On World Refugee Day, we are happy to share with you the first in our series of guest blogs dedicated to the financial inclusion of refugees and forcibly displaced persons. We have invited Swati M. Dhawan to curate this series. In this first instalment, she presents the ‘Finance in Displacement’ research collaboration to outline the particular barriers that refugees and displaced persons face.
Between 2019 and 2021, I had the privilege of being part of the Finance in Displacement project, a research collaboration that studied the financial lives of refugees in Jordan, Kenya, Mexico, and Uganda. Our initial objective was to explore the role of financial services in supporting the economic integration of refugees. However, as we delved deeper, we discovered that the lack of financial services was not the primary concern for refugees. Instead, they faced foundational exclusion due to limited economic rights (to move and work freely, obtain IDs and other important documents, and start a business) and faced significant challenges in envisioning a stable future in their host countries. This realisation prompted us to shift our focus from financial inclusion to the broader lens of financial health.
During our research, we conducted extensive interviews, field observations, and focus groups. In the two case study countries, Jordan and Kenya, we conducted three rounds of repeat interviews with the participants, allowing us to delve deeper and observe their financial strategies over time. We also interviewed key stakeholders to understand the policy and service ecosystem for refugees.
In the first interview round in Jordan when we asked refugees about their access to bank accounts and formal credit, we were often met with ironic laughter and scepticism. Unable to secure an income, our participants in Jordan did not see the value of a bank account. Only a small fraction (eight out of forty-four) who had managed to find formal jobs, at least temporarily, needed a bank account to receive a salary and could provide the required documents such as valid passports and work permits. Payments through digital channels offered some benefits in refugees’ ability to secure humanitarian cash assistance or remittances from family, but the utility ended there. Starting a business with formal debt was not preferred given the uncertainty and challenges faced by refugee-owned businesses in Jordan.
In Kenya, refugees are required to reside in camps and it is a criminal offense to travel outside of the camps without permission. Our respondents in Nairobi were unable to develop their livelihoods; they were denied work permits and faced constant harassment and discrimination. Those living in the camps felt trapped as they were not able to move and trade freely or leave the camp to build a new life as skilled professionals, in Kenya or abroad. They faced challenges in renewing their documents and issuing work permits.
In both countries, refugees were unable to fully integrate into host economies unless they had a secure legal status such as a permanent residence or had acquired citizenship (by the process of naturalisation). This uncertainty discouraged refugee investment in long-term skills and assets, and led to limited self-reliance and prolonged dependence on charity. In such a scenario, there was no incentive for refugees to save or borrow money to invest.
We discovered that access to financial services was just one aspect of the multifaceted challenges refugees encountered. What truly mattered were the non-financial inputs that enabled them to achieve economic autonomy and access to socioeconomic opportunities. We categorised these inputs into two levels: foundational inclusion, which focused on obtaining economic rights and stability, and meso-inclusion, which addressed access to opportunities for improved financial well-being. Financial inclusion policies and programmes can then build upon this by providing refugees with access to tools to better manage their financial lives.
We define a refugee to be financially healthy when over four to five years starting from their arrival in the host country, they can build daily systems to achieve the following outcomes (adapted from the financial health definition and indicators based on research by the Financial Health Network and Center for Financial Inclusion):
1. Meet basic needs: Refugees can meet basic needs when they can access resources—whether on their own or through their personal, social, and professional networks—needed to secure essentials such as food, shelter, clothing, medicine, and education.
2. Comfortably manage debt: Refugees arrive indebted to those who financed their journey and often take out lines of credit during protracted displacement to make ends meet, pay for unexpected expenses, or make lump sum investments. Some debt is manageable, but too much can leave individuals and households vulnerable to violence, extortion, and poor mental health.
3.Recover from financial setbacks: Financial setbacks such as loss of employment, a medical emergency, or a lost asset are common during prolonged displacement. These may be overcome through access to resources, whether lump sum aid disbursements, personal savings, or lines of credit through personal and social networks.
4. Access a lump sum to enable investment in assets and opportunities: Many refugees arrive with few assets and little savings with only small funds available to cover the day-to-day cost of living. If unable to accumulate or borrow a lump sum, refugees cannot build wealth or invest in ways that provide long-term security such as education and improved housing, or high-cost assets such as a car.
5. Continually expand their planning horizons: Over time, new arrivals should be able to move from daily ‘hand-to-mouth’ struggles to a place where they can expand their economic activities and achieve some stability. This will allow them to contemplate, and plan for, a financial future beyond the present day.
Applying the financial health lens to our findings in Jordan and Kenya, we found that while financial inclusion might not always improve financial health, a financially healthy refugee is more likely to engage with financial services. While well-intended, the efforts of the financial inclusion actors to improve refugees’ access to financial services—by removing operational barriers or improving financial literacy—are not likely to bring transformative changes to their financial health in a scenario where foundational economic rights are not guaranteed. In Jordan, since refugees face barriers in accessing mainstream banking infrastructure due to lofty documentation requirements, they are enabled to access mobile money which is not yet mainstream and robust. Moreover, only Syrian refugees have the required IDs (a card issued by the Ministry of Interior) to open a mobile wallet, and refugees from other nationalities are still required to provide valid passports which most do not have. In Kenya, refugees are not allowed to use M-Pesa which is a critical part of the economic infrastructure. Instead, their transactions are limited to a separate limited-function financial system called Bamba Chakula. Rather than enabling financial inclusion, we argue that such efforts have contributed towards the ‘financial encampment’ of refugees.
Our observations corroborate the criticism of the self-reliance model in humanitarian programming, characterized by a refugee support system that is driven by market forces, neoliberal principles, and financialization. As displacement is prolonged, humanitarianism has taken a resilience spin, placing the responsibility on national and local authorities to provide services and highlighting the involvement of non-traditional actors like the private sector, and portraying aid recipients as ‘active and resilient survivors and first responders.’ These approaches, while avoiding political conflicts and creating private sector markets, lack transformative impact on refugees’ conditions and may undermine autonomous humanitarian efforts.
While we cast a critical eye on the efficacy of financial inclusion approaches, we acknowledge that it is not the question of ‘financial inclusion versus financial health’ but rather an integration of both. Financial inclusion remains crucial for refugees’ prolonged stay in host countries. However, to create meaningful change, financial inclusion policies must align with host government policies that enable foundational and meso-level inclusion. Adopting the financial health approach offers fresh insights for designing effective initiatives by prioritising the needs and desired outcomes of refugees. This requires collaboration among multiple stakeholders and necessitates political solutions to address systemic barriers.
For a deeper dive into some of the challenges refugees face, we also recommend looking at the selected financial biographies from Jordan and Kenya, bringing some of the participants’ stories to life. Also find more reports, essays, and financial biographies of refugees and migrants from across the globe on the Journeys Project website.
Swati M. Dhawanti is a seasoned development researcher with 14 years of experience advising businesses, international development organizations, and governments on achieving inclusive development through digital pathways. Her expertise lies in the areas of digital financial inclusion, financial capability, women’s economic empowerment, digital livelihoods, and consumer protection. With a global and sectoral focus, Swati has conducted research across developing market economies in Asia and Africa. Notably, Swati’s recent research has delved into the financial and livelihood transitions of refugees, exploring the pivotal role of digital financial inclusion. This research formed the basis of her recently completed Ph.D. in Economic Geography. She has also conducted independent research in Germany as a German Chancellor Fellow. Her research contributions have been widely published in various formats, including academic papers, reports, essays, blogs, and articles.
