Access to Finance Empowers Refugees

7 May, 2018

Original source: Cordaid

RUFI is a microfinance institution established in South Sudan. Its four founders had been among the four million Sudanese people who fled the country during the protracted civil war (1983-2005). In 2008, back in the South of Sudan, they founded RUFI to provide financial services to rural households that are isolated from the mainstream economy.

Watch a video about how RUFI and Cordaid empower refugees in Northern Uganda: 

Cordaid Investments has been RUFI’s partner since 2010. We have supported them with grants and loans for their operations in South Sudan (which became an independent state in 2011). Resi Janssen, Cordaid’s Senior Investment Manager: “Cordaid’s aim is to enhance inclusive finance, especially in fragile contexts. South Sudan is a very fragile and conflict affected country and our alignment with RUFI’s mission is evident. Despite the difficult environment RUFI has managed to achieve a good financial performance and has always been a very reliable partner.”

MICROFINANCE INSTITUTION FOLLOWS FLEEING CLIENTS ACROSS THE BORDER

By 2015, RUFI had 4 South Sudan branches, in Kajo Keji, Nimule, Juba and Yei. In July 2016, a new crisis in South Sudan erupted and 90% of RUFI’s clients of the three bordering branches fled to Northern Uganda. RUFI decided to follow them to Uganda and opened branches in Koboko, a small town near the border with South Sudan, and in one of the refugee camps. Cordaid Investments supported RUFI’s plans and approved a mix of a grant and a convertible grant. The latter will be converted into a debt or equity after three consecutive profitable quarters.

As per March 2018, RUFI had almost 400 clients located mainly in refugee camps. Sadia Edita, RUFI’s Operations Manager: “In the first year of operations in Northern Uganda we have seen some progress for the clients. They can support themselves. And they are so appreciative that we have come to help them at the right time”.

Resi Janssen visited Northern Uganda a few weeks ago. “People in refugee camps are very entrepreneurial, they often start the same type of business that they had in their home-country”, she explains. “I visited various entrepreneurs in Bidibidi and Morobi camps, some of them already having expansion plans in mind: tailors, hair-dressers, tomato farmers, a pharmacy, motor-cycle taxi’s, piggeries, …”.

HOW 2 LOANS HELPED EMMANUEL TO SET UP SEVERAL BUSINESSES

One of these refugee entrepreneurs is Emmanuel Muki. He took a loan from RUFI to buy stock (clothes). With the profit from this business he bought a sewing machine. Emmanuel and his son learnt how to operate the sewing machine and became tailors. After paying off, Emmanuel took a second loan to buy a motorcycle taxi that he rents out. He plans to keep diversifying. With the next loan he will open a coffee and tea café and employ someone to run it.

REMEDY: FOCUSING ON YOUTH

RUFI’s management realised that young people in refugee camps face special problems. With no work and nothing to do, they become a redundant group, which increases the risk of being lured into joining armed groups. To address their needs and concerns, RUFI created the REMEDY project.

The assets of the women’s bakery initially belong to REMEDY and will only be transferred to the group after it has fully repaid the loan.

It aims to create jobs, by providing training and funding to selected youth projects. Cordaid Investments together with the Government of Luxembourg supported the initiative with convertible grants.

WOMEN SET UP A BAKERY WITH A LOAN, A GRANT AND OWN CONTRIBUTIONS

The REMEDY incentivises like-minded youth people to work together. For instance, a group of women presented a proposal to start a bakery. Their project was selected to receive financial support and coaching. They had to provide an own contribution. REMEDY funded the construction of the oven and the purchase of the bakery equipment, with a mix of grant and loan. The assets initially belong to REMEDY and will only be transferred to the group after it has fully repaid the loan. Each member of the group has her own business and the women agreed to take shifts to use the oven and to share the equipment. The group structure and own contribution stimulate solidarity and enhance a sense of ownership, thereby increasing the motivation to make the enterprise succeed.

INVITING DONORS AND INVESTORS TO PROMOTE ACCESS TO FINANCE FOR REFUGEES

These are just a couple of many existing examples of how financial services can empower people in refugee camps, especially women and young people. Given the scope of the current global migration and refugee crisis, their importance cannot be overstated. Resi Janssen: “Cordaid Investments has supported RUFI to create financial inclusion in refugee camps in Northern Uganda. We hope that our intervention can play a catalytic role. And we invite other donors and investors to join RUFI’s efforts in promoting financial inclusion and creating employment opportunities for refugee populations.”

AFSIC INVESTMENT CONFERENCE

Financial services for refugees will also be the main topic of Resi Janssen’s presentation of RUFI’s case at the AFSIC Investment Conference in London on May 3rd.

For more information about financial services for refugees, contact Resi Janssen.

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