Introduction
Refugee situations are becoming increasingly protracted, with refugees trapped in a state of limbo, unable to access durable solutions and relying in part on external assistance in order to survive. Humanitarian agencies, including UNHCR, are struggling to find ways of promoting livelihoods and self-reliance in these circumstances.
Livelihood interventions such as microfinance present an attractive option to address these challenges since refugees in long-term displacement do not face an imminent prospect of return or resettlement. Microfinance - and microcredit in particular - provide for a more dignified way of assisting displaced populations as they do not promote a culture of handouts but instead with promise to alleviate poverty through income generation.
Microcredit activity can also be self-sustaining in financial terms, something that is particularly useful in long-term displacement situations in which donor funding is usually in decline. Microfinance in general fills an important gap as it makes available a range of financial services that are not normally present in displacement settings. Remittances and money transfers for example are important for refugees as they are a convenient way to send and receive money from family and friends.
Consequently, UNHCR is increasingly implementing livelihood interventions targeting refugees, returnees and IDPs (internally displaced persons). UNHCR seeks to support these populations' economic self-reliance with the help of livelihood programming which includes access to grants and loans, training and labour-based activities such as cash or food-for-work activities.
The rationale behind livelihood programming is that promotion of self-reliance is a way to accelerate the achievement of durable solutions and microfinance is an important part of UNHCR livelihood programming. The aim of microfinance is to make available financial services for micro entrepreneurs and low-income people who have the potential to become economically active.
Despite the fact that UNHCR has been involved with microfinance for two decades, there is little comprehensive information available on UNHCR's experiences in providing microfinance in refugee settings. These experiences have not yet been documented in a systematic manner. This review seeks to fill that gap and addresses the following questions: to what extent have microfinance programmes been employed in refugee situations and what forms have these programmes taken? And what have been the outcomes of these programmes and what lessons can be learned from UNHCR's experiences with microfinance programmes so far?
This research paper focuses in particular on the last 10 years, as it was in 2000 that UNHCR started to take serious steps to improve its microfinance activities. Its findings are based on UNHCR documents and evaluations as well as external reports and research papers produced by non-governmental organisations (NGOs) and academia. In addition to this, interviews were conducted with UNHCR staff with experiences of working in microfinance within UNHCR.
In order to get a better understanding of how UNHCR's microfinance programmes are designed, three case studies have been given particular attention: Costa Rica, Serbia and East Sudan. These programmes were chosen because they represent a good geographical spread and include long-term refugees with both urban and rural/campbased profiles. Information was gathered from project documents, recent evaluations and interviews with staff working in the chosen countries.