To mark World Refugee Day on 20 June, AFI members shed light on their efforts in innovating responsibility sharing, partnerships, and policy actions to advance the financial inclusion of FDPs.  These proactive policy approaches being implemented by emerging economy financial regulators show what is possible even within the context of compliance with global standards and other constraints such as an underdeveloped financial infrastructure.  These policy actions have furthermore been made possible through innovative partnerships established with actors from beyond the traditional financial inclusion sphere, such as humanitarian agencies and Anti Money Laundering & Countering the Financing of Terrorism (AML-CFT) stakeholders. 

ZAMBIA by Bank of Zambia

Zambia currently has three refugee settlement areas namely, Mantapala in Luapula Province (15,000 refugees), Meheba, in North-Western province (20,000 refugees) and Mayukwayukwa, in Western Province (12,000), the rest of the refugees are self and urban-settled. According to Zambia’s Ministry of Home Affairs, Office of the Commissioner for Refugees, Zambia is currently a host to over 75,000 refugees and asylum seekers mainly from the Great Lakes Regions and the Horn of Africa.  The United Nations High Commission for Refugees (UNHCR), as of the end of February 2018, reported that Zambia hosted more than 72,151 FDPs, including 44,283 refugees of whom 92 per cent are from the Democratic Republic of Congo (DRC).  People from the DRC are fleeing from conflict in some parts of the country.  The number of refugees and asylum seekers is expected to increase to 76,000 by the end of 2018.  The influx of refugees led Zambia to make a passionate appeal to the international community for assistance.

Refugees need access to financial services to enable them to meet their daily needs such as run their businesses, access education, access medical services, clothing, and shelter.  However, with limited access to financial services they cannot meet these needs, including access to basic human rights. Zambia as a member of the United Nations is a signatory to the New York Declaration that sets out a more comprehensive response to refugee crisis. It seeks to help refugees become more self-reliant so that they can contribute to their own future and to that of the host community. To achieve this, refugees will need access to financial services.

Recently the Bank of Zambia granted approval to mobile money service providers such as Airtel Money, Zoona, Kazang, Zamtel Kwacha and MTN Mobile Money to provide mobile financial services (within transaction and balance limits for mobile money or e-money) to refugees by using refugee identification cards or registration documents issued by the Ministry of Home Affairs to satisfy Know Your Customer (KYC) requirements.  It also collaborated with the Zambia Information and Communication Technology Authority (ZICTA) to facilitate the provision of phone sim cards to refugees using the above identification documents.  All SIM cards need to be registered with the Communications Authority in Zambia.  Following this authorization by Bank of Zambia, one of the mobile money service providers in partnership with the United Nations Capital Development Fund (UNCDF) and UNHCR has started providing more affordable phones (this was one of the hindrances as refugees do not have resources to purchase mobile phones) and mobile money services to refugees in Zambia.

It has been reported by the mobile service provider that once funds are loaded onto the e-wallet for refugees, the refugees subsequently withdraw all the funds at once. This creates cash flow challenges for the service providers and this may be a reason why other Mobile Network Operators (MNOs) are reluctant to move into this space. Hence there is for sensitization to refugees and assurance on the safety of their funds on e-wallet and also provision of financial literacy services. In addition, there is need for increased financial products and services available to refugees such as savings, insurance, microcredit facilities, and remittances.

RWANDA by National Bank of Rwanda

The Government of Rwanda maintains a policy to protect and advance the rights of refugees as is enshrined in the Rwandan Refugee Law. This law provides refugees with the right to work, to freedom of movement and to access documentation such as refugee identity cards, birth and death certificates, and marriage and education certificates. Refugees can own property and can enter into contracts such as land-leases. Refugees in Rwanda are granted the right to work and the government has a policy of progressively integrating refugees into national systems for health and education. Primary health care is provided in the camps by humanitarian staff and refugees are sent to local health facilities for secondary and tertiary referrals.

Refugees, like other national residents, participate in activities that generate income for their families. They also receive remittances, which have impact on the national economy. From a regulatory perspective, having refugees included in the financial system contributes significantly to their well-being as well as positively impacting the performance of the whole financial system.

The Government of Rwanda through the Ministry for Disaster Management and Refugees (MIDIMAR), the National Identification Agency (NIDA), and Immigration together with the UNHCR have launched a joint verification exercise of refugees and asylum seekers residing in Rwanda for the purpose of updating information and verifying their physical presence in the country through biometric data. This has positively impacted refugees by giving them greater access to identity documents which facilitated their ability to access Government services, employability and ability to move more freely in the country and abroad as well as accessing services from financial institutions (e.g. opening bank accounts and mobile money accounts).

For example, refugees in Nyabiheke, Gihembe and Kigeme camps have been receiving cash digitally via mobile money services instead of in-kind support such as food packages or vouchers. These refugees have been provided a mobile phone, which in turn enables them to receive mobile remittances.  The Equity Bank has signed a Memorandum of Understanding (MOU) with MIDIMAR to send staff to camps and help refugees to open accounts with the help of UNHCR.  The National Bank of Rwanda together with partners will visit the camps to conduct awareness raising on financial consumer protection regulations as well as encouraging the adoption of cashless means of payment.

TANZANIA by Bank of Tanzania

Tanzania has three camps sites for refugees located in the Western region of Tanzania (Kigoma Region). According to 2017 data there are about 320,000 refugees, most of whom are from Burundi and the Democratic Republic of the Congo (DRC). They are identified by a special ID issued by the UNHCR for monitoring purposes and control during the provision of food.  Given the increased number of refugees the Government of Tanzania through the National Identification Authority (NIDA) has started the issuance of a special biometric ID to refugees to easily identify them.  The IDs will also enable them to access formal financial services, which in return will help improve their life standards.  Refugees in Tanzania receive remittances from their relatives living abroad through Western Union and mobile phones, however the amount that can be sent or received is very limited and is being monitored closely for security purposes.

FDPs have needs, including access to financial services and products.  Therefore, they shouldn’t be left behind with just a very limited amount, driving them to use informal financial services and products that could even harm the integrity and stability of the financial system.  This calls for the need to: identify them; include them in the formal financial system; involve them in income generating activities; and effectively use their skills and knowledge in productive sectors (such as agriculture, industries, education, health, and engineering).

Currently, refugees in Tanzania are limited to very few financial services such as payments and remittances.  They can own mobile phones which they can use to receive and send money. Before including refugees into the formal financial system, in particular to access credit, savings, insurance and other services, the Government and the Bank of Tanzania (BOT) are working closely with the Financial Intelligence Unit (FIU) on the National Risk Assessment (NRA) to establish the level of risks that can be posed by refugees in the financial system, which will help in the development of tiered KYC processes.  In addition, the BOT is encouraging banks and MNOs to develop products that are suitable for FDPs. At the same time, as the Chair of the Financial Inclusion National Council, the BOT is working hand in hand with the NIDA to ensure that FDPs are registered and issued with the unique identification to support them open an account at the bank. The ID will also help the MNOs to increase the cap for transactions.  To achieve these objectives, the BOT is working collaboratively with the Ministry of Internal Affairs, Ministry of Finance, NIDA, FSPs, UNHCR, FIU, TCRA and other regulatory authorities.

Given the fact that the challenge of financially including refugees is global, it is recommended that testing the application of new technologies such as blockchain should be considered in exploring options to expand financial access to FDPs. The role of FinTechs in such initiatives will continue to grow, given their higher speed at developing innovative products and services. Collaboration between traditional Financial Service Providers (FSPs) and FinTechs offers opportunities to harness this potential. 

Addressing the financial needs for FDPs should be discussed by a broad range of stakeholders involved in the design and implementation of the National Financial Inclusion Strategy (NFIS), and it should be considered from the strategy design stage.