Partner Organization: FSD Uganda

Rebuilding livelihoods in displacement

Together with FSD Uganda, we have been supporting the Financial Inclusion for Refugees (FI4R) project where 3 financial service providers (FSPs) have been offering financial products to refugees and host communities in West Nile and South-West regions. The implementing partners – Equity Bank Uganda Limited, VisionFund Uganda, and Rural Finance Initiative – started off activities in these areas in September 2019.

In January 2020, the project engaged BFA Global to undertake a baseline study that provided an in-depth analysis of the incomes, expenses, and financial management of refugees in Uganda, compared their status then, with their lives prior to leaving their countries of origin and their journeys to Uganda. This was followed by four rounds of financial diaries over two years using BFA Global’s financial diaries methodology.

The results from each round are below.

The financial diaries involved tracking incomes and spending habits of 41 households recruited from the three implementing partners. During each round, qualitative interviews were also conducted with the households. In November 2021, an end-line study was conducted to understand the evolved financial behaviour of refugees, get feedback on financial products offered by the implementing partners and assess how new financial products were used by the refugees. The Covid-19 pandemic occurred during the study period and offered the opportunity to track how households coped with the situation. Below is a timeline of the research activities undertaken dung the project.

The end-line report dubbed, Rebuilding Livelihoods in Displacement has shown there is increased use of cash at home as refugees seek easy access to money in case of emergencies, despite the growth of phone ownership which supports mobile money transactions. According to the study, refugees found the use of cash convenient in responding to emergencies, especially those that are health-related. The study which sought to examine the financial strategies employed by refugees attributed increased phone ownership to the 2019 legislative changes which allowed refugees to access SIM cards in their names. Ownership of smartphones is 9% higher among female refugees compared to men.

The report further revealed that while refugees have a wide range of income sources, self-employment remains one of the primary sources of income. However, proceeds from agriculture are on the rise with more people paying attention to the sector because of reduced food rations. The report found access to banking agents to be low which limited the use of formal financial services. Most agents are found at the centre of the settlements which is far from some of the refugees.

The report recommends the development and refinement of financial products to cater to the needs of refugees. These could include branchless banking to make financial services more accessible and microinsurance for medical emergencies. The report recommends the provision of renewable energy solutions for lighting and cooking and upskilling for economic self-sufficiency.

With about 30 million refugees on the continent, the findings could provide insights for other refugee populations outside of Uganda.

Financial inclusion for refugees in Uganda: baseline report

We have launched a landmark study in Uganda with the aim of understanding the different sources of income for refugees in collaboration with FSD Uganda and BFA Global. This study aims to uncover the uses of their finances and the financial products and services they use and supporting the development of financial products and services offered by Equity Bank Uganda Limited (EBUL), Vision Fund Uganda (VFU) and Rural Finance Initiative (RUFI) and evaluating the impact of those products and services on refugee livelihoods.

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

The art of market facilitation: learning from the financial sector deepening network

Market facilitation (M4P) is an approach to promote systemic change—change that goes beyond individual players and that is relevant to the wider environment, affecting many. Market systems development requires that organisations play a facilitating role. Standing outside of the market system, facilitators work with different players within the system, to make it work more effectively. Their essential role is active and catalytic, to enable others to do rather than do themselves—stimulating changes in a market system without becoming part of it.

Understanding this concept and applying it in market systems development initiatives is no mean feat. Market facilitators, donors and practitioners must draw from a wide range of tools and techniques to put market facilitation into practice. Developing and maintaining partnerships, managing risks, deploying flexible intervention tactics, establishing a measurement system and communicating effectively are all useful learning points for those working in this field. Knowing when to exit an intervention is just as critical as identifying and selecting the right partners to work with and understanding these complexities can have an impact on the effectiveness of interventions. Market facilitation as a practice is more of an art than a science, directed by principles rather than lists of actions, which can make it difficult to translate the theory into practice.

There is limited evidence from the field on how to apply this approach in a way that ensures interventions are both scalable and sustainable. In June 2015, FSD Africa commissioned the Springfield Centre to produce: a) one
comprehensive case study of FSD Kenya—a financial market facilitation agency in Nairobi, Kenya; and b) six minicase studies of financial market facilitation interventions from the wider FSD Network, by the FinMark Trust, FSD Kenya, FSD Tanzania and FSD Zambia. The aim of this process was to build the knowledge base around the art of market facilitation in the field. These case studies revealed a lot of insights about effective market facilitation, the challenges the Financial Sector Deepening (FSD) Network faced while designing and delivering interventions using the M4P approach and the lessons they have learned so far.

The M4P synthesis paper (this publication) explores the art of market facilitation in action through the lens of the FSD network and synthesises learnings gained from these case studies to build understanding around the M4P approach. The paper examines the wider lessons and challenges that emerge for organisations addressing the dilemmas of developing financial markets for the poor and how they differ significantly from other conventional approaches.

What financial services would you need if you found yourself as a refugee?

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I often find it difficult for most people to relate to refugees. We seem to forget that we can be in the same situation depending on the circumstances around us. The happenings in Ukraine have shown just how delicate our stability status is, and that we can quickly be turned into forcibly displaced people overnight!

While conflict, war or persecution have been traditionally viewed as the main forces giving rise to refugees, natural disasters triggered by climate change among others are fast becoming a force to reckon with. The number of forcibly displaced people has now surpassed 100 million for the first time, fueled by the war in Ukraine and other ongoing conflicts around the globe.

This takes me back to a scenario in June 2018 when FSD Africa, FSD Uganda and BFA Global were conducting a design sprint with 6 Ugandan financial service providers (FSPs), to develop new ideas for financial products and services for refugees in the country. The 4-day event reached a phenomenal breakthrough when one of the participants posed: “What if something happened and we found ourselves in another country as refugees? What financial services would we need?” Those two questions opened the minds of the participants and ideas started flooding in. The design sprint was one of the 4 steps that FSD Africa has been following to develop financial inclusion for refugees (FI4R) projects. The other 3 are:

  1. Market assessments that capture the financial lives of refugees and show the potential of serving these populations.
  2. Innovation competitions where FSPs are invited to pitch ideas of how they would address refugee financial needs
  3. Financial support and technical assistance to FSPs to develop, pilot and roll-out financial solutions.

In Uganda, working with FSD Uganda, we identified Equity Bank Uganda Limited, VisionFund Uganda and Rural Finance Initiative to offer financial services in various refugee settlements from October 2019. While the project concluded in March 2022, these FSPs have continued operations as this turned out to be a viable business for them. The project engaged BFA Global as the learning and research partner. They undertook a baseline study in January 2020 and a series of 4 financial diaries (linked below) – capturing the financial needs and uses of refugee households.

The 4 financial diaries:

They then carried out an endline study in November 2021. The partners achieved the following results:

  • Over 26,300 customers accessed loans, with 73% being female
  • Cumulative loans amounted to £9 million ($2.7million)
  • 262 bank agents were recruited across the settlements, 15% of which were women
  • Over 93,300 households registered on Equity Bank Uganda’s digital platform
  • 65,484 households receiving digital payments as of March 2022.
  • The bank made payments worth UGX 10.8 Bn (£2.2m) during the first quarter of 2022
  • 8 humanitarian agencies used the Equity Bank Uganda platform for disbursements

Below is a summary of some of the different financial services offered by the FSPs:

Based on the end-line study findings, there is still work to be done to improve financial services for refugees in the following areas:

 

Linking refugees in Uganda to formal financial services

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The Financial Inclusion for Refugees (FI4R) project which was jointly supported by FSD Uganda and BFA Global, and other partners (Equity Bank Uganda, VisionFund Uganda and Rural Finance Initiative) worked to offer financial services to refugees in Uganda.

In a world dealing with unprecedented crises, over 100 million people – equivalent to the population of the world’s 14th largest country – find themselves forcibly displaced. On May 23, 2022, the UNHCR unveiled a staggering reality: 1% of humanity is on the move, struggling for survival away from their homes. Beyond the distressing stories of human suffering, there lies a lesser-known struggle – the battle for financial inclusion and dignity. In this video, we uncover the profound journey of resilience and hope in the face of adversity of refugees in Uganda.

Through the lens of the financial diaries methodology, this animation offers a unique glimpse into the financial lives of refugees, revealing challenges, opportunities, and the relentless spirit of those fighting to rebuild their lives. The project, in partnership with a spectrum of financial service providers, including banks, MFIs, mobile network operators, and SACCOs, showcases practical insights and hopeful stories of empowerment and resilience.

 

Strengthening the effectiveness of Uganda’s consumer protection framework: mystery shopping assessment of credit cost disclosures

Uganda has made substantial advancements in financial consumer protection policy in recent years but understanding whether and how the financial sector complies with these new regulations can be a challenge in the absence of systematic monitoring. Setting rules is insufficient to ensure proper market conduct, so supervision of sales visits is needed to ensure that the rules established are upheld in practice.

To provide a snapshot of current practices and compliance with existing guidelines on consumer credit information provision at the point of sale, we have worked with FSD Uganda and Innovations for Poverty Action (IPA) to conduct a “mystery shopping” exercise of lending institutions in three districts of Uganda.

IPA recruited and trained shoppers fitting profiles reflecting typical Ugandan borrowers. Shoppers portrayed a range of personas and scenarios—limited versus advanced borrowing knowledge, business versus personal borrowing need, male versus female, and varying loan amount requests—to measure how such differences would impact the products shoppers were offered and the information disclosed by loan officers. IPA also analyzed publicly available data on the cost of credit published by the
Bank of Uganda in order to complement the findings.

The study finds that information on product cost, including the interest rate and the total cost of credit, was not consistently provided by loan officers; pricing information on the loan product was not always forthcoming: only half of the eligible mystery shoppers were informed of the total cost of credit and only 69% of loan officers provided information about interest rates without being prompted.

Based on these findings, the report offers ten key policy recommendations for regulators and financial sector providers in order to increase transparency, promote adherence to consumer protection regulation, harmonise policy approaches and create an enabling environment for simplified loan products.

Finance for all: The financial inclusion for refugees project in Uganda

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Late last year, we joined FSD Uganda and BFA Global in Uganda where we are implementing the Financial Inclusion for Refugees Project (FI4R) in Nakivale, Bidi Bidi and Palorinya refugee camps and with urban refugees in Kampala. This project aims to drive the availability of financial services to refugees and host communities. We are also conducting research with the aim of understanding the different sources of income for refugees, the uses of their finances and the financial products and services they use and supporting the development of financial products and services offered by Equity Bank Uganda Limited (EBUL), Vision Fund Uganda (VFU) and Rural Finance Initiative (RUFI) and evaluating the impact of those products and services on refugee livelihoods.

The project kicked off with extensive focus group discussions and individual interviews. It is the first Financial Diaries project with refugees which will not only provide a detailed picture, over the course of a year, of the incomes, expenditures and financial flows of refugee households but also reflect on how financial service providers engage with these households and make a difference to their financial picture.

Here are some of the preliminary discoveries from the initial baseline study.,

Notes from the frontier: FSD Africa’s fragile states approach – a learning journey (

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In early November, FSD Africa brought two worlds together for the first time: taking five prominent financial service providers (FSPs) to Gihembe Refugee Camp in Rwanda to participate in a ‘Financial Product Design Sprint’ in partnership with UNHCR, Government of Rwanda, and Access to Finance Rwanda (AFR). We were also joined by a member of UNHCR from Geneva, the International Finance Corporation and FSD Uganda.

Earlier that week, FSD Africa and BFA presented research on ‘Refugees & Their Money’ to over 20 FSPs in Kigali – highlighting the business case for financial products focused towards refugees (you can find a short summary found here). Philip Kakuru, from Tigo, said ‘With the limited access of the refugees, there was little to know about them, but the sprint design opened our eyes’. These FSPs, along with any others, now have an opportunity to win one of our four £10,000 grants in our Innovation Competition – Financial Services for Refugees in Rwanda.

To read more about the wider FSDA approach to refugee finance, take a look at last month’s blog here.

Day One: Any ideas?

The next day, the five FSPs, chosen through an open competition, began the Financial Product Design Sprint. The FSPs were a diverse group representing MMOs, MNOs, MFI and banks: MobiCash, Equity Bank, Vision Fund, Tigo and Commercial Bank for Africa. This three-day event hoped to challenge misconceptions about refugees, their potential and FSPs to consider a refugee product seriously. The first day began with an in-depth presentation of BFA’s research and details regarding the structure of refugee camps. This was followed by product brainstorming with each FSP, before narrowing down to a select two or three ideas which were fleshed out.

Day Two: What are the financial lives of refugees?

On the second day, these FSPs were taken to Gihembe Refugee Camp, a camp with a population of around 12,000 refugees from DRC and located only an hour drive from Kigali. Here, each FSP had the opportunity to speak to at least two refugees and over the course of two hours get a better feel for their financial lives. For most, this was their first time interacting with refugees and particularly in a refugee camp. As one FSP noted ‘With this segment, there is a lot to offer and learn from them’. This was followed by further prototyping of the FSP’s idea and customising their product to the needs of refugees.

Day Three: Is this the right product for refugees?

The final day offered an opportunity to return to the camp and with initial prototypes, in the form of a drawing, poster or app, get direct customer feedback. This proved particularly helpful for many FSPs to refine their product. As Peter Kawumi, from FSD Uganda, said ‘Through the design sprint’s customer interaction iterations, misconceptions about the refugees’ technology literacy, economic independence and financial ambition were debunked.’
The first ‘Financial Product Design Sprint’ was well received by all FSPs and there is also potential for replication in Uganda, with FSD Uganda, and as Vishal Patel from the IFC said ‘helped inform IFC’s work in Kenya in Kakuma refugee camp and town.’
Learning from risk taking

Working with banks and beneficiaries in this way is new to FSD Africa. It builds on the FinDisrupt model, pioneered by our sister organistion – FSD Tanzania. We learned a lot, especially on the value of bringing the refugee voice into FSD Africa planning and FSP business casing. The type of discussion it generates, out of the office environment, created momentum that would otherwise never have been achieved.

To read more about the wider FSDA approach to refugee finance, take a look at last month’s blog here.