By Karen Jacobsen and Kim Wilson
One of the biggest challenges facing refugees and migrants is navigating the livelihoods and financial landscape of a camp or city after they arrive in a host or transit country. This camp or city may be their intended destination or a place of transit; nevertheless they may spend several years there, and need to find a way to survive financially, support themselves and their families (including those still back home), and hopefully even thrive. We refer to this achievement as ‘financial health.’ This report is based on a study, Finance in Displacement (FIND), that explores how refugees navigate financial and livelihoods obstacles, and the strategies that enable them to manage their finances, access financial services, and attain some measure of financial health and sustainable livelihoods. We focus on two host countries, Uganda and Mexico, both with large numbers of diverse groups of refugees, many of whom have been displaced for years.
Whether refugees are able to achieve some measure of financial health is of interest to host governments, city municipalities and humanitarian agencies. Refugees who do so are able to better support not only themselves and their families, but also provide an economic boost to the places where they live. Financial health also reduces the risks for cities of having a large population of poverty-stricken, unemployed immigrants. It is therefore in everyone’s interest to promote the financial health of refugees and migrants. A better grasp of the financial strategies and challenges that enable or undermine refugees’ financial health will enable donors, policymakers, and humanitarian organizations to develop policy and programming that better matches what refugees are doing and what they are capable of.
This report explores how refugees attain financial health and what can be done to support them, but it is important to recognize that not all refugees will be able to ratchet up their livelihoods. As in all populations, only some individuals will have the entrepreneurial ability, the luck, and the resources to be successful. In addition to the ‘exogenous’ or contextual factors that must be in place to enable livelihood success, there will always be some individual and households who will not be able to ratchet up their livelihoods because they struggle with personal or household challenges such as physical or mental health problems, disabilities, and single parenting. These challenges are more likely to affect refugees because of their displacement experience. There will always be refugees in need of targeted humanitarian assistance, and extra help with supporting their livelihoods. This kind of traditional humanitarian support should be built into or alongside all refugee livelihoods programming and programming focused on financial services.
Our main takeaways about how refugees’ livelihoods and experience with financial services contribute to their financial health are as follows:
One of the biggest livelihoods obstacles facing refugees is their lack of ID and other documents required to access government services, mobile services (sim cards), formal employment (when they are permitted to work), and formal financial services (banks). Not having proper ID also makes refugees more vulnerable both to exploitation by landlords and employers, and to being shaken down by corrupt police or government officials. Programming and advocacy should focus on this issue, and there is already good practice in place.
Security concerns influence livelihoods. Although the cities of Kampala and Tijuana are very different, the experience of refugees was very similar, with one exception: security concerns for both men and women. In Tijuana, women especially feared being on the street because of both Tijuana’s reputation for violence and crime, and many had direct experience of being threatened. Security concerns are a widespread problem for women refugees in many cities around the world, directly affecting their willingness to venture out of their homes or shelters to find work, and a livelihood.
Co-national networks and help from locals (the kindness of strangers) are crucial aspects of refugees’ ability to survive and thrive, especially in early days. Local help enabled refugees to meet daily consumption needs including food, shelter, and child care; recover from financial shocks in the city (stemming from health problems or crime), and raise lump sums or take advantage of opportunities that supported the ratcheting up of their livelihoods.
Market niches are important. Skills like languages or knowledge of the country of origin enabled brokering and cross-border trade. Talents (eg. sports or dance or music abilities) enabled refugees to find work as coaches or play professionally, and often led to wider network connections and subsequent work. Identifying or carving out market niches that are well suited to refugees is something refugees are very good at, and could be supported with programming.
Cross-border trade and brokering activities with the sending country (and the wider region) are potentially important livelihood areas for refugees, but how refugees engage across borders is a relatively neglected area of research.
In using both formal and informal financial services, refugees vary in both their willingness to utilize services, and their ability to access these services:
Refugees’ willingness to engage with banks was influenced by their home country experience with banks (which varied by country), the attitude of the banks towards them (which was sometimes obstructive), and the refugees’ financial literacy (understanding of what banks offered). Most refugees were familiar with and already using mobile money services both for sending and receiving remittances, and for banking purposes. Most refugees were familiar with informal services like VSLAs, but not all chose to utilize them.
When refugees do try to access formal financial services, they face a range of obstacles mainly with banks. Formal requirements around ID documents and other KYC requirements mean refugees often can’t access bank services. In some countries (like Mexico), bank staff attitudes towards refugees and migrants create additional access problems.
In subsequent sections of the report we describe our ‘theory of change’ about financial health in displacement settings, and the design of our research study, then dive into our two case studies, and conclude with some recommendations for how policy makers, practitioners and donors could support refugee livelihoods.