RUFI Crosses Border with Refugees from South Sudan, Opens Doors in Uganda; Breaking MFIs’ Stereotypes About Victims of Conflict – Insights from European Microfinance Week

26 November, 2018


Original Source: Micro Capital

Friday at European Microfinance Week, Resi Janssen of Dutch NGO Cordaid described her institution’s Rural Finance Initiative (RUFI), which had been working in South Sudan when violence in 2016 caused most of its clients to flee to Uganda. With no license to accept deposits in Uganda, RUFI became an agent of Centenary Bank so it could continue to provide savings and other services to its customers – albeit in a different country – at a time of great need.

Not long after relocating, some of RUFI’s customers started asking how they could keep their children from being recruited as fighters. RUFI secured EUR 150,000 (USD 170,000) from the government of Luxembourg to support entrepreneurship among youth and widows. Many became engaged in business such as sewing, raising pigs and baking.

Philippe Guichandut of the Luxembourg-based Grameen Credit Agricole Foundation described a pilot program his organization is launching in several months in partnership with Sweden’s development agency SIDA and the UN Refugee Agency (UNHCR). The program will combine technical assistance with investment in financial service providers (FSPs) in Uganda and Jordan. The FSPs will lend in amounts of USD 260 to USD 2,800 to both refugees and local residents in host communities. The technical assistance funding can be used for costs such as staff training, marketing, managing digital financial services, financial education, and business support and mentoring. Mr Guichandut reports that refugees in both Uganda and Jordan have a strong interest in entrepreneurship. Although FSPs worry about refugees returning home before repaying their loans, Mr Guichandut cited a survey of refugees in which only 10 percent stated they plans to relocate in the short term.

Jim Brands of Dutch development bank FMO described a different strategy to encourage FSPs to work with new populations. FMO’s Nasira program is partnering with the EU to provide a risk guarantee for losses over 10 percent on various institutions’ lending to refugees, women and youth.

As in other sectors, a major goal of NGO and government involvement in serving refugees is to help private actors gain confidence in their ability to serve this sub-segment. As of now, according to Mr Brands, commercial investors have not seen sufficient data to convince them to invest in services for refugees. Lene Hansen, a consultant in the field, pointed out that, “40 years ago, the poor were [considered] unbankable.” She argues that it will be much quicker to convince lenders that refugees also can be served profitably.

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