamics. It also presents opportunities for research to address the gaps in financial services targeted towards low-income households and workers engaged in the informal sector.

Support for India's Migrants During COVID-19: Navigating Potential Gaps in the System

Test of a Lifetime: COVID-19 and Financial Inclusion

Challenges and Crises

Mayada will moderate “Advancing Financial Inclusion for Refugees and Host Communities,” a panel discussion with David Kuijper of FMO, Joe Huxley of FSD Africa, Lev Plaves of Kiva, Pamela Eser of UNCDF, and Phillippe Guichandut of Grameen Credit Agricole Foundation.

This spotlight session will seek to discuss and propose solutions to specific challenges that refugees face in accessing financial services. Panelists will present a number of innovative blended finance interventions currently implemented to support, in a sustainable and scalable way, the undeserved refugee market, along with their host communities.

The first <a href="https://www.unhcr.org/global-refugee-forum.html">Global Refugee Forum</a> is a ministerial-level "opportunity to translate the principle of international responsibility-sharing into concrete action." This discussion will take place at 1:30 pm (CET) on December 18.

Watch the live stream <a href="https://www.facebook.com/events/2367634536861156/">here</a> (Facebook account isn't required).

&nbsp;

Global Refugee Forum

Event

This <a href="https://centerforfinancialinclusion.org/financial-inclusion-week-2019/">Financial Inclusion Week</a>, we’re asking ourselves what the purpose of our work is. For those of us who work with refugees, financial inclusion is often for rebuilding sustainable livelihoods, resilience, and self-reliance.

Driven by necessity and limited employment choices, many refugees decide to start a business once they settle in a host country. However, lack of financial capital represents a major stumbling block on the way to business success. Financial service providers (FSPs) in a number of countries are starting to become aware of the potential of this underserved market, but much of the work is still at an incipient phase. FSPs often have questions related to whether operations adjustments may be required, strategies to follow to reduce credit risk, and supporting non-financial services. While every context is different, some good practices are emerging among a number of FSPs, which have been extending credit and other financial services to refugees. Drawing on their experiences, here are four recommendations for FSPs on how to start including this underserved market in their microfinance portfolio:
<h2>1. Analyze market data for better targeting.</h2>
Refugees aren't a homogeneous group, so FSPs first need to understand the differences of their socio-economic characteristics to be able to make an informed decision regarding which sub-segments they wish to serve. Relevant data for a first screening may be offered by local development and humanitarian agencies, and – in addition to basic demographic information – should ideally include data such as vocational or business training received, access to start-up financing, access to bank accounts, description of enterprises, and membership to any existing saving groups. Sometimes this data may be unavailable or insufficient, and market feasibility studies may be required. Especially in countries with high concentration of refugees living in settlements where FSPs have no presence, this would require set-up costs for branches or delivery channels.
<blockquote>A study revealed that refugee communities had enough financial capacity to be good clients.</blockquote>
To identify the potential market of serving refugee entrepreneurs in the West Nile region, <a href="http://www.visionfund.org/2095/where/africa/uganda/">VisionFund Uganda</a> conducted an <a href="http://www.visionfund.org/222/media/news/article/report---serving-refugee-communities-in-uganda/">assessment</a> of 6,700 refugee members of existing saving groups. The study revealed that the refugee communities had enough financial capacity to be good clients, given the presence of daily and weekly markets in the camps, availability of fairly good network coverage, and mobile money agents and existence of entrepreneurial groups and business activity. The results from this assessment, when considered alongside data collected from a broader <a href="https://www.findevgateway.org/blog/2018/oct/getting-it-right-providing-financial-services-refugees">market survey</a> previously conducted by Microfinanza, convinced the MFI to set-up their first branch in the West Nile and start serving refugees.
<h2>2. Widen the range of acceptable forms of IDs while complying with regulation.</h2>
Depending on FSPs’ internal policies and the host country’s regulatory framework, adjustments to FSPS’ internal procedures may be required to serve refugees clients. <a href="https://corporate.mybucks.com/articles/worlds-first-refugee-camp-bank-a-resounding-success/13TBmOsflyCQsUqyeQoSMI">MyBucks in Malawi</a> is the first financial institution to provide a full range of financial services to clients at a refugee camp. Refugees in the Dzaleka camp had no access to FSP providers until last year and had to travel roughly 40 kilometers to the nearest city of Lilongwe to access financial services. The bank saw the business potential of this untapped market, but in order to serve refugees, MyBucks needed to tailor its offering by widening the acceptable forms of identification. Refugee clients often don't meet KYC policies required by the bank – such as a passport or national ID – and don't own land properties that the bank can use as securities. Therefore, in order to comply with the country’s regulations, MyBucks sought a waiver from the central bank to use refugee forms provided by UNHCR to allow refugees to open bank accounts. Today, the bank, which opened its first branch in April 2018, is offering a full range of banking services to refugees.

As of July 2019, 153 refugee entrepreneurs have received business loans from the bank, which relies on group lending methodology to lower credit risks in extending collateral-free loans to refugees. Each individual has to repay according to his/her amount and repayment schedule. The group guarantees for the members, in case a member can't repay on time. Repayment rates to date are 100 percent. MFIs in other countries which don't have to comply to stringent banking regulations, have also been accepting old refugee IDs and expired passports as means to verify identities. A number of new identification and verification measures through blockchain are also starting to emerge which provide innovative tools to verify people’s identities and monitor risk in financial transactions.

A <a href="https://www.makingcents.com/hawiyati-english">digital identity</a> for refugees has been piloted in Jordan and Lebanon by local MFIs. This provides their clients with a “portable identity” that verifies their foundational identification (government or UNHCR issued) digitally, records their credit history, and uploads other important documents. This identity will be especially useful in case a refugee wishes to access banking services upon return to the home country or in case of resettlement, and can also work as an incentive to repay the loan on time.
<h2>3. Establish alternative procedures to mitigate credit risk.</h2>
FSPs are used to the conventional eligibility requirements that proof of citizenship, identity, and residency cards reduce credit risk. Nevertheless, there can be other ways to monitor risk and to verify IDs by adding some flexibility to documentation required. <a href="https://www.almajmoua.org">AlMajmoua</a> is the biggest MFI in Lebanon, the country with the highest number of refugees relative to its population. The MFI serves over 9,000 refugee borrowers with a loan portfolio of over $9 million and repayment rates of almost 100 percent, making it the financial institution with the highest number of refugee borrowers served in a country. More than half of the loans disbursed by AlMajmoua to refugees are for income generation in the limited sectors were refugees are allowed to work in the country, such as field crops, cleaning services, sewing, selling clothes and hairdressing.
<blockquote>AlMajmoua serves over 9,000 refugee borrowers with a loan portfolio of over $9 million and repayment rates of almost 100 percent.</blockquote>
How did this MFI succeed in reaching thousands of refugee clients – many of which through individual loans, so where no social guarantee can be applied – with excellent repayments? To mitigate credit risk, the MFI primarily relies on a strong communication channel between their loan officers and clients by conducting regular business visits, which also allow it to find out whether refugees may have imminent plans to return to their home country or relocate. Additionally, AlMajmoua exceptionally provides loans up to $1,500 to refugees who don’t hold an active residency permit as long as they have a Lebanese, Palestinian or Syrian guarantor with a valid residency permit.
<h2>4. If you provide enterprise support services, consider what would be relevant for refugees new to business.</h2>
Sometimes credit isn't sufficient to initiate and scale up a business activity and refugees may need the support of incubators and start-up technical assistance. Some FSPs might already have their training curricula well developed, which might have to be adapted to the needs of the foreign-born clients. <a href="http://www.microfund.org.jo/">Microfund for Women</a> (MFW), Jordan’s largest not-for-profit microfinance institution, serves over 7,500 Syrian refugees, approximately 40 percent of whom are involved in income generation activities, mostly commercial and home-based services. For MFW, it proved particularly important to accompany loans with non-financial services tailored around refugee women’s specific needs (most of their Syrian refugee women clients were not working before the war started). The MFI has established a learning academy and developed training curricula for both beneficiaries and staff members related to market ofrientation, business management skills, financial literacy, and marketing. In addition. MFW offers free feasibility studies for start-up entrepreneurial businesses with loan amounts higher than $4,000.

When FSPs don't offer such services, they may be able to partner with organizations offering that do. For example, <a href="https://www.ilo.org/global/lang--en/index.htm">ILO</a> is adapting its <a href="https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_560493/lang--en/index.htm">business skills development training tools</a> to the needs of the displaced population and the local context, and is now planning to train refugees and host communities to develop their own enterprises and facilitate access to finance. A first training has already been deployed in Kenya through the Danish Refugee Council in the Dadaab refugee camps.
<blockquote>When FSPs don't offer such services, they may be able to partner with organizations that do.</blockquote>
Hopefully, this post will spark FSPs to realize the important role they have in finding solutions to the refugee crisis. By extending their services to the refugee population in their country, FSPs won't only support the resilience and self-reliance of this widely underserved market, they will also assist in overcoming stigma and helping refugees contribute economically and socially to host communities.

How to Include Refugee Entrepreneurs in Microfinance

Jordan

Middle East and North Africa

Lebanon

Malawi

Financial Inclusion Week 2019

Financial Service Providers

Microfinance Institutions

In 2014, Ghanshyam, a man in his forties, was barely making ends meet working in a farm he owned in his native Nepal when a landslide devastated his land and constrained the livelihoods of people living in the surrounding area. A year later, twin earthquakes destroyed his house, forcing him and his family to live like slum dwellers for nearly a year inside temporary tarps provided by humanitarian organizations.

As the Nepali government imposed new regulations for the construction of earthquake-safe housing, Ghanshyam found himself unable to afford the construction of a government-standard home. Getting a loan was also next to impossible, as financial institutions did not provide loans against land in the earthquake-affected areas. The elections soon followed and with them, threats to voters to cast ballots for a certain party. Facing political unrest and no hope for economic improvement, Ghanshyam opted to sell his land and pay an agency in Kathmandu $30,000 to get him to the US. He had no idea how difficult the journey ahead of him would be.
<blockquote>Ghanshyam opted to sell his land and pay an agency in Kathmandu $30,000 to get him to the US. He had no idea how difficult the journey ahead of him would be.</blockquote>
Ghanshyam traveled through eight countries before reaching Costa Rica. He was extorted in Peru multiple times by police officers, detained by immigration authorities in Ecuador for four days, extorted again by Colombian police officers three times, and had his money, passport, and other identity documents stolen while in Colombia. This series of unfortunate events all occurred before spending seven days crossing the Darién Gap, a thick mountainous jungle dividing Colombia and Panama riddled with venomous snakes, wild cats, and dangerous paramilitary groups. And yet, Costa Rica was only the half-way mark in a treacherous journey to the US.

Ghanshyam is one of 87 migrants interviewed as part of a study of long-journey migration titled <a href="https://sites.tufts.edu/journeysproject/the-other-migration/">The Other Migration: The Financial Journeys of Asians and Africans Traveling through South and Central America Bound for the United States and Canada</a>. Led by Prof. Kim Wilson, alums and graduate students from the Fletcher School at Tufts University captured these individual migrant stories in Costa Rica and Colombia in 2018 and 2019.

The<a href="https://sites.tufts.edu/journeysproject/financial-biographies/"> experiences shared by these migrants</a> offer evidence of the financial exclusion they faced both in their countries of origin as well as en route to their country of destination. Among the patterns of exclusion uncovered by this study, access to funds before and during their journey and access to livelihood and work opportunities throughout their journey should be of concern to the financial inclusion community.
<h2>Availability of Funds</h2>
The availability of funds was a key determinant of safety. Having the resources to secure an “all-inclusive” smuggling package marked a stark difference between an uncertain and dangerous journey and a partially safe one. As in Ghanshyam’s case, most Nepalis were able to afford this all-inclusive package which included plane tickets, lodging, traditional Nepali meals, and designated smugglers along the way to guide the migrant’s journey. The circumstances of migrants from Africa was worse. They were easy targets for criminal organizations and were confronted with more risk throughout their travels. African journeys were also commonly longer and dependent on procuring work in transit, being gifted money by good Samaritans, or receiving money transfers from loved ones.

Unfortunately, whether traveling with appropriate identity documents or not, formal money transfers were inaccessible to migrants. Researchers of The Other Migration believe this was likely due to money transfer agents not understanding their corporate internal policies and therefore not recognizing certain identification documents as sufficiently compliant with their regulations. Migrants were forced to resort to locals to access their money, requesting these strangers receive the funds in their name. Locals provided their service for a fee that ranged between 10 percent and 20 percent of the transfer amount, in addition to the fees the sender was already incurring. In some cases, migrants told of their funds being stolen by the local who was lending their name and ID for the transaction.

As the report explains, these activities put into question the efficacy of AML/CFT (anti-money laundering/combating the financing of terrorism) standards. To comply with these standards, financial service providers follow a set of procedures called Know Your Customer (KYC). These procedures are supposed to establish the facts and the behaviors of a specific customer. Nevertheless, in this case the customer being examined is not the end customer but a third party serving simply as an identity lender. Such activities create three problems: First, migrants cannot get their money without relying on locals and paying an exorbitant fee. Second, locals – knowingly or unknowingly – become involved in criminal activity, and third, KYC procedures fail to fulfil their purpose.
<h2>Livelihood and Work Opportunities</h2>
Livelihood and work options in transit countries are highly valued by migrants whose travels are piece-meal. Many Africans and Indians found themselves stuck in a transit country after their funds were depleted or stolen. Some were able to request an injection of travel capital from family members back home or living in the US or Europe. Yet for others, the option of receiving remittances was unavailable and they quickly resorted to pleading for odd jobs – often carrying groceries for supermarket patrons – or relying once more on the mercy of locals for aid. African respondents shared their willingness to work with the researchers, expressing frustration at their inability to communicate in the local language and their lack of access to formal employment. The researchers found there is currently no country in the America’s corridor offering temporary work permits for transit migrants.
<h2>Recommendations</h2>
In order to overcome the problems faced by migrants in transit, the report suggests AML/CFT requirements for transferred amounts under $1,000 be relaxed. This would allow money transfer agencies to deal directly with the end customer, adhering to the spirit of KYC requirements and avoiding the excessive fees currently incurred by migrants. As an alternative solution, governments of the transit countries could create an identity corridor, thus supplying migrants with a temporary identification document that is recognized by all or most transit countries, providing for more orderly international mobility, and serving to comply with existing AML/CFT requirements. Including a digital component of such an ID would be important, as many migrants are robbed of IDs in the Darién jungle or during other legs of their journey.

The report also proposes issuing temporary work permits for people in transit. Since most migrants are entering through official ports of entry in Ecuador and Brazil, immigration officials could collect information on migrants’ skills, store these in a regional database, and, in partnership with the transit countries’ labor authorities, allocate labor in needed sectors. This initiative would then be carried out in collaboration with the identity corridor. Work permits would enable migrants to contribute to the formal economy and would allow governments to collect taxes on their labor, generating resources that could fund support services to migrants and their host communities.
<blockquote>Work permits would enable migrants to contribute to the formal economy and would allow governments to collect taxes on their labor, generating resources that could fund support services to migrants and their host communities.</blockquote>
In short, considering transit migrants in efforts towards financial inclusion would provide thousands like Ghanshyam with the opportunity to escape grinding poverty with dignity and safety, while also adhering to financial regulations and contributing to local economies along the journey.

Financial Inclusion for Transit Migrants

Nepal

<em>AXA shares insights on and solutions to women's unmet insurance needs in emerging economies.</em>

<em>By <a href="https://group.axa.com/en/about-us/profile/garance-wattez-richard">Garance Wattez-Richard</a>, Head of Emerging Customers, AXA Group</em>

Women-focused insurance solutions are a central part of AXA’s Emerging Customers work. In our <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;uact=8&amp;ved=0ahUKEwiPgJOBxo7XAhUK2oMKHQBJCJMQFgg0MAA&amp;url=https%3A%2F%2Fcdn.axa.com%2Fwww-axa-com%252F57b5a3a4-c7cc-4dea-97c9-5f7d9f47232c_sheforshield_final-web2015.pdf&amp;usg=AOvVaw0YQN3Y_Twiv2ykoHDo86TX">SHEforSHIELD</a> report, launched with the International Finance Corporation in 2015, we found that the market is growing quickly, as women become more risk-aware and willing to invest in protection. We conducted focus groups with women in Indonesia, Nigeria, and the United Arab Emirates (UAE) and learned that women have very specific, yet unmet needs when it comes to insurance. I am happy to share the stories of three of the women we met on our customer insights journey, diving into their fears and desires and the role that inclusive, women-focused insurance solutions could play.



<strong><em>Nurul</em></strong>

<em>”We are in good health, there are no problems,”</em> we hear from Nurul and other women at the beginning of a focus group in rural Indonesia. Nurul, a 33 year old mother of three, is in her 4<sup>th</sup> loan cycle with a large group micro-lender. She and her husband live just above the national poverty line, earning an average of 3 million Indonesian Rupiah per month (around USD 220) through dairy farming, selling food and doing small jobs in the nearest town.

[gallery ids="24390,24388" type="square" columns="2" link="file"]

When we ask more, we discover that while Nurul does not worry about her own health, she is concerned with that of her husband, children and parents. She shares, <em>“My husband is the head of my family, so if something happened to him, my family would not survive.”</em> While her husband is the primary income earner, Nurul serves as the family’s primary caregiver, ensuring everyone is taken care of—particularly if anyone becomes ill.

This dichotomy is reflected in Nurul’s financial priorities, as well as that of many of her fellow borrowers. Despite the fact that one-fourth of Nurul’s neighbors have experienced pregnancy or newborn complications, with one-third of her fellow group members having given birth at home, our maternal health insurance concept was rejected unanimously during the focus group. Meanwhile, spouse life insurance and family hospitalization coverage a with transport allowance are in high demand among the women in the village.

While we still see a need for maternal health packages, we are adjusting our products to meet the actual desires of community members. We have bundled our family hospitalization coverage and spouse life protection, with health check-ups and basic education during weekly repayment meetings. In addition, we continue to improve our maternal health offerings. Together with medical device manufacturers and telemedicine providers, we have prototyped a solution that would make maternity care, including pre-paid check-ups and insurance for complications, safer and more affordable.

<strong>Ifunanya</strong>

Across the ocean, we speak with almost-middle-class women in bustling Lagos. Ifunanya, a 36-year old mother of three, graduated from agricultural university and followed her husband 10 years ago when he got an accounting job in Lagos. After maternity break, Ifunanya got back to teaching, and together the couple earns a regular income of 200,000N every month (USD 566)—very close to a middle-class threshold in Nigeria. Ifunanya, along with the other women in the focus group, say all the right things about healthy lifestyle: prevention is better than a cure, good diet is important and physical activity is a must. They laugh when asked if they apply these concepts in practice, but are hungry for more information on how to live a healthy life.

[caption id="attachment_24389" align="aligncenter" width="1024"]<img class="aligncenter size-large wp-image-24389" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/10/photo-17-05-2017-11-24-53-e1509171338285.jpg?w=2048" alt="AXA Photo Nigeria" width="1024" height="700" /> Focus group in Nigeria. Photo credit: AXA[/caption]

<em>“Cancer is a situation that is feared in Nigeria. It is very difficult to handle... It cannot be managed,” </em>admits Ifunanya. She is right. According to the World Health Organization, about 10,000 cancer deaths <a href="http://www.who.int/cancer/country-profiles/nga_en.pdf">are recorded</a> annually in Nigeria, while 250,000 new cases are recorded yearly. Specifically, Nigeria records 14,000 cervical cancer cases annually, part of the 85% of deaths from cervical cancer that occur in low- and middle-income countries. While Ifunanya does not know much about cancer, it is top-of-mind for her, and she and the other women in the group rank cancer as the most difficult health event to manage financially. <em>“You will definitely need to have at least half a million naira to cope with it.” </em>Ifunanya’s husband has a good insurance package from his employer, but it does not cover her at all.

All of this demonstrates demand for a solution that bundles health information, diagnostics and critical illness insurance, which can be delivered on a mobile platform.

<strong>Mary</strong>

The last stop of our consumer insights journey is the UAE, where we researched the needs of migrant women from Asia. Mary is 34 years old and has worked as a domestic helper in Dubai for the past five years. She earns AED 2,000 every month (USD 283), half of which she sends half home to her husband, two children, mother and sister. Improving the well-being and future prospects for her children is what motivates Mary. She is worried that if something happens to her, they will not be able to prosper. While she is very interested in our diaspora life insurance policy, she would prefer to put her mother or sister as beneficiaries to ensure her children’s welfare. Mary also saves money in a joint account with her sister to make sure she has easy access to funds when she gets back home. Many other Filipino domestic workers in our group in the UAE have accounts for the same purpose, creating a touch point with formal financial services. Migrant workers like Mary have a clear need for life insurance to cover their families in the event of a death, as well as easy ways to save money while they're abroad.

[gallery ids="24387,24391" type="square" columns="2"]

<strong>Lessons Learned and Implications </strong>

Nurul, Ifunanya and Mary have many things in common. Being exposed to and unprotected against many risks, they are responsible caregivers with high aspirations for the future of their children. At the same time, they are so different. We need to start with a very simple offering for customers like Nurul in rural Indonesia, but if we build awareness, the solution prototyped for Ifunanya in Lagos might be also relevant for Nurul in the medium-term. Mary shows us that women face specific risks but also have specific preferences that need to be at the center of product and process design. For us, this is a thorny challenge, but also an incredible opportunity to ideate solutions for different stages of the emerging customer journey.

This all might look familiar to those of you who have been in the financial inclusion space for a long time. We are aware of the work done by <a href="https://www.freedomfromhunger.org/microfinance-and-health-protection">Freedom from Hunger</a>, among others, on bundling health and microfinance. Is this a <em>déjà vu</em>? We don’t believe so. We are taking lessons learned in the past and using them to fuel business model innovation. The issues are the same, but the rise of new technology and new health players makes it possible to come up with scalable and affordable solutions. It’s not only about cost anymore, it’s about changing behaviors by offering the right solutions to the right segment at the right time. For us, at AXA Emerging Customers, this is "make it or break it." If we can’t provide health solutions to emerging customers, we won’t be successful in the long term. Join us to make it a reality.

Insuring “Emerging Women” – Old Issues, New Solutions

Indonesia

Insurance

Life Insurance

Women

<em>&gt; Posted by Sonja E. Kelly, Fellow, CFI</em>

The U.S. Congress has recently been involved in debate on immigration, a theme also explored in President Obama’s State of the Union Address last week. Such conversations have led me to wonder… what does financial inclusion mean for people who are living outside of their home country?
<p style="text-align:left">There has been a marked increase in countries that have released <a href="http://cfi-blog.org/2013/08/29/forty-countries-and-counting-committed-to-the-maya-declaration/" target="_blank">definitions of financial inclusion, national strategies for financial inclusion, and regulations that support financial inclusion</a>. The focus of these efforts is in part determined by how countries define the target population for financial inclusion. Often, financial inclusion is not for everyone.</p>
<img class="wp-image-13935 aligncenter" style="border:0;margin-top:15px;margin-bottom:15px" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/02/7926358726_8b366eab62_b.jpg" width="565" /> At the Center for Financial Inclusion, <a href="http://www.centerforfinancialinclusion.org/about" target="_blank">our definition</a> specifies that financial services are “for all who can use them.” For us, age, disability, gender, or citizen status should not keep people from formal financial services.

In the implementation of financial inclusion policy, regulation, and strategy, however, there are legal and security-based concerns affecting why our definition of financial inclusion “for all who can use financial services” isn’t reflected in every definition of financial inclusion. The OECD and the <a href="http://ec.europa.eu/internal_market/finservices-retail/inclusion/index_en.htm">EU</a>, for example, are very clear that financial inclusion is for citizens only. Other countries around the world similarly adopt this definition. It makes sense that banks would want to know whether a prospective client is a citizen. Proof of citizenship means lower risk. It implies that legal problems can be routed through the national justice system. It ensures that the owner of the account or the holder of a line of credit can more likely be found in case of a problem.

It also means, however, that there are many migrants and refugees who are by virtue of their citizenship status excluded from the formal financial system. In Saudi Arabia, over 30 percent of people in the country are not citizens. In UAE, over 80 percent of people are not citizens. In Jordan and Hong Kong, this number is about 40 percent, and in Kuwait and Qatar, around 70 percent. In sheer numbers, the U.S., Germany, and Russia lead the way, with an estimated 70 million people living in one of these three countries without citizenship.

If we fail to create solutions to serve migrants and refugees, we ignore a huge number of those who are excluded from formal financial services.

Potential solutions should remind policymakers of financial inclusion’s intent: to serve marginalized and vulnerable populations, and in my opinion, that includes those without citizenship. Regardless of which side of the political spectrum you stand, extending financial services to migrants and refugees has the potential to increase their economic potential and contribute to the gross domestic product. In other words, if migrants and refugees are managing their finances in the formal financial system in which they are working, the money they earn can contribute to the economy in their country of employment rather than solely in their country of citizenship. With an estimated <a href="http://esa.un.org/unmigration/wallchart2013.htm" target="_blank">232 million migrants around the world</a>, and remittances expected to reach <a href="http://www.worldbank.org/en/news/press-release/2013/04/19/world-bank-launches-initiative-on-migration-releases-new-projections-on-remittance-flows" target="_blank">$515 billion by 2015</a>, this presents a significant business opportunity for providers.

If financial inclusion is just for citizens, then we will continue to have an enormous exclusion problem even with the benefit of inclusive policy, regulation, and strategy at the national level. Financial inclusion shouldn’t be just for citizens—it should be for all.

<em>Image credit: <a href="http://www.flickr.com/photos/30201239@N00/7926358726/" target="_blank">joiseyshowaa</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/11/12/finance-for-all-by-2020-in-order-to-end-extreme-poverty-by-2030/" target="_blank">Finance for All by 2020 in Order to End Extreme Poverty by 2030</a>

<a href="http://cfi-blog.org/2012/10/26/prelude-to-the-u-s-election-voter-ids-and-financial-identity/" target="_blank">Prelude to the U.S. Election: Voter IDs and Financial Identity </a>

<a href="http://cfi-blog.org/2013/11/19/financial-inclusion-by-2020-our-generations-equivalent-of-putting-a-man-on-the-moon/" target="_blank">Financial Inclusion by 2020: Our Generation's Equivalent of Putting a Man on the Moon</a>

Financial Inclusion… For Whom? Considering Immigration and Citizenship

<em>&gt; Posted by Center Staff</em>

<a href="http://www.centerforfinancialinclusion.org/fi2020/global-forum" target="_blank" rel="attachment noopener wp-att-11854"><img class="alignright" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/07/fi2020-date.jpg?w=490" alt="" width="310" height="121" /></a>The FI2020 Global Forum in London gets underway this Sunday with a pre-Forum side meeting on financial inclusion for persons with disabilities (PWDs). This client-centric start feels like a fitting precursor for an event to expand financial inclusion.

Financial inclusion requires that financial services meet the unique needs of all clients, especially the needs of the most underserved and vulnerable client groups. Sessions throughout the Forum reflect this key tenet. In addition, there are side meetings on the <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/financial-capability">Financial Capability Roadmap</a> and the <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/client-protection">Consumer Protection Roadmap</a>, focused on moving these roadmap principles and recommendations to action. These and the other three <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/">financial inclusion roadmaps</a> were developed through a consultative process that collected and incorporated the perspectives of specific client groups.

Among Forum participants are representatives of various client segments – such as PWDs, women, the elderly, youth, rural populations, and migrants – to help raise awareness of their unique needs and assets. Here’s a collection of pertinent statistics for financial inclusion on these client segments:

Youth:
<ul>
 	<li>1.8 billion of the world’s population is between the ages of 10 and 24</li>
 	<li>87 percent of youth are concentrated in the developing world</li>
 	<li>About half the world’s youth report being economically active</li>
 	<li>38 percent of young adults have an account compared to over 54 percent of older adults</li>
</ul>
The Elderly:
<ul>
 	<li>In 1950, globally, 1 in 20 people were elderly. By 2050, it will be 1 in 5.</li>
 	<li>In 2000, only 6 percent of people in less developed countries were over 65 years old. By 2050, that number will grow to 20 percent.</li>
</ul>
Women:
<ul>
 	<li>In all regions, women are less likely to have a bank account than men</li>
</ul>
[caption id="attachment_12936" align="aligncenter" width="600"]<a href="http://cfi-blog.org/2013/10/25/seeking-financial-inclusion-for-all-at-the-global-forum/women-chart/" target="_blank" rel="attachment noopener wp-att-12936"><img class=" wp-image-12936 " style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/10/women-chart.png" alt="" width="600" /></a> Source: World Bank, Global Findex (Washington, DC: World Bank, 2011)[/caption]
<p style="text-align: left">Persons With Disabilities:</p>

<ul>
 	<li>Over 15 percent of the world’s adult population, or 785 million people, live with a disability</li>
 	<li>Unemployment for persons with disabilities is as high as 90 percent in the developing world</li>
 	<li>In developing countries, 80 percent of persons with disabilities live in rural areas</li>
</ul>
Migrants:
<ul>
 	<li>There are an estimated 214 million international migrants around the globe, and over 700 million more people migrate within their own countries</li>
 	<li>Developing countries will receive over $410 billion in remittances in 2013</li>
 	<li>Cross-border remittances are a growing market</li>
 	<li>The top recipient countries of remittances include India, China, Mexico, the Philippines, and Bangladesh</li>
 	<li>For the Philippines and Bangladesh, more than 10 percent of their GDP comes from remittances</li>
</ul>
Rural Populations:
<ul>
 	<li>About 20 percent of the world is living in rural areas, compared to about 40 percent in 1950. This trend, however, does not mean a shrinking of all rural populations. <sup>                        </sup></li>
 	<li><span style="font-size: 13px;line-height: 19px">In low and middle income economies, those who live in rural areas are much less likely to have an account than those living in urban areas</span></li>
 	<li>An estimated 30 to 40 percent of remittances go to rural areas</li>
</ul>
<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/10/10/fi2020-global-forum-gearing-up-for-the-homestretch/" target="_blank" rel="noopener">FI2020 Global Forum: Gearing Up for the Homestretch</a>

<a href="http://cfi-blog.org/2013/10/22/combatting-exclusion-for-persons-with-disabilities-in-india-and-mexico/" target="_blank" rel="noopener">Combatting Exclusion for Persons With Disabilities in India and Mexico</a>

<a href="http://cfi-blog.org/2013/03/08/international-womens-day-2013-where-are-we-with-womens-access-to-financial-services/" target="_blank" rel="noopener">International Women's Day 2013: Where Are We With Women's Access to Financial Services?</a>

Seeking Financial Inclusion for All at the Global Forum

Financial Inclusion 2020

Consumer Protection

Rural Populations

Youth

Mayada El-Zoghbi

Managing Director

Ezra Mannix

Kim Wilson

Madison  Chapman

Shashank Shreedharan

Jithin  Jose

Micol Pistelli

Maria Teresa Nagel

Lauren Hendricks

Philippe  Guichandut

Nina Nieuwoudt

Amee Parbhoo

Jeffrey Riecke

Lizzy Bolze

Daniel Balson

South Sudan

Germany

Greece

Iran, Islamic Rep.

Sudan

Syrian Arab Republic

Turkey

Azerbaijan

Libya

Rwanda

Myanmar

Iraq

Agent Banking

Delivery Channels

Mobile Banking

Alternative Data

Credit

Fintechs

Impact Investing

Insurtech

MSME/SME Finance

Neobanks

PayGo

Smallholder Farmers

Digital Financial Services

Telcos

Crowdfunding

Privacy

Social Performance

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

Though Nigeria’s government has set ambitious goals for financial inclusion, the majority of its people lack a formal bank account. Accion has worked in the country since 2007 to expand access to financial services.

<em>Lauren Hendricks of the Grameen Foundation recently spent time at the Bidi Bidi camp. Below are her reflections.</em>

The Bidi Bidi refugee camp, in northwestern Uganda, is the largest refugee settlement in the country, and the second-largest refugee camp in the world, hosting 220,000 refugees who have fled the devastation and humanitarian crisis of the protracted civil war in South Sudan. In contrast to long-established refugee settlements elsewhere in the country, the inhabitants of <a href="https://www.theguardian.com/world/2018/may/19/inside-world-largest-refugee-camp-uganda-south-sudan-civil-war">Bidi Bidi</a> are newcomers: all of them have arrived since the 2016 “<a href="https://reliefweb.int/report/south-sudan/south-sudan-finding-way-forward-after-july-2016-crisis">July Crisis</a>” in South Sudan.

Because of the long-term stability, favorable policy and social environment, and freedom of movement in Uganda, the majority of refugees in more established camps are either already engaging in small businesses or would like to start one (a recent World Bank study cited that 72 percent of refugees are operating some sort of micro or agri-business.) But at Bidi Bidi, the relationships and arrangements among people that create an active economy have not had time to develop, and economic activity remains low. These refugees arrived with literally just the clothes on their back and the few assets they could carry, and are to a greater extent than most refugees in Uganda, still struggling to establish themselves and supplement the limited support NGOs and the UN can provide.

However, there is a potential game changer: mobile phones and mobile money are widely available, and they hold enormous potential for generating economic activity. <a href="https://grameenfoundation.org/where-we-work/sub-saharan-africa">Grameen Foundation</a> is working with <a href="https://www.gsma.com/r/mobileeconomy/sub-saharan-africa/">GSMA</a> (the association of mobile network operators) to develop ways to increase financial inclusion among the refugees. In my visit to Bidi Bidi to consider how mobile money could help kick start the camp economy activity, I found many possibilities.

The challenge is to make it easier for people to make payments. Right now, many people receive transfers from abroad and from relief agencies via mobile money. In order to use this money for purchases, they either need to find an agent who can cash it out or a merchant who accepts mobile payments. Both are in extremely short supply in Bidi Bidi. Currently when refugees receive transfers from abroad, or from relief agencies, it can take up to a week to find an agent with liquidity. The camp has only 17 agents for over 200,000 people. To reach the ideal penetration ratio of 1,000 to 1 it would need ten times as many agents.

Our work has shown that a focus on female agents will pay off, especially because a majority of the refugees are in women-headed families. Increasing the number of agents cannot be done all at once, however. Currently, agents report an average of 20-30 transactions per day, which does not suggest an overwhelming demand. The pace of recruitment of new agents would need to track the development of the payments and transfer ecosystem within the camps.
<blockquote>A focus on female agents will pay off, especially because a majority of the refugees are in women-headed families.</blockquote>
Equally important is acceptance of mobile money payments by local merchants, which will allow refugees to use mobile money to purchase food and essential goods. Currently, merchants in the camps accept only cash. When refugees cannot turn their relief and transfer payments into purchases, they face severe delays in access to food and essentials. Many merchants believe that accepting mobile money is expensive, but new products are on offer that reduce fees significantly.

Another supporting element for creating an active payments ecosystem is to attract a "super agent," such as a microfinance institution (MFI) or bank that can help agents and merchants balance their liquidity, an essential function. One possibility is <a href="https://rufimfi.com/">RUFI</a>, a unique MFI founded by South Sudanese refugees in 2009 and working on both sides of the South Sudan-Uganda border, and the only microfinance institution serving refugees in Bidi Bidi. RUFI is also an agent for Centenary Bank, offering savings and other services. Currently RUFI’s nearest office is over 30 kilometers away, a significant distance barrier for refugees. By locating in Bidi Bidi and becoming a super agent for mobile money, RUFI could not only help manage agent liquidity, it could also get to know agents and merchants that could become credit clients, and move its own credit and savings transactions to digital form. This would position it well to develop a loan product to help <a href="https://reliefweb.int/report/uganda/refugee-entrepreneurs-boost-host-communities">female entrepreneurs</a> finance the capital needed to become agents.
<blockquote>A super agent can help agents and merchants balance their liquidity and get to know potential clients.</blockquote>
Reports by <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;ved=2ahUKEwiJh6D2mPjiAhXqqFkKHRNtDvAQFjAAegQIAxAC&amp;url=https%3A%2F%2Fwww.uncdf.org%2Fdownload%2Ffile%2F127%2F6633%2Fuganda-refugee-remittances-assessment-report0620v3pdf&amp;usg=AOvVaw1uX4vhWZodJZ-OcUtUJAML">UNCDF</a>, DCA, and Platform for Inclusive Finance indicate that informal savings groups are active in Bidi Bidi settlement, though estimates range widely regarding how many adults participate (from 11 to 49 percent, depending on the report). Working with savings groups could be an effective way to increase digital financial literacy among refugees, increasing their comfort with digital payments. One of the appeals of digital money is its security, and savings groups may be looking for ways to secure their pooled resources, given security issues within the settlement. Encouraging savings groups and their members to use mobile money would help develop the market for mobile money which in turn is needed to support an agent network.

With steps like these, the economy can slowly begin to rev up, providing benefits to all the residents of Bidi Bidi.

A Ugandan Refugee Camp Hosts Potential for Financial Inclusion

<em>This <a href="http://www.findevgateway.org/">FinDev Gateway</a> blog repost is part of the series "<a href="http://findevgateway.org/blog-series/getting-inclusion-right-fiw-2018">Getting Inclusion Right: Financial Inclusion Week 2018</a>."</em>

“I attended six vocational trainings including cooking, make-up, how to make soap and hairdressing. But in the end I couldn’t work as I couldn’t buy the necessary equipment. Not even scissors for cutting my son’s hair.”

This testimony came from a Syrian woman at Zaatari Camp in Jordan. She is one of over 200 refugees interviewed in Jordan and Uganda as part of a market study commissioned by Grameen Credit Agricole Foundation and conducted by the consulting firm Microfinanza. The studies, funded by the Swedish International Development Cooperation Agency (Sida), are the first step in the implementation of a joint program between Sida, UNHCR and Grameen Crédit Agricole Foundation designed to expand access to financial and non-financial services for refugees and host communities in Jordan and Uganda.

The research aimed to assess refugees’ demand for and access to financial and non-financial services. While their landscapes differ in terms of market opportunities and regulatory environments, both Jordan and Uganda have protracted refugee populations with similar needs for financial services.

Since the theme of this year’s <a href="http://financialinclusionweek.org/">Financial Inclusion Week</a> is "Getting Inclusion Right," we’d like to share our top five recommendations for financial service providers (FSPs) willing to contribute to getting financial inclusion right for refugees.
<h3>1. Do not develop specific financial products for refugees.</h3>
This recommendation may seem surprising, but findings from the study demonstrate that there are already products on the market that meet the demands identified among refugee clients. You may need to adjust your internal policies and procedures for ID and collateral requirements but there is no need for exclusive “refugee products” to match demand. Just reach out more to the refugees in your area to include them in the products you offer.
<h3>2. Find out what type of credit refugees in your area need, and how much.</h3>
In Uganda and Jordan, we found that while refugees were borrowing regularly from Savings Groups, friends and family, they were not able to borrow enough to cover their business needs. They wanted access to formal credit, they would prefer individual loans, and most were willing to pay interest. The survey also revealed a need for financing green energy products in settlements, as well as the potential to leverage digital financial services, which are already used by refugees in both countries. In Uganda, where land is reasonably available for refugees, there is also demand for agricultural products, both for individuals and for companies looking for raw agricultural products.
<h3>3. Screen their business ideas. Refugees manifest a remarkable spirit of entrepreneurship.</h3>
In Uganda, 78 percent of refugee respondents have plans to start or develop their own businesses, and 60 percent have already taken the first steps - using savings, borrowing informally and enrolling in vocational trainings. In Jordan, most refugees prefer to start their own business over seeking employment in the limited available sectors for non-Jordanians. In terms of gender segmentation, about one every four women interviewed in Jordan have strong plans to start or develop their own, mostly home-based, businesses, a proportion which increases to one every three women in Uganda.
<h3>4. Overcome the fear of flight risk, as data shows that refugees rarely resettle.</h3>
Flight risk is an oft-mentioned concern for FSPs when it comes to considering refugees as a potential target market. However, our studies found that the vast majority of respondents do not have any plans, not even vague ones, to return to their countries or to relocate to another country. Resettlements are also rare within countries. Refugees’ aspirations were much more related to gaining economic independency than to moving on to a new location. Between 2014 and the end of April 2018, only 5 percent of the registered refugee population in Jordan and 1 percent in Uganda have resettled.
<h3>5. Consider adding on non-financial services to complement the credit offer.</h3>
In both countries, non-financial services – primarily financial education and business management support – are particularly relevant for refugees with limited or no prior experience with credit or running a business. FSPs should apply their client segmentation procedures to assess which refugees may need non-financial service provision. Then, consider partnering with existing specialized NGOs which offer these services, or developing your own curriculum.

Getting Financial Services to Refugees Right

<em>Are you following the question of how people receive cash assistance in emergencies or protracted crises? If so, hop aboard the listserv of CALP (</em><a href="http://www.cashlearning.org/"><em>Cash Action Learning Partnership</em></a><em>). Brisk discussions, great resources, and important insights circulate weekly, often daily. </em>

Lately, we have been discussing “frivolous expenses”—money spent on alcohol, cigarettes. Participants in the listserv are making excellent points. They assert that tracing cash uses in hopes of soothing donor concerns that money is not being spent wisely is folly for two reasons: 1) we already have substantial <a href="https://blogs.worldbank.org/impactevaluations/do-poor-waste-transfers-booze-and-cigarettes-no">evidence</a> that an increase in available cash to households does not increase marginal consumption of alcohol or cigarettes and 2) it’s hard to trace actual use since cash assistance typically supplements other sources of household income.

I would like to pose a third reason why a focus on the uses of cash assistance is folly. To do that, I need to take us into the language of financial planners. Rarely do financial planners, at least in the U.S., use the term “frivolous expense.” Instead, they prefer to divide people’s budgets into <a href="https://bizfluent.com/info-8721606-discretionary-vs-committed-fixed-costs.html">committed expenses and discretionary expenses</a>. In this system, the same item can potentially be classified differently at different points in time. For example, a financial planner speaking to my students the other day agreed that purchasing a grande latte at the local Starbucks was a discretionary expense in the fall semester, and should be enjoyed only after committed expenses were budgeted for and met (including any set-asides for savings). But the coffee’s classification could change. Let’s look to the spring. In March, inviting a potential employer to an informational interview might include treating them to a beverage. For each networking week, the grande latte (in fact two) would now be budgeted as a committed expense: it represents an investment in a student’s future.

Perhaps in settings of displacement we should similarly analyze expenditure on cigarettes and alcohol. When are they committed expenses and when are they discretionary? In a qualitative study I led in 2016 and 2017 on the <a href="http://fletcher.tufts.edu/Institute-for-Human-Security/Research/Migration-Crisis-and-State-Fragility/Financial-Mobility-of-Refugees">Financial Journey of Refugees</a>, those receiving cash assistance said they did not use their aid on cigarettes and alcohol.*

Those not receiving cash assistance, and not yet habituated to the games of aid, were forthcoming about their cigarettes budgets. Cigarettes, they claimed, were a condition of their survival. To gather information on affordable apartments or the best routes out of the country, they needed to offer up a smoke to the person in the tent next door. They happily offered a cigarette to the man at the taxi stand to learn the best times to cross a border or where to get the best rates to convert hard currency into local money. When you are a refugee or migrant, information is survival. Investing in information is not a discretionary expense, it’s a committed expense. In Greece, one group of young Afghan men told us that they did not smoke in Afghanistan but budgeted for cigarettes prior to departure. Their informants told them they had to invest in being sociable along their travels across Iran and Turkey. In fact, they took up smoking as a strategy for socializing and planned to quit when they reached their countries of destination.

Both alcohol and cigarettes had benefits beyond their powers to elicit crucial information. They also facilitated bribes. A woman told us of the “special drink” she carried to persuade the guards at a checkpoint to usher her family through without checking their documents, which if examined, would be cause for their arrest or return. Cigarettes were often exchanged in detention centers and safe-houses for favors like an early release from detention or a better placement on the open-back truck. They were also cheaper than cash bribes. Without using the terms “committed expenses” versus “discretionary expenses,” our respondents set us straight on how exactly cigarettes and drinks constituted an investment in their safety, survival and resilience.

Thus we add a third nail in the coffin of donor insistence on tracing the uses of their cash assistance – the utter frivolity of tracking frivolous expenses. I am sure we will find many more nails to pound into the coffin as our discussion advances.

<em>* Incidentally, respondents were confused about whether they should say they used cash assistance on condoms. Did condom expenditure prove that they were responsible adults earnestly trying to prevent disease, or did it prove that they were irresponsible adults interested only in the next conquest. And, no, we did not ask them if they spent their cash assistance on condoms. Our respondents surfaced the topic when we asked what questions asked by other researchers confused them, so that we would not make the same mistakes. They then asked us for tips on how to answer the condom question, which we gladly gave them.</em>

<em>Kim Wilson is a Lecturer in International Business and Human Security at the Fletcher School, Tufts University and is part of the faculty of Fletcher’s <a href="http://fletcher.tufts.edu/Institute-for-Human-Security">Henry J Leir Institute for Human Security</a>.  </em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/03/09/the-digital-demands-of-the-displaced-dont-track-me-dont-expose-me-dont-cut-me-off/">The Digital Demands of the Displaced: Don’t Track Me, Don’t Expose Me, Don’t Cut Me Off</a>

<a href="https://cfi-blog.org/2016/02/09/financial-inclusion-and-immigration-in-europe-disrupting-identity-norms/">Financial Inclusion and Immigration in Europe – Disrupting Identity Norms</a>

<a href="https://cfi-blog.org/2017/09/28/migrations-middlemen-and-how-to-pay-them/">Migration's Middlemen and How to Pay Them</a>

The Frivolity of Frivolous Expenses

This was the question that a team of us at The Fletcher School at Tufts University set out to answer in our study “<a href="http://fletcher.tufts.edu/Institute-for-Human-Security/Research/Migration-Crisis-and-State-Fragility/Financial-Mobility-of-Refugees">The Financial Journey of Refugees</a>.” We studied the routes and financial challenges of more than 100 refugees in Greece, Jordan and Turkey, between July 2016 and April 2017. The refugees we interviewed had traveled from South Asia, Central Asia, the Middle East, East Africa and West Africa.

Regardless of their country of origin, with the exception of Syria, a refugee’s biggest expense was the cost of hiring a smuggler. Smuggling expenses ran about 85 percent of the total cost of the journey. The smuggler’s fee included important services: travel by air or overland, depending on the refugee’s budget, guide services across borders, payment of bribes at border crossings, and documentation falsification expenses. Smuggling prices varied widely by country of origin (some borders being porous, others sealed tight), by how deluxe a trip was (air versus ground), by numbers of borders crossed (affecting the number of falsified IDs required). To give an example, journeying overland from Afghanistan through Pakistan, Iran, and Turkey to Greece might cost $7,500 per person, a price that went up or down based on shifting rules and border crackdowns. Traveling from Eritrea to Greece might cost the same amount. Traveling from Syria to Turkey could cost as little as $500.

The price of the journey was one factor in a traveler’s safety – the higher the cost, the better the traveling modes, and the safer the travel. While <em>what</em> refugees paid their smuggler was important, <em>how</em> they paid them was equally important. Did the refugee pre-pay the kingpin smuggler in advance of the journey? Did she post-pay him after arriving safely in Greece or Germany? Did she pay leg by leg? All these strategies were in play and we outline them in our <a href="http://fletcher.tufts.edu/~/media/Fletcher/Microsites/Human%20Security/Final%20Journeys_Briefing%20Paper.pdf">report summary</a> and they are detailed by the refugees themselves in a <a href="http://fletcher.tufts.edu/~/media/Fletcher/Microsites/Human%20Security/Compendium%20Financial%20Journeys%20%20Publication.pdf">Compendium of Field Notes</a>. Below we describe two of many strategies.
<h3><strong>Strategy 1: Guarantee Scheme via a Financial Third Party</strong></h3>
Money agent networks, often informal, span from Pakistan to Germany, and around the world. These networks—dubbed Eastern Union by a Jordanian regulator—do far more than transfer funds from person A to person B. They will store funds for later disbursement or, if instructed, will shunt funds directly to smugglers. For example, a journeyer traveling overland from Kabul to Athens might visit a money agent in Kabul (a saraf) who will take her deposit for $7,500. When she arrives safely to her first waypoint, which could be in Zahedan, Iran, she texts a code to her saraf. The code, incidentally, would have been randomly generated by the saraf’s app before her departure and she would have memorized it. By sending the code, the refugee signals her safe arrival at the Zahedan waypoint. The saraf then forwards a predetermined sum to the kingpin smuggler, using a network of couriers and other money agents to get him his funds. The kingpin in turn deploys a combination of banks and money agents to make sure his local smugglers get paid.

There is no single way this system of guarantee works. It is customized, improvised upon, and individually negotiated by various actors. In some instances, there is no code. In others, there are several codes. In some instances, the kingpin smuggler chooses the saraf. In others, the refugee chooses the saraf. In Syria, the third party is often a shopkeeper who charges $50 to insure the journey. In Iran, the money agent charges a percentage (often 10 percent) of transactions.
<h3><strong>Strategy 2: Crowdsourcing via Kin</strong></h3>
Typically, crowdsourcing via kin is a pre-payment strategy, but not always. We interviewed refugees who were held hostage by smugglers at various points along their routes. When relatives—sometimes a circle of relatives both forward and backward along the route—paid up, the hostage refugee was released to be smuggled farther along her route.

Often crowdsourcing came in the form of pre-payments along various points in a route. For example, traveling from Eritrea to Greece, a journeyer might signal a relative in Khartoum to fund trip expenses. The relative in Khartoum would crowdsource funds from family members in multiple countries across Europe and North America. She might use Zain, a mobile money system, to collect the funds and hold them in Khartoum. She would then secure a smuggling network to help the Eritrean refugee cross to Sudan. The kingpin smuggler would be paid via a courier upon the refugee’s safe arrival in Khartoum. If the Eritrean refugee wanted to continue north to Turkey, Greece or Northern Europe, another round of crowdsourcing would begin. Again, the relative would make payment to the smuggler after the refugee’s safe arrival. In some cases, to ensure compensation, the smuggler will stay with the refugee in a safe house until he has received his payment via Western Union or an informal money agent.

Said one refugee: “It’s a collective system. All Eritreans understand each other on this.” The understanding is that she does not have to pay her relatives back, but she is expected to pay her debt forward: when someone else in her network tries to escape Eritrea, she is expected to do her part to financially support his or her expenses.

What do these strategies mean for providers of financial services? Clearly suppliers cannot legally, knowingly pay smugglers. But, perhaps there are other forms of financial assistance that are perfectly legal.

First, licit travel is often part of a route and could be better insured. For example, a refugee may be able to obtain a visa to a transit country and would like to secure legal travel there. But, because prior legs of the journey may be cobbled together through smugglers, the refugee cannot predict when they will reach the transit country. Insurance could help offset this uncertainty. Too often providers are skeptical that people need financial education to understand sophisticated insurance products. As long as the systems are familiar and offer value, refugees both literate and illiterate, will master them quickly. Second, providers believe that people don’t like to save, but, we found that saving for a purpose—journey preparation—is valuable. Surely, there are many legal ways to assist refugees to accumulate savings for journey purposes. And just as surely, clever suppliers could find ways for refugees to easily access those licit savings along their journey. Third, the ubiquity of informal agents could lead to service expansion. Can trusted informal money agents be co-opted and certified within a legal framework in much the same way that Uber has recruited its drivers?

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/03/09/the-digital-demands-of-the-displaced-dont-track-me-dont-expose-me-dont-cut-me-off/">The Digital Demands of the Displaced: Don't Track Me, Don't Expose Me, Don't Cut Me Off</a>

<a href="https://cfi-blog.org/2016/02/09/financial-inclusion-and-immigration-in-europe-disrupting-identity-norms/">Financial Inclusion and Immigration in Europe – Disrupting Identity Norms</a>

<a href="https://cfi-blog.org/2016/08/17/a-learners-license-to-master-the-rules-of-the-credit-road/">A Learner's License, To Master the Rules of the Credit Road</a>

Migration’s Middlemen and How to Pay Them

<em>The following post was <a href="http://blogs.accion.org/features/7-fintech-trends-to-watch-in-2018/">originally published</a> on the Accion blog.</em>
<p id="46a8" class="graf graf--p graf-after--h4">We’re in the middle of a fintech boom that <a class="markup--anchor markup--p-anchor" href="https://medium.com/accion/trends-that-may-change-the-world-c00f4e500a8c" target="_blank" rel="noopener noreferrer">could change the world</a>. As a seed-stage investor in fintech for the underserved, Accion Venture Lab continues to see innovative startups increasing access to, reducing the cost of, or improving the quality of financial services for underserved individuals and small businesses around the world.</p>
<p id="c50b" class="graf graf--p graf-after--p">As we kick off a new year, we’re particularly excited about seven areas of startup-led innovation.</p>

<h4>Digital neobanks</h4>
[caption id="attachment_24930" align="aligncenter" width="616"]<img class="wp-image-24930" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/01/appsm_mockup2.jpg" alt="" width="616" height="411" /> SmartMEI is a digital neobank serving small businesses in Brazil[/caption]
<p class="graf graf--p">In the last few years, we’ve seen the emergence of a number of digital neobanks. Neobanks offer a user-friendly digital interface and a platform for financial services without maintaining their own banking licenses. With a focus on user experience and digital applications, neobanks stand to offer faster and better service to the underserved. Moving forward, neobanks will need to provide both a compelling product for a targeted customer segment and a suite of offerings that go beyond basic accounts or credit cards to retain customers and improve unit economics. Innovators in this space include <a class="markup--anchor markup--p-anchor" href="http://nowmoney.me/" target="_blank" rel="nofollow noopener noreferrer">NOW Money</a>, which offers migrant workers in the UAE a platform to more efficiently transfer remittances and access to other products and services over time, and <a class="markup--anchor markup--p-anchor" href="https://www.smartmei.com.br/" target="_blank" rel="nofollow noopener noreferrer">SmartMEI</a>, which offers small businesses in Brazil a free tax tool and access to a broader set of financial services.</p>

<h4>Next gen small business finance solutions</h4>
<p class="graf graf--p">Around the world, micro, small, and medium enterprises (MSMEs) struggle to access capital. Estimates suggest that <a class="markup--anchor markup--p-anchor" href="https://www.ifc.org/wps/wcm/connect/4d6e6400416896c09494b79e78015671/Closing+the+Credit+Gap+Report-FinalLatest.pdf?MOD=AJPERES" target="_blank" rel="nofollow noopener noreferrer">200 to 245 million formal and informal small businesses</a> either don’t have a loan or have one but are still constrained by their access to financing. Startups have been developing creative ways to acquire, underwrite, and fund these businesses. Some of the most innovative models today are embedding themselves into supply chains and working with a partner in that supply chain to identify MSMEs in need of financing and to obtain existing data that can support credit decision-making. These companies include <a class="markup--anchor markup--p-anchor" href="http://www.tiendapago.com/en/" target="_blank" rel="nofollow noopener noreferrer">Tienda Pago</a>, which partners with major consumer good distributors in Peru and Mexico to extend short-term working capital to small stores for inventory purchases, and <a class="markup--anchor markup--p-anchor" href="https://lidya.co/" target="_blank" rel="nofollow noopener noreferrer">Lidya</a>, which works through partners in Nigeria to provide invoice discounting and supply chain financing to small businesses.</p>

<h4>Insurtech for the underserved</h4>
<p class="graf graf--p">Low-income consumers in emerging markets need insurance products to manage and mitigate financial risks, but serving those customers poses significant challenges — from cost-effectively reaching and educating consumers, to accurately assessing and pricing risks, to efficiently managing claims. Startups can play a critical role in solving those challenges with products intended to address specific risks for underserved communities, new distribution channels to reach these populations, and new streams of data to more effectively assess and price risk. Insurtech innovators include <a class="markup--anchor markup--p-anchor" href="https://lumkani.com/" target="_blank" rel="nofollow noopener noreferrer">Lumkani</a>, which sells a low-cost heat detector bundled with insurance to households in South African informal settlements that protect against loss of life, shelter, and assets, and <a class="markup--anchor markup--p-anchor" href="https://togarantido.com.br/" target="_blank" rel="nofollow noopener noreferrer">Togarantido</a>, which serves as an online-based insurance broker focused on the underserved in Brazil.</p>

<h4>Financial services for smallholder farmers</h4>
<p class="graf graf--p">Smallholder farmers remain notoriously difficult to reach and are often considered high-risk clients since their incomes are tied to unpredictable harvests. An estimated <a class="markup--anchor markup--p-anchor" href="https://www.raflearning.org/post/inflection-point-unlocking-growth-era-farmer-finance" target="_blank" rel="nofollow noopener noreferrer">270 million smallholder farmers around the world face a financing gap of $170 billion</a>. Innovators addressing this need can provide real value — by helping farmers finance irrigation pumps, combat pests, or address climate risks. Startups in this space include <a class="markup--anchor markup--p-anchor" href="https://apolloagriculture.com/" target="_blank" rel="nofollow noopener noreferrer">Apollo Agriculture</a>, which leverages satellite imagery, data science, and mobile money to finance fertilizer and seeds needed to increase crop yields, and <a class="markup--anchor markup--p-anchor" href="https://www.pula-advisors.com/" target="_blank" rel="nofollow noopener noreferrer">Pula</a>, which works with large seed and fertilizer suppliers across Africa to bundle crop insurance in with product purchases.</p>

<h4>Asset finance</h4>
[caption id="attachment_24931" align="aligncenter" width="615"]<img class="wp-image-24931" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/01/kn_pg_2016_25.jpg" alt="" width="615" height="410" /> The Paygo team at work on their smart meter for cooking gas[/caption]
<p class="graf graf--p">Individuals and small businesses require financing for assets like medical equipment, smartphones, and solar home systems to increase efficiency and improve lives. One promising innovation in this space is pay-as-you-go financing, which allows consumers and business owners to make small upfront payments and regular “top-ups,” usually sent via mobile money. The model has already led to a rapid expansion in solar home systems across emerging markets. Other scalable models for asset financing leverage new distribution and payment approaches like layaway solutions, leasing models, and peer-to-peer transfers. <a class="markup--anchor markup--p-anchor" href="http://paygoenergy.org/" target="_blank" rel="nofollow noopener noreferrer">PayGo Energy</a> is a promising company in this space; its pay-as-you-go financing model enables low-income customers in Kenya to pre-pay for cleaner and more affordable cooking gas.</p>

<h4>All-digital consumer lending</h4>
<p class="graf graf--p">Recent years have seen digital consumer lenders emerge and scale by using simple apps to collect and analyze customer data to provide access to credit for underserved populations. The speed and accessibility of digital platforms enable credit access for consumers who are underserved by traditional lenders and who might otherwise be too costly to serve. Innovators could add value to the sector with new approaches to credit underwriting and consumer engagement that lower defaults and improve retention — two of the critical challenges to the app-based lending model. <a class="markup--anchor markup--p-anchor" href="http://smartcoin.co.in/" target="_blank" rel="nofollow noopener noreferrer">SmartCoin</a> offers new engagement tools alongside its mobile lending platform to better understand and serve its customers in India, and <a class="markup--anchor markup--p-anchor" href="https://www.tezfinancialservices.pk/" target="_blank" rel="nofollow noopener noreferrer">Tez</a> provides an all-digital banking platform with a full suite of products to low-income consumers in Pakistan.</p>

<h4>Consumer financial health</h4>
<p id="ce83" class="graf graf--p graf-after--p">In 2016, the Federal Reserve revealed a concerning statistic about financial health in the U.S.: 46 percent of Americans said they could not pull together <a class="markup--anchor markup--p-anchor" href="https://www.washingtonpost.com/news/wonk/wp/2016/05/25/the-shocking-number-of-americans-who-cant-cover-a-400-expense/?utm_term=.893f79e72c4c" target="_blank" rel="nofollow noopener noreferrer">$400 to cover an emergency</a>. Startups are providing solutions that help consumers manage their day-to-day financial lives and rebound from shocks. There is significant potential for innovators to leverage behavioral science to design new solutions such as clever nudges, useful automation, gamification, or bundling across different financial products. Innovators in this space include <a class="markup--anchor markup--p-anchor" href="https://www.lendstreet.com/" target="_blank" rel="nofollow noopener noreferrer">Lendstreet</a>, which focuses on financial health by providing U.S. consumers a platform to restructure and refinance their distressed debt and rebuild their credit, and <a class="markup--anchor markup--p-anchor" href="https://www.destacame.cl/" target="_blank" rel="nofollow noopener noreferrer">Destacame</a>, which empowers users in Mexico and Chile with control of their data to build their financial capabilities and access better financial products.</p>
<p id="2358" class="graf graf--p graf-after--p">Each of these areas of startup-led innovation offers significant potential for both social impact for underserved consumers and financial profit in 2018. We’re excited to see what’s next.</p>
<em>Image credits: Accion</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/02/27/kopo-kopo-building-on-the-rails-of-mobile-money-in-kenya/">Kopo Kopo: Building on the Rails of Mobile Money in Kenya</a>

<a href="https://cfi-blog.org/2017/08/28/catalyst-fund-lessons-on-getting-early-stage-fintech-startups-investment-ready/">Cataylst Fund: Lessons on Getting Early-Stage Fintech Startups Investment-Ready</a>

<a href="https://cfi-blog.org/2017/07/31/how-financial-institutions-and-fintechs-are-partnering-for-inclusion-lessons-from-the-frontlines/">How Financial Institutions and Fintechs Are Partnering for Financial Inclusion: Lessons from the Frontlines</a>

&nbsp;

&nbsp;

&nbsp;

&nbsp;

&nbsp;

7 Fintech Trends to Watch in 2018

A <a href="http://www.un.org/apps/news/story.asp?NewsID=57013#.WUkqMevyuM8">record number of people</a>, more than ever in our lifetimes, are fleeing their homes due to wars, persecution, and disasters. Nearly <a href="http://www.unhcr.org/en-us/figures-at-a-glance.html">20 people</a> are forcibly displaced every minute, amounting to 28,300 people each day. Roughly <a href="http://www.unhcr.org/en-us/figures-at-a-glance.html">65 million</a> people are currently displaced worldwide, according to the United Nations Refugee Agency. This figure is about the size of the <a href="http://www.cnn.com/2017/06/20/world/world-refugee-day-worst-crisis-in-history/">population of France</a> or the United Kingdom. About 22 million of the displaced are refugees (displaced across country borders). And more than half of whom are under the age of 18.

Today on World Refugee Day, we call on the international community to provide compassion for the displaced and support and solidarity for those working tirelessly to help them. It’s an opportunity to reflect on what we can do to overcome inaction, indifference, and fear.

Two areas in need of attention, as <a href="http://www.independent.co.uk/news/world/europe/refugees-120-migrants-drown-latest-mediterranean-disaster-boat-sinks-asylum-seekers-nigeria-sudan-a7798961.html">today’s news</a> has so painfully affirmed, <a href="http://www.unhcr.org/news/briefing/2017/6/5948dfb64/world-refugee-day-reports-three-new-shipwrecks-mediterranean-sea.html">are enhanced water rescue operations</a> and more viable and safer alternatives for those in need of international protection. Today we learned that <a href="http://www.unhcr.org/news/briefing/2017/6/5948dfb64/world-refugee-day-reports-three-new-shipwrecks-mediterranean-sea.html">several ships</a> that disembarked from the coast of Libya over the weekend sank and more than 120 refugees are feared to have drowned in the Mediterranean Sea.<a href="https://www.flickr.com/photos/126123741@N03/25780260202/in/album-72157663792457593/"><img class="wp-image-23747 alignright" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/06/25780260202_9b483f09f9_k.jpg" alt="" width="620" height="413" /></a>

The death toll this year of refugees attempting to cross the Mediterranean <a href="http://www.independent.co.uk/news/world/europe/refugees-120-migrants-drown-latest-mediterranean-disaster-boat-sinks-asylum-seekers-nigeria-sudan-a7798961.html">passed 1,000 in April</a>, a number that wasn’t reached until the end of May last year. The International Organization for Migration (IOM) indicates that during 2017 so far, at least 1,850 people have lost their lives trying to cross the Mediterranean.

As we’ve covered extensively on this blog, the financial inclusion industry is well-positioned to support internally displaced individuals and refugees. By offering payments, credit, insurance, and savings products, inclusive finance providers can help refugees stay connected to sources of financial support, transition beyond reliance on economic assistance programs, and ultimately contribute to their host countries.

Here are a few of our previous posts for you to read, or re-read. They offer an introduction to the topic of financial inclusion of refugees, outline the challenges and opportunities to serve this especially vulnerable client segment, including via new technologies and business models, and share success stories for others to learn from.
<ul>
 	<li><a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/">Financial Inclusion of Refugees: An Introduction</a>, by Daniel Balson, Lead Specialist for Eurasia and MENA, the Smart Campaign</li>
 	<li><a href="https://cfi-blog.org/2016/09/27/financial-inclusion-of-refugees-azerbaijan-case-study/">Financial Inclusion of Refugees: Azerbaijan Case Study</a>, by Daniel Balson, Lead Specialist for Eurasia and MENA, the Smart Campaign</li>
 	<li><a href="https://cfi-blog.org/2016/10/07/financial-inclusion-of-refugees-al-majmoua-in-lebanon/">Financial Inclusion of Refugees: Al Majmoua in Lebanon</a>, by the Social Performance Task Force (SPTF)</li>
 	<li><a href="https://cfi-blog.org/2017/03/09/the-digital-demands-of-the-displaced-dont-track-me-dont-expose-me-dont-cut-me-off/">The Digital Demands of the Displaced: Don’t Track Me, Don’t Expose Me, Don’t Cut Me Off</a>, by Kim Wilson</li>
 	<li><a href="https://cfi-blog.org/2017/02/14/refugees-and-humanitarian-assistance-which-kind-of-aid-is-best/">Refugees and Humanitarian Assistance: Which Kind of Aid Is Best?</a>, by Jeffrey Riecke, Senior Specialist, CFI</li>
 	<li><a href="https://cfi-blog.org/2016/02/09/financial-inclusion-and-immigration-in-europe-disrupting-identity-norms/">Financial Inclusion and Immigration in Europe – Disrupting Identity Norms</a>, by Brenda Santoro and Ahmed Dermish with Kim Wilson</li>
 	<li><a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">The Future of Refugee Financial Inclusion</a>, by Daniel Balson, Lead Specialist for Eurasia and MENA, the Smart Campaign</li>
</ul>
Whether you work in the inclusive finance sector or not, we hope you’ll take action. For more information, head to the UN Refugee Agency <a href="http://www.unhcr.org/en-us/get-involved.html">website</a>.

<em>Image credit: <a href="https://www.flickr.com/photos/126123741@N03/25780260202/in/album-72157663792457593/">Julian Buijzen via Flickr.</a></em>

It’s World Refugee Day - Financial Inclusion Stakeholders Take Note!

Predictably, the long tentacles of <a href="https://www.microfinancegateway.org/library/responses-refugee-crisis-financial-education-and-long-term-integration-refugees-and-migrants">financial inclusion</a> have coiled themselves around the most vulnerable targets of humanitarian aid: low income <a href="http://www.digitalfinanceinstitute.org/?post_projects=childrens-adventure-camps">refugees</a>, migrants and displaced populations (hereon: “refugees”).

Just as predictably, the financial inclusion agenda is driven by suppliers (aid providers, donors, financial intermediaries and governments). Few refugees are demanding to be included in a digital/formal ecosystem. That does not mean they don’t appreciate the shelter, food and cash that humanitarian agencies have mustered on their behalf. They do. They also appreciate the efforts of those same agencies to make cash assistance easier. E-cash that can be transformed into physical cash at convenient times and places is an example. Use of debit cards at ATMs to withdraw cash from digital accounts can cut valuable time otherwise spent waiting in long cash distribution queues. Very appreciated, indeed.

But beyond handily retrieved cash assistance, refugees, obsessed with the business of surviving, aren’t all that interested in being co-opted by yet another development agenda, in this case, financial inclusion. They aren’t demanding a bank account, a mobile wallet, or a branded payment card. Nor are they demanding that their cash retrieval method turn into a savings program. In fact, such programs, however well-intended, can backfire. Some NGOs place restrictions on cash withdrawal amounts – an attempt to force savings or nudge smoother consumption. But such restrictions can lead to cash cards getting swallowed at the ATM; refugees forget, or perhaps never understood, the various constraints layered into their cards.
<blockquote>But beyond handily retrieved cash assistance, refugees, obsessed with the business of surviving, aren’t all that interested in being co-opted by yet another development agenda, in this case, financial inclusion.</blockquote>
Despite the supply-side’s lust for data, refugees, especially older ones, reject the notion of being traced. It’s easy to see why. Some are fleeing such ruthless trackers as the Taliban, ISIS, or their home governments and thus are protective of data that might expose even a whiff of their whereabouts. As a consequence, some reject debit cards, e-vouchers, or e-wallets for anything other than maximum withdrawal of cash as soon as a digital distribution is made.

There’s more. As part of addressing a “<a href="http://nextbillion.net/unlocking-the-power-of-digital-financial-services-for-humanitarian-response/">financial inclusion gap</a>,” agencies and <a href="http://nextbillion.net/unlocking-the-power-of-digital-financial-services-for-humanitarian-response/">donors</a> are examining the closed loop nature of the cards they issue. Wider use of cards and access points across networks is one reason to lengthen the loop. That sounds good. Agencies and donors also promote individually owned e-wallets and cards. Refugee-owned accounts (versus NGO-owned accounts) allow users to top up their cards and wallets with remittances and earnings. That sounds good, too. And agencies hope to increase digital transactions to improve data collection.

Wait, that definitely does not sound good.

Again, data collection is exactly what many aid-receiving refugees fear.  They worry that humanitarian actors (NGOs, UN agencies, governments and commercial intermediaries) will know too much about them, that the full content of their accounts – not just the aid-funded portion – will become visible to anyone with the right permissions, permissions over which refugees have zero control.

The refugee wonders: if aid agencies can track all transactions in my account, which transactions will be deemed “good” (the purchase of milk?), which “bad” (the purchase of cigarettes?), and which up for grabs (the purchase of condoms?)? Will bad purchases signal that I am irresponsible and thus trigger a closure of my cash assistance? If I receive remittances on the same account that holds my e-cash assistance, will my aid agency assume that I no longer need that assistance?

Getting the answer right requires users to fathom a bottomless pit of aid agendas. It’s easier to withdraw cash as soon as it becomes available than to imagine the possibilities that might arise from storing funds digitally.

But what if the world of financial inclusion suddenly were to become relevant to refugees? What might real demand look like?  In the summer of 2016, faculty, students and alumni of the Fletcher School, Tufts University, embarked on a study called the Financial Journey of Refugees. The study was sponsored by CRS Greece, GiZ Jordan, DRC Turkey, and the Trampoline House in Denmark. We researched 109 subjects and dozens of key informants in Greece, Turkey, Jordan, Denmark and Afghanistan. Our primary research question was: how do refugees finance their journeys and manage their money along the way? In the course of our qualitative discussions, they told us far more than we asked. Many confided their financial experiences and their experiences of aid across multiple countries. Results can be found in a recently released <a href="http://fletcher.tufts.edu/CEME/Featured-CEME-Senior-Fellows/~/media/CC882A166CB2476CA6C5DB62739FF5CC.ashx">essay</a>.

So, what are refugees demanding, if not financial inclusion? One way to find out is to understand what they do today to manage their financial tasks. Here are a few highlights: they are using kinship networks to finance their journeys, to store savings and to borrow to fill gaps in income as they settle and make their way. They are using local hawaldars – money traders – to store and release funds to their smugglers at different waypoints in their journeys as well as to settle debts within cross-border kinship networks.  But, perhaps an important takeaway goes beyond use of financial services and peers into the workings of a close cousin of finance: information services. Refugees are using Facebook, Whatsapp, and Viber, enabled by smart phones that they own or borrow. Together these platforms constitute a refugee communications backbone.

Facebook is deeply trusted (maybe more than justified). Refugees use Facebook to check whereabouts of relatives, indicate a need for funds, or refer a good smuggler. With mobile phones ubiquitous and smart phones prevalent, Facebook is accessible (and VPN workarounds possible in places where it is banned, such as <a href="https://www.lostwithpurpose.com/access-facebook-blocked-sites-iran/">Iran</a>). Refugees monitor and update Facebook often, particularly in places where batteries can be charged easily.

The near-ubiquity of Facebook and the perpetual fear of digital financial accounts seem incongruous. Our study does not reconcile these divergent claims. We only acknowledge them and ask: what value proposition makes Facebook so attractive that it overshadows the fear of traceability? Can Facebook move beyond its current third party offerings via <a href="https://www.bloomberg.com/news/articles/2016-06-13/inside-facebook-s-plan-to-get-users-to-buy-flowers-in-messenger">Messenger</a>, out of banked transactions, into bankless P2P transactions, like the hawala? Might they link to a crypto-currency and brand it in a friendly way? What would regulators need to do to make this possible?

But there are other questions, too. Can progressive central banks, such as the Bank of Jordan, focus on a demographic that is unafraid of being digitally tracked, such as <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/12/GSMA-case-study_Jordan_2016.pdf">young people</a> whose goal is to assimilate and impress? And in good time, could it let the behavior of the young become the norm? Meanwhile, can cash assistance providers applaud their own efforts as humanitarians, shedding concerns about whether their life saving cash and e-cash services – remarkable for what they are – contribute to a financial inclusion agenda?

<em><a href="https://sites.tufts.edu/kimwilson/">Kim Wilson</a> is on the Faculty of the Fletcher School, Tufts University and oversees Fletcher's participation in the <a href="https://digitalfrontiersinstitute.org/the-institute/certificate-digital-money/">Certificate in Digital Money</a> offered jointly with the Digital Frontiers Institute.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/">Financial Inclusion of Refugees: An Introduction</a>

<a href="https://cfi-blog.org/2017/02/14/refugees-and-humanitarian-assistance-which-kind-of-aid-is-best/">Refugees and Humanitarian Assistance: Which Kind of Aid Is Best?</a>

<a href="https://cfi-blog.org/2016/02/09/financial-inclusion-and-immigration-in-europe-disrupting-identity-norms/">Financial Inclusion and Immigration in Europe - Disrupting Identity Norms</a>

The Digital Demands of the Displaced: Don’t Track Me, Don’t Expose Me, Don’t Cut Me Off

If you had to embark on a journey similar to that of the 65 million people who are currently forcibly displaced, what would you bring? Most likely among your provisions would be a smartphone. Phones are the contemporary map and compass, a gateway to critical information, a means for keeping in touch with loved ones, and a financial toolkit. <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf">More and more</a>, aid workers are witnessing refugees arriving at camps with smartphones. For both the refugee journey and the post-journey settlement process, a phone can be vital. With this in mind, you might not be surprised to learn that mobile money usage among refugees, including for cash transfers from governments and NGOs, is on the rise.

GSMA reports that the end of 2015, there were <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/04/SOTIR_2015.pdf">271 operating mobile money systems</a> across 93 countries, with over 400 million registered accounts globally. At the same time, the Center for Global Development <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">estimates</a> that the vast majority of aid to refugees is given in monetary form. Most aid is provided either through vouchers that can be used for specific purchases or in-kind donations of items like blankets, heaters, and bags of rice. There’s growing evidence suggesting that not only are cash aid transfers <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">superior to vouchers and in-kind aid</a>, but that mobile money is the <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf">optimal vehicle for cash transfers</a>.

Most refugees use mobile phones extensively, with higher internet usage rates than the general population, according to a study from the Oxford University Humanitarian Innovation Project, “<a href="https://www.rsc.ox.ac.uk/refugeeeconomies">Refugee Economies: Rethinking Popular Assumptions</a>”. In some cases refugees even buy a new SIM card <a href="https://www.trulioo.com/blog/financial-support-for-refugees-displaced-people/">each time they enter a new country</a> in order to navigate their way to the next border. Governments and aid agencies are recognizing this trend and re-thinking how they support this vulnerable population. And for their part, mobile network operators (MNOs) increasingly see refugees as a new, viable customer base as well as an opportunity to contribute services to highly vulnerable people.

A <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf">new report from GSMA</a> offers a handful of vignettes that illustrate the growing pervasiveness of phone-based financial services in refugee communities:
<ul>
 	<li>In Pakistan, which has the third-largest refugee community in the world, the government is the primary source of cash assistance for displaced individuals, and the majority of cash transfers are completed via mobile money. Four of the market’s top five MNOs are active participants in the mobile money disbursement programs.</li>
 	<li>In Uganda, GSMA surveyed refugees both in and outside camps and found that almost half of them used mobile money, mainly to receive remittances from family and friends. Recently, the MNO Orange Uganda built a tower in the Nakivale camp to support the launch of its mobile money service targeting the refugee population.</li>
 	<li>Refugees in Rwanda are regular users of mobile money. Some are even working as mobile money agents.</li>
</ul>
Mobile money presents refugees with deepening financial inclusion opportunities. Large barriers persist to refugees adopting and using such services, but when given the opportunity, refugees and internally displaced populations use mobile money in the same ways that other populations do: for remittances, person-to-person payments, merchant payments, loans, and savings.

Potentially most crucial for refugees are international remittances, either to send money home or to receive money from home. The international remittances market has been disrupted by mobile money in recent years, with transfers via phone <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf">21 percent</a> cheaper on average than standard money transfer operations. And such services are spreading fast. In fact, international remittances are the fastest-growing mobile money service. One can now send international remittances via mobile money between more than 20 countries worldwide, particularly in regional markets, i.e., between neighboring countries. High rates of adoption are seen in several markets in which these services recently launched, including Burkina Faso, Ivory Coast, Mali, and Senegal.

Whether in settlement camps or post-settlement, refugees seek to quickly build new lives. To this end, they use person-to-person and merchant payments not only for consumption purposes, but also as livelihood-building and business tools. Eighty-nine percent of refugees in Kampala use their mobile phones to generate income, according to “Rethinking Popular Assumptions”. Phones can help refugees find employment, access market information, and run micro-businesses. A mobile money ecosystem also presents employment opportunities for ancillary services like selling phone charging services, mobile phone repair, and serving as mobile money agents. Mobile money empowers refugees to create or boost existing markets – for food, clothing, financial services, and more.

In addition to mobile money, we’ve seen an array of initiatives from governments and NGOs that pair aid with other digital financial services:
<ul>
 	<li>Lebanon hosts the most refugees per capita in the world with 1.2 million individuals. Aid organizations like the International Rescue Committee (IRC) <a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">issue ATM cards</a> for refugees to access cash benefits, taking advantage of the fully-functioning distribution networks of merchants and ATMs available in the country.</li>
 	<li>In Syria, the United Nations Relief and Works Agency (UNRWA) <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;uact=8&amp;ved=0ahUKEwi_nNidh47SAhUqw1QKHUnmAIQQFggcMAA&amp;url=https%3A%2F%2Fcfi-blog.org%2F2016%2F11%2F15%2Fthe-future-of-refugee-financial-inclusion%2F&amp;usg=AFQjCNECigBXaYLGABweP1wabi4C7_sZdA&amp;sig2=CIjwqfD6abOcndsGBat1RA">developed a small fleet</a> of mobile lending units to reach clients in areas without financial infrastructure.</li>
 	<li>On the island of Lesbos, Greece, Mercy Corps <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">offers refugees debit cards</a> that connect to a bank account to help them build banking histories.</li>
 	<li>The Digital Finance Institute launched the <a href="http://www.digitalfinanceinstitute.org/?post_projects=childrens-adventure-camps">Banking on Refugees project</a> which is piloting a cloud-based branchless bank that harnesses biometric identification and digital payment solutions, including prepaid cards and e-wallets.</li>
</ul>
However, a number of challenges impede the spread of mobile money-based humanitarian aid for refugees, as well as their uptake of broader mobile money services. These can come from both the supply and demand side. In some environments the mobile money ecosystem is still too nascent and not yet a viable option. In others, demand is weak, either because services are not sufficiently convenient or robust, or because of lack of customer awareness or familiarity. In its recent study, GSMA found that for refugees using mobile money, convenience and connectivity was more important than familiarity with the service, pointing to the importance of service and agent coverage and agent liquidity.

Proof of identity also poses a serious issue. <a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">As discussed on this blog previously</a>, refugees often leave their home country without identity documentation, and sometimes even when they have it, the host country government may not have the technology and data needed to authenticate these documents. Lack of identification can impede refugees from buying SIM cards, owning mobile phones, and accessing mobile money and other financial services.

UNHCR in Jordan is mitigating this problem using biometrics. Refugees in the UNHCR program in Jordan <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">receive iris scans</a> which are stored in the cloud. The UNHCR offers bank accounts for refugees through the Cairo Amman Bank. When refugees arrive at the bank’s ATMs, they look into a set of binoculars that scans and verifies their eyes, and they’re able to withdraw the money in their name.

Refugees are also often faced with the loss of the banking and credit histories they built in their home countries. We’ve <a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">advocated before for credit history portability</a> for refugees, allowing refugees to be able to apply preexisting credit histories in the host country and, if they return home, to bring credit histories accumulated in host countries back with them.

Trulioo, a company that works in identity verification, <a href="https://www.trulioo.com/blog/financial-support-for-refugees-displaced-people/">asserts the potential</a> to use an individual’s cyber identity for identity verification and for enabling access to credit and other financial services. MNOs could serve as centralized, cross-border identifiers, by harnessing the user data and transaction histories linked to specific SIM cards. Additionally, aggregation of an individual’s online interactions, including of mobile money and online transactions could serve in place of credit histories to open financial doors.

But often it all comes back to the initial distribution of relief payments, where governments, NGOs, MNOs, and banks too often conduct business as usual. Although buy-in and coordination from these stakeholders is essential, many remain uncomfortable, unfamiliar, or unconvinced about the merits of cash transfers instead of vouchers or donated items, or about the merits of mobile money. Elizabeth MacBride of Quartz <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">writes</a>, “One of the obstacles to donors shifting their giving to cash has been that the NGO edifice that funnels their money is built to resist its own destruction.” Indeed, mobile money cash transfers might be a more efficient and effective means to offer refugees crucial resources, but there are vested interests in the status quo. For example, in 2013 USAID shipped <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">1.4 million metric tons</a> of food aid as part of the World Food Program. To accomplish this, roughly $70 million was spent on shipping. Food sellers and shippers are likely to be strong advocates of retaining the in-kind system.

A number of studies suggest that not only is cash aid more efficient than other aid forms, it’s ultimately more helpful for refugees. One study estimates that the savings on administration gleaned from the more efficient digital cash transfer programs could help the aid reach 30 percent more people for the same price. In 2014 IRC, in partnership with Yale and the University of Brasilia, published a rigorous evaluation of emergency cash distribution for refugees with the core finding that refugees <a href="http://mastercardcenter.org/action/mobile-money-transforming-financial-inclusion-refugees/">used the money for food as intended</a>, as opposed to spending it on cigarettes or alcohol. Another IRC report in Lebanon found that 87,700 families who were given $575 via ATM cards <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">used the funds for essential purchases</a>, like food, clothing, fuel oil, and so forth. In both of these studies additional findings spoke to the entrepreneurial nature of refugees, who strive against extremely difficult odds to build new lives. In the first study it was calculated that for every $1 of cash assistance, $2 was created in local markets. In the second, with cash transfers instead of other aid forms, more children stayed in school because fewer families had to send their kids to work. Another study of Syrian refugees in Iraq found that <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">70 percent</a> of individuals sold some of the aid they received in the form of rice. Compared to other forms of aid, cash transfers empower refugees to take action on behalf of themselves and smooth entry into their new country.

And digital channels for cash aid – whether mobile money or otherwise – offer a number of benefits over physical cash transfers. Digital finance offers greater transparency and the ability to track cash, which can combat the longstanding problem of corruption surrounding the physical handling of cash. And digital offers refugees greater security and safety from theft.

Sadly, the current refugee crisis is not going away any time soon. In the meantime, we applaud all those working to support these millions of individuals, through cash transfers, financial services, and other means.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/">Financial Inclusion of Refugees: An Introduction</a>

<a href="https://cfi-blog.org/2016/09/27/financial-inclusion-of-refugees-azerbaijan-case-study/">Financial Inclusion of Refugees: Azerbaijan Case Study</a>

<a href="https://cfi-blog.org/2016/10/07/financial-inclusion-of-refugees-al-majmoua-in-lebanon/">Financial Inclusion of Refugees: Al Majmoua in Lebanon</a>

Refugees and Humanitarian Assistance: Which Kind of Aid Is Best?

[caption id="attachment_22489" align="aligncenter" width="615"]<img class="wp-image-22489" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/12/myanmar-accion-champions-financial-inclusion-fish-seller-ma-san-hew-microfinance-client-of-accion-dawn-image-by-john-rae.jpg" width="615" height="412" /> Accion client Ma San Htwe selling fish in Myanmar, one of the key areas discussed at European Microfinance Week 2016.[/caption]

<a href="http://www.e-mfp.eu/european-microfinance-week-2016">European Microfinance Platform</a> is celebrating 10 years of supporting inclusive finance innovation, and hosted European Microfinance Week 2016 (EMW) in Luxembourg a few weeks ago. At the conference, I joined discussions about key organizations and challenges in the industry. Here are five of the main takeaways from the week:
<h4>1. The Underserved Refugee Population<strong>
</strong></h4>
The <a href="http://sptf.info/">Social Performance Task Force</a> (SPTF) is helping to provide financial services to the refugee population, which is now <a href="http://sptf.info/working-groups/refugee-microfinance">approximately 20 million people</a>. In reality we don’t know very much about the socioeconomic needs of refugees, and much of the research is focused on humanitarian efforts. SPTF is working to research and provide guidelines to financial service providers to better serve the financial needs of this population. The guidelines will be published on SPTF’s website in the coming months. Learn more about leading organizations supporting refugees from <a href="https://cfi-blog.org/tag/financial-inclusion-of-refugees-blog-series/">CFI’s blog series</a> on refugees.
<h4>2. Opportunity in Myanmar<strong>
</strong></h4>
Representatives from VisionFund, Advans, UNCDF, and M-CRIL provided a look at the economic landscape of Myanmar and the future of financial inclusion there. In Myanmar, 70 percent of the population was excluded from formal financial services <a href="http://partners.wsj.com/metlife/multipliers/articles/myanmars-economic-revolution/">until 2011, when microfinance rapidly </a>expanded. After 2011, 267 licensed Monetary Financial Institutions (MFIs) opened. This<a href="http://partners.wsj.com/metlife/multipliers/articles/enabling-new-business/"> opportunity</a> comes with many barriers to inclusion, such as a lack of government regulation and funds and capacity-building issues. However, there is widespread optimism with an adoption of regulations proposed by the <a href="http://smartcampaign.org/home/1082/1082">Smart Campaign</a>, as well as further demand for microfinance in Myanmar. Investors should consider moving into the region for long term impact.
<h4>3. Offshore Financial Centers<strong>
</strong></h4>
The <a href="http://fiecouncil.com/">Financial Inclusion Equity Council</a> (FIEC) hosted a discussion at EMW about their latest research on offshore financial centers. Daniel Rozas and Sam Mendelson of the European Microfinance Platform have been working with FIEC members, raising questions about the key drivers in deciding to domicile funds offshore, and why this is important for the impact investing space. This session was a good introduction to the research, and their publication will be released early next year.
<h4>4. Cyber Security and Digital Finance</h4>
Expanding digital finance is important to everyone working in the financial inclusion space. Unfortunately, operational costs are too high to open banks in remote areas. The threat of cyber-attacks and the challenge of gaining trust in emerging markets are also important topics to review. International Development organizations, investors, regulators, and innovators gathered to highlight the risk. One topic that was discussed was the risks specifically faced by smaller banks: they are much more vulnerable to cyber-attacks and they don’t have enough capital to invest in security measures. Organizations like Suricate Solutions (an electronic banking and IT security firm) and <a href="http://www.uncdf.org/">UNCDF</a> are working with regulators to collect data from the market and set up preventative measures to avoid vulnerability for the financial inclusion sector.
<h4>5. Microfinance and Access to Education<strong>
</strong></h4>
This year, access to education was the theme of the European Microfinance Award. It was represented by three finalists from around the world: Kashf Foundation (Pakistan), Fundación Génesis Empresarial (Guatemala), and Opportunity Bank (Uganda). The winner was Kashf Foundation, an organization that provides loans to private schools, training for teaching staff, and educational opportunities for women and girls. In a country where 25 million children are out of school, this €100,000 award by the Luxembourg Ministry of Foreign and European Affairs will make a great impact. The organization is also <a href="http://www.smartcampaign.org/certification/certified-organizations#Kashf">SMART Certified</a> by the Center for Financial Inclusion.

These are just a few of the important discussions about innovations in financial inclusion. Each presents not only challenges but unique opportunities to learn and collaborate to make progress in inclusive finance.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">The Future of Refugee Financial Inclusion</a>

<a href="https://cfi-blog.org/2015/02/18/myanmars-first-ecommerce-platform-supports-the-transition-from-cash-to-electronic/">Myanmar's First eCommerce Platform Supports the Transition from Cash to Electronic</a>

<a href="https://cfi-blog.org/2016/07/22/more-in-for-impact-whats-up-in-socially-responsible-investing/">"More in for Impact": What's Up in Socially Responsible Investing?</a>

&nbsp;

5 Themes in Financial Inclusion Innovation from European Microfinance Week 2016

<em>&gt; Posted by Daniel Balson, Lead Specialist for Eurasia and MENA, the Smart Campaign</em>

<em>This is the fourth and final blog entry in a <a href="https://cfi-blog.org/tag/financial-inclusion-of-refugees-blog-series/">series</a> exploring how financial services can be leveraged to assist refugee populations. This entry will consider the future of refugee financial services and what our sector can do to ensure that the future is an inclusive one that serves genuine needs and protects refugee rights. </em>

<em>Syrian refugees shop at a market with their bank card given by the Turkish Red Crescent.</em>

It is worth asking whether the financial inclusion sector is at the forefront of the movement to financially include refugees. The humanitarian sector has long struggled to determine how to provide assistance during a crisis in a way that is sustainable, effective, and accountable. Recently, humanitarian organizations such as Oxfam and the International Finance Corporation (IFC) have begun considering whether it’s possible to use payments as an on-ramp for financial inclusion of refugees. Cash transfers have historically facilitated corruption and failed to make it into the hands of the people who needed it most. In-kind donations of goods such as tents, food, sleeping material and other items undermined local merchants who made their livelihoods selling these very goods. In response, the sector has begun experimenting with digital financial payments. In Afghanistan, for example, the World Food Program (WFP) has <a href="https://btca-prod.s3.amazonaws.com/documents/185/english_attachments/Afghanistan_Case_Study_May2016.pdf?1463507198">issued e-vouchers</a> and mobile money to cover food aid. The first e-voucher pilot was carried out on a small user base of 603 recipients in Kabul for a three-month disbursement cycle from April to June 2014. The total value of e-vouchers disbursed was US$72,360. The program proved successful and the WFP launched several follow-on pilots across the country in the subsequent year.

By eliminating the need for central distribution points, e-vouchers helped insulate staff and beneficiaries from security risks. Biometric technology such as finger-print scanning and chip and pin technology helped the WFP overcome literacy challenges and safeguard client data. As a result, e-vouchers were more effective at protecting clients’ rights to privacy and helped deliver a more transparent and approachable payment product.

Lebanon has proved to be another test case for digital financial services and refugee populations. Lebanon has welcomed 1.2 million refugees within its borders, mostly from Syria, Iraq, and Palestine. As such, it is the country with the most refugees per capita in the world. Here too, digital financial services have played a pivotal role. By creating points of access with merchants and ATMs, aid organizations have <a href="http://www.cashlearning.org/downloads/untappedhumanitariandemand-abusinesscaseforexpandingdfs.pdf">developed a fully functioning distribution network</a>, allowing refugees to use their pre-paid cards in more transactions than ever before.

With the success of these seemingly disconnected technology programs, humanitarian organizations have begun speaking to their financial sector counterparts to explore how these pilots could transition to an on-ramp for genuine financial inclusion. Whereas in the past, humanitarian organizations became adept at quickly installing basic, flexible, and effective financial networks to use in times of crisis, the new approach seems to be focused around developing a more lasting system that can continue to serve at risk populations long after reconstruction. For example, more and more humanitarian organizations are considering how payment networks can evolve into a system that facilitates savings, credit, and insurance.

<strong>What can donors do better?</strong>

To achieve results on this front, donors, aid agencies, and humanitarian organizations will have to take a critical look at prior approaches and incentives. For example, the sector may wish to reconsider whether old monitoring and evaluation paradigms are best suited to providing sustainable financial services to refugees. Previously, auditors assessing the efficacy of an intervention might have counted how much money was distributed and spent. However, if we are to work towards developing long-standing financial channels for refugees, it is imperative that we account for and encourage savings. Evaluators may be required to develop newer and more accurate metrics to determine whether pre-existing payment channels can grow to accommodate the diverse array of financial services refugees will require.

Additionally, donors and practitioners will need to learn to tell their story better. In doing so, they might consider what counts as a success and why it matters to governments, donors, practitioners, and to refugees themselves. New narratives would be most effective if boosted by emerging research on refugee financial services. For example, if the sector were to demonstrate that financially included refugees are more likely to return to their country of origin, it could use this data to make a stronger case before skeptical donors. Donors champion financial organizations like Al Majmoua in Lebanon and Microfund for Women in Jordan that experiment with financial services for refugees.  By highlighting successes, donors could use their considerable megaphone to reinforce the importance of such programs and demonstrate that they can deliver financial services for refugees in a sustainable and effective manner. Such publicity could be paired with a concerted focus on overcoming the perception of refugees as risky borrowers: donors could guarantee some portion of loans issued.

<strong>What can practitioners do better?</strong>

Practitioners can find new ways to leverage digital services to address challenges refugees face. Myriad avenues are being explored; a few of the more promising ones are highlighted below:
<ul>
 	<li>Currently, refugees risk losing credit histories that they carefully built in their home countries – as well as credit histories they start from scratch and build in their host country. Credit score portability can help mitigate these challenges and encourage refugees to take up financial services in their host country as well as return to their home countries when it is safe, with the knowledge that their sound financial decision making will be recognized.</li>
</ul>
<ul>
 	<li>Refugees often arrive to their host countries with few fixed assets and limited collateral. Creditors can harness the power of crowdfunding to create digital stores of collateral for potential refugee clients, allowing them to get a foot in the door of the credit marketplace.</li>
</ul>
<ul>
 	<li>As refugees might arrive with limited documentation, they are often unable to demonstrate their creditworthiness. Alternative creditworthiness analysis tools offer one promising solution. By leveraging a refugee’s social media presence, contacts and networks, loan officers can get a sense of the client’s trustworthiness and diligence, allowing the provider to lower the interest rate on an otherwise prohibitively risky product.</li>
</ul>
<ul>
 	<li>Many refugees face political persecution in both their home country and their host country. As such, they are often reticent to divulge personal information necessary to secure a loan. Strong digital safeguards can help protect a refugee’s privacy, anonymize data and minimize risk to the client’s contacts back home.</li>
</ul>
Technology, of course, will not be a substitute for appropriate strategizing and good sense. Many of the core obstacles facing refugees’ financial inclusion can be best solved not through novel technical approaches but by reviewing and carefully internalizing lessons already uncovered by the sector. For example:
<ul>
 	<li>Mobile lending units allow the product to come to the client in cases where the client cannot come to the product. In Syria, UNRWA developed a small fleet of mobile lending units, allowing loan providers to reach clients in areas with few security threats but limited financial infrastructure.</li>
</ul>
<ul>
 	<li>Appropriate and flexible products can help an institution adapt to a rapidly changing situation. In Syria, UNRWA launched its <a href="http://www.unrwa.org/sites/default/files/content/resources/microfinance_department_annual_report_2015.pdf">BST (“Bastat”)</a> product aimed specifically at street peddlers and designed to cope with their frequent displacement, in part through low repayment amounts. A separate product provides home reconstruction loans for Syrians. These highly tailored products help address real and pressing needs faced by Syrian victims of conflict. These strategies are an effective illustration of appropriate product design, the first of the Smart Campaign’s Client Protection Principles. You can learn more about how the Smart Campaign views this principle <a href="http://smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">here</a>.</li>
</ul>
<ul>
 	<li>Providing financial services to refugees is often a contentious proposition. In countries where resources are limited, politics are fraught and conflict is a recent memory, the public and the government are often skeptical when precious funds are redirected to temporary and foreign visitors. Recognizing this reality, institutions can minimize disruption by supporting activities that do not compete with the local economy. For example, in Lebanon, Al Majmoua has funded refugee families who make <em>aghabani</em> table cloths, a traditional Syrian textile in high demand throughout the Middle East.</li>
</ul>
<ul>
 	<li>Institutions serve refugees best when they focus on people. As we’ve seen in <a href="https://cfi-blog.org/2016/09/27/financial-inclusion-of-refugees-azerbaijan-case-study/">our Azerbaijan case study</a>, one of the easiest and most effective ways financial institutions can learn about how to serve refugees and the internally displaced is to hire them. Refugee staff come with an intuitive feel for the clients and their culture and an eagerness to work and learn. Additionally, financial institutions have found success by creating joint refugee and host borrower groups to create interdependence and build bridges between individuals who might not normally associate with one another. Additionally, by offering financial products to women refugees specifically, institutions are more likely to assist an underserved market segment and less likely to be seen as intrusive.</li>
</ul>
<strong>What governments can do better:</strong>

Meaningful progress on providing financial services to refugees requires the assistance of governments. Elected and appointed officials set the rules of the market, determine the country’s overarching policy towards refugees, signal moral support for migrants’ rights, and channel public concerns. Their support is fundamental to ensuring that refugees and the internally displaced can access meaningful economic opportunities.

Government officials can begin by stimulating an honest dialogue about the political dimensions of refugee financial inclusion and steering the rhetoric away from a binary option. Rather than forcing the public to make an imagined choice between citizen rights and refugee assistance, governments could explore avenues for how refugees can be financially included while benefiting their host communities.

Recognizing that refugees are some of their most vulnerable populations, officials can enact rules that would ensure their protection. By encouraging formal institutions to enter the market before they are superseded by less reputable lenders, officials can prevent the emergence of a black market for credit and thwart abuses before they appear.

While financial inclusion practitioners know far more about what it takes to assist refugees today than ten or even five years ago, there is much more to learn. Are refugees with more access to capital more likely to return to their home country? What types of financial services offered to refugees have the greatest net-positive effect on their host communities? These and other questions require additional research. Governments have the resources and the moral suasion to commission and implement such studies and should be vocal about the need to learn more on this critical topic.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/">Financial Inclusion of Refugees: An Introduction</a>

<a href="https://cfi-blog.org/2016/09/27/financial-inclusion-of-refugees-azerbaijan-case-study/">Financial Inclusion of Refugees: Azerbaijan Case Study</a>

<a href="https://cfi-blog.org/2016/10/07/financial-inclusion-of-refugees-al-majmoua-in-lebanon/">Financial Inclusion of Refugees: Al Majmoua in Lebanon</a>

The Future of Refugee Financial Inclusion

<em>&gt; Posted by the Social Performance Task Force (SPTF)</em>

<em>The following is the third post in a four-part blog series on the financial inclusion of refugees and the internally displaced. The first post can be found </em><em><a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/">here</a>, and the second <a href="https://cfi-blog.org/2016/09/27/financial-inclusion-of-refugees-azerbaijan-case-study/">here</a></em><em>.</em>

<strong>Overview of refugee populations in Lebanon</strong>

The multi-cultural and open economy of Lebanon is no stranger to the need to accommodate refugees. Over the years, Lebanon, which has a population of roughly 6 million, has generously maintained an open border policy and has, until restrictions were introduced in 2014-15 following the very large influx of Syrian refugees, permitted refugees to settle temporarily but freely across the country. The country’s experience in providing financial services to these refugees and internally displaced persons offers insights for financial institutions around the world on serving these vulnerable global populations.

Lebanon's refugee populations are diverse. The largest refugee group is Palestinian, around half of whom live in the 12 recognized Palestine refugee camps. From Iraq, about 50,000 refugees arrived after American-launched military operations in Iraq in 2003. Many of the Iraqi refugees were at one time middle-class professionals who have self-settled in urban areas in Lebanon. Syrians, who have a long history as migrant workers in Lebanon, have never been counted as foreign workers, and many were known to work in Lebanon before the war in Syria. But when civil war broke out in Syria in 2011, an unprecedented number of Syrians emigrated to Lebanon. As of October 2015, close to <a href="http://www.refworld.org/docid/56557d3b4.html">1.1 million</a> Syrian refugees in Lebanon had registered with the United Nations High Commissioner for Refugees (UNHCR).

Serving as a refugee in Lebanon requires the ability to navigate in an environment of extremely complex political, economic, social, and security-related volatilities. For example, <a href="http://www.ilo.org/wcmsp5/groups/public/---dgreports/---exrel/documents/briefingnote/wcms_368227.pdf">Lebanese labor laws exclude</a> Palestinian refugees from Syria from entry into formal employment, while newer restrictions allow for Syrian refugees to obtain work permits only in the traditional migrant worker sectors of agriculture and domestic services, where almost half of the Syrian refugee workers are employed, and in construction. The increased competition for low-quality, low-skilled jobs has <a href="http://documents.worldbank.org/curated/en/698161468179049613/Lebanon-Promoting-poverty-reduction-and-shared-prosperity-a-systematic-country-diagnostic">resulted</a> in depressed wage incomes and increased job insecurity, which is a key perceived stress factor for both refugee and host communities. These dynamics can <a href="https://data.unhcr.org/syrianrefugees/download.php?id=9399">trigger</a> resentment and fear especially among lower-income Lebanese workers and entrepreneurs, including the traditional core clientele of financial service providers (FSPs) like Al Majmoua.

<strong>Al Majmoua - history and structure</strong>

Save the Children launched Al Majmoua (Arabic for “the Group”) was established in 1994 as a microfinance program with USAID funding to provide group loans to lower-income women entrepreneurs across disadvantaged areas of Lebanon. In 1997, it became an autonomous NGO. One of Al Majmoua's <a href="http://www.almajmoua.org/visionandmission.aspx">strongly held values is inclusiveness</a>; though Al Majmoua's core clientele are women, it also serves lower-income men as well as individuals of “any nationality whether located in rural or urban regions; [it] also serve[s] refugees and reach[es] out to those living in remote areas and Palestinian camps all over Lebanon.” As of October 2015, Al Majmoua had 54,000 active borrowers holding USD 49 million in loans. Fifteen percent of these borrowers are non-Lebanese, including migrant workers, Palestinians, and Syrian refugees. Contrary to some fears that loans to refugees are high risk, as of 2015, each of Al Majmoua's client segments, including the non-Lebanese, has a 30 day portfolio at risk rate below 1 percent.

Al Majmoua offers group and individual loan products for micro- and SME enterprises, information and communication technology (ICT) start-ups, and youth entrepreneurs. It also offers salary-guaranteed loans, home improvement loans, loans to pay school fees for children, and loans for the disabled.

<strong>Lessons learned from Al Majmoua on serving refugees</strong>

<em><u>Expect initial staff and leadership resistance, but this can be overcome</u></em>. Inclusion of refugees challenges stereotypes and preconceived ideas about ‘the other.’ This requires determined drive from the board and senior management. A good first step for institutions is to have an open-ended board discussion on why refugee populations in their country are – or are not – served by their FSP. Institutions might also consider a discussion on ‘why not refugees?’ with their national associations, and can meet with relevant external stakeholders such as protection agencies to get more information on refugee populations. Once the reasons for ‘why not’ are put on paper, a strategy session with management to convert obstacles into opportunities is a great next step.

<em><u>Solicit and analyze feedback from institutions’ own staff and clients before offering services to refugee populations</u></em>. Al Majmoua initiated a series of focus group discussions with existing clients to discuss the idea of offering financial services to Syrian refugees. These discussions revealed very significant negativity. A majority of clients feared being outpriced or losing jobs to Syrians willing to work more for less, and they did not think Al Majmoua should “help the competition.” Demand for rental housing was felt to be surging, affecting also rent costs for Lebanese. During 2012, the injection of relief funds in the economy was believed to inflate prices of basic commodities, while the increased demand for goods by refugees was seen to benefit larger businesses (for example, refugees were provided cash or vouchers to use in select, large supermarkets) at the expense of the small stores operated by Al Majmoua’s clients.

<em><u>Develop and share the business case/strategy to secure buy-in</u></em>. Developing the business case for serving refugees based on hard data can be difficult to do upfront, due to a big information gap. One path forward is institutions making it a point to compile all the questions and concerns for which they do not have an upfront answer and incorporate these into a ‘feasibility study’ to eventually build a business case that works for all stakeholders. As the business case is developed, it’s essential that all stakeholders are fully informed. For Al Majmoua, a key turning point came when clients and staff felt their concerns were being heard and addressed in the pilot project.

<em><u>Market research is indispensable</u></em>. Because culture, language, and traditions among the targeted refugee population differ from those in the host community, and thus also from FSP staff, market research is critical, as adaptation and adjustments to products or procedures may be necessary. Furthermore, market research can help make refugee populations become more visible to the FSP. A recommended starting point is consulting with protection agencies and local authorities, as they can usually assist with numbers, location maps, and basic socio-economic profiles of refugee populations. Al Majmoua suggests that FSPs focus their market research in the value chains where refugees have an advantage, such as in ethnic foods and handicrafts. Further, institutions supporting refugee associations offer another means for learning about and engaging with local populations. Institutions might also create opportunities for repeated informal meetings between refugees and existing clients and staff.

<em><u>Do not outsource client selection</u></em>. Protection agencies may refer the most vulnerable refugees, as they prioritize needs, even though FSPs can best serve the working or entrepreneurial poor. The experience of Al Majmoua suggests to not outsource or rely on referrals from other agencies for client selection or appraisals.

<em><u>Non-financial services are relevant to refugees – and a good entry point</u></em>. Offering non-financial services can be a great entry point for refugees who are often socially isolated, but  services must be based on actual, specific demand. Involve participants in the design of curriculum and activities, and take the time to find the right trainer - . Include the cost of transport to activities if possible, as transportation can be an access barrier to poor refugees. Finally, institutions should expect tension and be patient. Al Majmoua found that it took an average of two sessions among youth and four sessions among women for non-financial services participants to start feeling comfortable with each other.

<em><u>Expand inclusive financial products to refugees</u></em>. There is no need to develop specific ‘refugee products’ and in fact, segregated product access can be counter-productive and cause tension with existing clients. Refugees can perform as well as any other financial services clients, when well segmented and appropriately appraised.

<em><u>Review and update the risk management regime</u></em>. Lastly, during the pilot test period of serving refugees, institutions should review their risk management systems and risk mitigation measures to check that these accurately identify and mitigate risks appropriately.

The experience of Al Majmoua in including refugees in its portfolio of financial and non-financial products has been largely positive. The overwhelming message to other FSPs is not to be afraid: Appropriately segmented and appraised, refugees can be as good clients as any national low-income entrepreneur – and sometimes better.

<em>This blog post was adapted by SPTF from the case study on Al Majmoua by Lene Hansen. To read the complete case study, please go to the </em><a href="http://sptf.info/working-groups/refugee-microfinancehttp:/sptf.info/working-groups/refugee-microfinance"><em>”Refugee Microfinance” page</em></a><em> of the SPTF website.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/">Financial Inclusion of Refugees: An Introduction</a>

<a href="https://cfi-blog.org/2016/09/27/financial-inclusion-of-refugees-azerbaijan-case-study/">Financial Inclusion of Refugees: Azerbaijan Case Study</a>

<a href="https://cfi-blog.org/2015/06/30/political-risk-is-keeping-microfinance-ceos-up-at-night/">Political Risk Is Keeping Microfinance CEOs Up at Night</a>

Financial Inclusion of Refugees: Al Majmoua in Lebanon