Financial inclusion for refugees and host communities

As the world is recording its highest levels of population displacement yet, the global refugee crisis creates great vulnerabilities for forcibly displaced populations, as well as for host communities.

The protracted nature of displacements impacts the livelihoods, dignity and opportunities of refugees. The ILO’s Social Finance Programme is currently introducing sustainable solutions to remedy the financial constraints of forcibly displaced persons (FDPs) and host communities, and enable them to be more resilient, empowered and durably protected.

Financial services are instrumental for FDPs to rebuild their economic livelihoods. Affordable access and use of quality and responsible financial services can help FDPs to safely store money, build up savings, send or receive money transfers and carry out day-to-day financial transactions. Depending on the various needs of FDPs and host communities, more complex financial services, like credit and insurance, can provide them with the additional support they require. Through the supply of adequate financial services, financial inclusion can empower FDPs to build assets, mitigate shocks related to emergencies and make productive investments that improve their livelihoods and the local economy.

Throughout its longstanding collaboration with UNHCR, the ILO has contributed to the capacity building of UNHCR staff and its implementing partners, to encourage and facilitate sustainable and viable access to finance for refugees and host communities.

Since 2019, the ILO and UNHCR have joined forces with UNICEF, IFC and the World Bank to design PROSPECTS. This is a project spearheaded by the Government of the Netherlands with the goal of fostering more sustainable livelihoods through employment creation, education and protection. Under this project, the ILO’s Social Finance Programme is working towards extending financial services to FDPs and host communities in East Africa and the Middle East. Working at the policy level as well as the supply and demand sides, Social Finance uses a participatory and multidimensional approach to enable better access to finance for refugees and host communities:
  • At the policy level, we advocate for the facilitation of measures so that FDPs are better integrated within host countries’ financial systems.
  • On the supply side, Social Finance supports financial institutions that embrace the new client segment of FDPs and their hosts through product diversification and innovation.
  • On the demand side, we aim to increase the financial capability of FDPs and host communities, thus enabling them to make better financial decisions sustainably.
Social Finance uses a participatory and multidimensional approach to enable better access to finance for refugees and host communities

Policy – Advocating for the inclusion of FDPs into host countries’ financial systems

Policy-level advocacy for the financial inclusion of FDPs

This objective relates to advocating for facilitating measures to better integrate FDPs within host countries’ financial systems. In this context, Social Finance provides technical assistance and tools to support national governments in framing countrywide financial inclusion and financial education strategies with national partners. Social Finance also supports them in the adaptation of financial education programmes to reach various vulnerable groups, including FDPs, using different outreach models. Two examples are:

Supply – Supporting financial institutions embrace new client segment’s opportunities

Making Finance Work for Refugees and Host communities

Jointly developed in collaboration with the International Training Centre of the ILO, Making Finance Work for Refugees and Host Communities targets top and middle managers of financial institutions wanting to serve the refugee market and host communities together. Adapted from the very successful Making Microfinance Work, the training programme helps institutions improve their performance with the refugees’ market segments they want to serve, while informing the strategic thinking around new products to offer, in view of advancing financial inclusion and responsible finance for refugee and host communities sustainably.

As a result of the training programme, financial services providers are then practically accompanied to diversify their product and service offering and ensure that they have the keys to serve the needs of FDPs sustainably.

Demand – Driving the financial capability of FDPs and host communities

ILO Financial Education for Refugees and Host communities

With more than a decade of experience, the ILO Global Programme on Financial Education is a holistic programme addressing policy dialogue and capacity building at all levels. It works with policy makers, meso-level training providers and multipliers, to increase the financial literacy of a wide range of beneficiaries. Based on its Financial Education tools, Social Finance has finalized the development of new training materials on Financial Education for Refugees and Host communities and is currently rolling out trainings in East Africa and the Middle East in the framework of the PROSPECTS project.
  • ILO Financial Education Trainee’s booklet for Refugees and Host Communities in Iraq
  • ILO Financial Education Trainee’s booklet for Refugees and Host Communities in East Africa
  • ILO Financial Education Trainee’s booklet for Migrants and Refugees in Andean countries

Fostering access to adequate financial services for refugees and host communities’ households

Because financial services are so important for refugees and host communities’ empowerment, Social Finance enables FDPs and host communities to access adequate financial services all around the world to safely store money, build up savings, access credit, send or receive money transfers, carry out day-to-day financial transactions and mitigate daily shocks through insurance. The goal is to support their livelihoods and build their financial capability so that they can reach sustainably healthy financial lives.

Supporting MSME Financing for more and better entrepreneurs

This initiative pilots business plan competitions in the context of migration and forced displacement, so that MSMEs owned by FDPs and host communities can follow a business management training and transform their business ideas into action. The innovative model unlocks sustainable access to finance opportunities for capacity building recipients, and it generates trust and reduces risk for financial services providers. The result is a sustainable and viable financial inclusion of FDPs and host communities.