According to the UNHCR, over 120 million people have been forcibly displaced as of May 2024. While not a homogenous group, many refugees face distinct needs and challenges. After initial emergency aid lapses, displaced communities are often left vulnerable and struggling to access vital long-term services to rebuild their lives. Economic independence is critical to rebuilding lives, but capital is often lacking to support refugee entrepreneurs, who may not be eligible to work or are deemed too risky to lend to.
Though refugees and displaced people face significant barriers to accessing credit, some financial institutions—including several of Kiva’s Lending Partners—are striving to change that. Kiva has been committed to advancing financial access to refugees and communities impacted by forced displacement since 2016. Together with our partners, we are actively working to build solutions to the challenges that refugees face when accessing finance.
Earlier this year, the Kiva Impact team conducted a listening tour with 15 partner institutions in the Kiva Refugee Investment Fund (KRIF) portfolio. Our partners shared solutions they have implemented to address some of the barriers refugees face in accessing finance. Though these partners operate in 11 different countries and serve diverse clients within them, five distinct approaches emerged across the group.
1. Tailoring loan products to meet evolving needs
Just as refugees and displaced people encompass many dimensions of demography and identity, their needs when rebuilding their lives are equally diverse - and evolve with time. In Chile, for example, Galgo has evolved their line of products to closely match the needs of refugees arriving from Venezuela. At first, shared VP of Capital Markets Laszlo Godor, the biggest need was housing. “People were being asked for a guarantee [deposit] of approximately three months in advance, something that was principally not possible for the Venezuelans who were arriving, since they did not have accumulated income to have this advance. So we financed this rent guarantee,” said Godor. Then, Galgo saw another need. “The second product was largely focused on revalidating university degrees,” said Godor. “Many doctors, lawyers arrived and needed to revalidate their university degrees. This had a cost of around $2,000-$3,000.”
“We saw many Venezuelans were needing a [transportation] tool for work, whether as their principal income or a secondary source of income.”
As time went on, Galgo created another product to meet another growing need: financing for motorcycles. “We saw many Venezuelans were needing a [transportation] tool for work, whether as their principal income or a secondary source of income,” said Godor. “This is why the focus we have in the present day is covering the motorcycle as a tool for work.”
2. Adapting loan or documentation requirements to meet refugees where they’re at
In many cases though, partner institutions reported that refugee clients do not need entirely new financial products; the existing products offered by the financial service providers are adequate. Instead, partners shared that what often needs adjustment are the processes: requirements, documentation, and terms and conditions. For example, requirements related to stability or credit history make it difficult to evaluate borrower creditworthiness.
Depending on the processes they had in place, partners shared varying approaches to adapting these. In Costa Rica, MiCredito has adapted their permanent address requirements to make group lending accessible to those in temporary living arrangements. In Jordan, FINCA Jordan adjusted their proof of income requirements to acknowledge the reality that refugees may not be able to formally prove a constant source of income as they are rebuilding their lives. In Uganda, UGAFODE introduced refugee identification as an official document, and petitioned the Bank of Uganda and Credit Bureau to approve this identification for credit reference checks.
With the help of a Kiva loan through UGAFODE, John was able to invest in both his farming and motorcycle businesses to improve his income. As a result, he is able to send his children to school.
3. Digitizing processes to address difficulties in reaching refugee clients
“It has a great indirect impact on them because this product has been designed for remote regions, and most of the refugees live in this region.”
Several partners cited geopolitical violence, remoteness, lack of infrastructure, and time intensity as some of their broader operational challenges in serving refugees. Others noted that serving clients in remote and hard-to-reach locations is labor-intensive and operationally expensive.
In response, several investees have turned to digitization to reach remote or hard-to-reach borrowers. In Colombia, Finamiga partnered with an organization offering online financial education, enabling them to reach 1,400 people across the country, including areas still fraught with armed conflict. FINCA Armenia implemented a tablet lending project that has been effective in reaching borrowers in remote areas, which includes the majority of their refugee clients. “They have been facing some challenges and difficulties to come every time to one of our branches, like to drive 30 or 40 kilometers,” said Vardan Haroyan, COO of FINCA Armenia. “It has a great indirect impact on them because this product has been designed for remote regions, and most of the refugees live in this region.”
4. Embedding client voice into the system by hiring locally
Several partners noted that navigating cultural barriers, ranging from language to mindset, is a varied but essential challenge when it comes to serving refugees. However, investees who hired staff from the client communities they serve cited local hiring as integral to the success of their lending programs. Laszlo Godor from Galgo noted the importance of having a staff that was representative of its client group. “We quickly saw that the level of empathy - as a result of knowing exactly the situation our potential [refugee] clients found themselves in - was crucial to being successful,” he said. Similarly, Andres Gomez from Finamiga shared that part of what makes them successful in rural areas of Colombia is the fact that they work with people from that area. “They know the area, they know the people, they know how to adapt and how to work there.”
Supporting partners who do not already have members of their target communities on staff is a clear opportunity to better understand and serve those communities.
“We quickly saw that the level of empathy as a result of knowing exactly the situation our potential [refugee] clients found themselves in was crucial to being successful.” - Galgo, Chile
5. Partnering with organizations with complementary expertise
Whether to provide wraparound support services to clients or expand access to funding, partners indicated that building strategic alliances with local, national, and international organizations is key to expanding the depth and breadth of their impact. FINCA Armenia, for example, partners with the Armenian National Agrarian University to source agricultural training for their clients. In Central America, MiCredito partners with NGOs that help them better reach specific groups of clients, like Nicaraguan refugee women living in Costa Rica. In Uganda, UGAFODE partnered with Kiva to secure guarantees for what were considered “higher risk” loans to refugees. “For the refugees, we know they don’t have collateral,” said Shafi Nambobi, CEO of UGAFODE. “So what we needed to do is…explore getting partnerships for guarantees. So now here we see Kiva guaranteeing these loans.” Finally, on an international level, FINCA Jordan cites the UNHCR as an important resource for connecting with refugees who may benefit from access to their loans.
Collaborative learning enhances solutions for refugees across the industry
Positioned across a diverse demographic and geographic landscape, Kiva’s Lending Partners can provide unique insights and creative solutions to serve the needs of displaced people in their local contexts. While acknowledging that the solutions used in one particular context cannot always be applied to another, drawing connections between challenges and potential solutions can provide a helpful foundation to build from.
By learning from our partners, Kiva can support them in adopting new approaches to reaching refugees with financial access, and augment their ability to do so with intentional capacity building. We encourage other service providers to share their learnings and best practices too, to help more institutions in the industry take the leap to start lending to refugees.
