Financial Inclusion Role in Dealing with Refugees


The aim of the following essay is to determine the role that financial inclusion could have in dealing with and improving the living conditions of refugees. It is divided in 3 main sections:

  1. Defining the link: Refugees and Financial Inclusion.
  2. Defining the context: Social and economic aspects.
  3. Financial inclusion solution.

“Financial services are instrumental for refugees to rebuild their economic livelihoods. Affordable access and use of quality and responsible financial services can help them to safely store money, build up savings, send or receive money transfers and carry out day-to-day financial transactions. Depending on the various needs of forcibly displaced persons (FDPs) and host communities, more complex financial services, like credit and insurance, can provide them with the additional support they require.”

“Through the supply of adequate financial services, financial inclusion can empower FDPs to build assets, mitigate shocks related to emergencies and make productive investments that improve their livelihoods and the local economy.”

International Labour Organization – Financial inclusion for refugees and host communities

  1. Defining the link: Refugees and Financial Inclusion

A refugee is a person who has escaped from their own country for politicalreligious, or economic reasons or because of a war.[1] Due to this exceptional situation, their need for humanitarian and financial help is usually substantial.

NGOs could cover their shelter needs, however, this is sometimes not sufficient in the long run, as refugees once overcome the first weeks of relocation, have to be integrated in the new society. This is clearly stated by The UN Refuee Agency: “Ideally, the situation of being a refugee is not permanent. In practice, the refugee will either return voluntarily to his or her home country when the conditions that forced him or her into exile have been reversed, or will have to find a lasting solution within a new community either in the country of first refuge or in a third country.”[2]

That’s where financial inclusion steps in. According to The World Bank, “financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way”.[3]

As explained, financial inclusion aims at helping the society as a whole to have access to a minimum range of financial services, through formal and/or informal ways. People living in hostile places threatened by war escape to safer places.

These refugees are received by humanitarian NGOs and international institutions such as the UN and its UNHCR team. However, according to this institution “many refugees have no access to banks and other financial services. This creates an enormous hurdle on their way to self-reliance and economic independence. Because without a bank account, they lack a safe place to save and receive money, have much fewer options to make payments or access loans. In short, without such services, they can’t fully participate in a country’s economy or build a stable life for themselves and their families.”

So once the refugees are safe, new ways of dealing with the problem should arise in order for them to stay in the hosting country without exhausting the humanitarian resources. Financial inclusion can be a way to deal with this issue.  

2. Defining the context: Social and economic aspects

Since the beginning of times conflicts for the control of specific regions or countries have existed. Even though in modern times we have mostly dealt with it through international agreements and cooperation, geopolitics has always been an issue.

Mainly due to the fact that in most cases throughout history, control and influence over other countries has been performed through violence and wars.[4]

Chart 1 – Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail, Ray Dalio, 2021

This has caused millions of refugees to leave their homes. Recent examples of this are the Sirian refugees, which since the civil war started in 2011, amount to 5,6 million[5] or Ukranian refugees, which until the current date already are more than 3,5 million.[6]

This forced inmigration does have a social and economic impact also in the hosting countries. On one hand, focusing on the cultural aspect, integration programmes have being developed (Cyprus being a good example), however the process of naturalization (having the same legal and life status than locals) is complex and gradual.2

Granting an asylum, which is the most essential need of refugees, and having in place “a reception policy that combines effective and adequate services (in particular as regards skills training, access to gainful employment and health care) […] would increase the chances of successful integration in the host country.”2

On the other hand, once being settled in the new country, assuming the war in their home country lasts for long, refugees impact the hosting country labour force. Differences in culture and religion (the case of the Sirian refugees in Europe) reduces their possibilities to access jobs and cover their needs.

As included in the labour force once they start to actively seek for a job[7], the economic structure of the hosting country changes. Some not undertaken jobs could be performed by non-qualified refugees, and other jobs in companies that need technical skills could reduce the wages they pay in case the refugees are qualified, as there is a higher labour force, just as it happens with inmigration.

3. Financial inclusion solution.

Financial inclusion plays therefore an important role. Depending on the region or country where the asylum-seeker stays, different formal financial institutions (FNGOs, NBFC and MBTs and later banks) could help them to integrate in the society.

A key issue that has to be addressed is whether the hosting country is a developed country, which can be checked through the FDI (see chart 5 in the appendix), and if refugees have had an education. Both can help to ease the integration of refugees in a faster way in hosting society. Education opens working opportunities, whereas developed countries’ governments get usually quite involved in helping refugees (again, Cyprus is a good example in Europe).

However, in developed and emerging countries, as well as underdeveloped regions, one of the best alternatives is to ask formal institutions for help, and most specifically, the UNHCR. This institution relies almost entirely on externally funded donations. “Individual governments and the European Union provide 85% of our budget. Another 11% comes from individuals and the private sector, including foundations, corporations and the public”.[8]

But what its key is that UNHCR operates globally, partnering with governments, financial institutions, financial service providers, and microfinance investors.[9]

UNHCR offers a wide coverage. Upon application for an asylum, refugees are offered a shelter. The application process can be made online, however its surprisingly long. In Spain, it could take up to a month for the request to be accepted before being studied in detail by the Spanish State that will provide a final response on whether the international protection is granted or not.[10] This lack of flexibility should be taken into account.

At the same time, the UNHRC is aware of the different financial needs of refugees, that evolve over time: Upon arrival they need survival cash, moving towards more comprehensive services such as savings, payments and credit during a more stable later phase. In between these situations, plenty of other factors might play a role, for example, the vulnerability they experienced, their human and social capital and their plans for the future.9

Some examples of the collaborations with financial service providers that UNHRC does are:

  • With the Financial Sector Deepening Africa (FSDA), supporting them with market studies and technical assistance in Rwanda, Uganda and the Democratic Republic of Congo.
  • With the International Finance Corporation (IFC) and the International Labour Organization (ILC) across Kenya and South America, performing market assessments9

More in depth, since 2019, the ILO and UNHCR have joined forces with UNICEF, IFC, the World Bank and Netherlands Government (which is the leading institution) to design PROSPECTS, with the goal of fostering more sustainable livelihoods through employment creation, education and protection.

Under this project, the ILO’s Social Finance Programme is working towards extending financial services to refugees and host communities in East Africa and the Middle East12, through a 3 sided structure as shown below:

Chart 2 – ILO’s Social Finance Programme


Even though still a lot has to be done, international institutions ease refugees’ financial activity in the hosting countries through this holistic approach. Using policy, supply and demand measures, these formal institutions are doing a big effort to facilitate their financial inclusion.


Chart 5 – Main activities, UNHCR 2001 – 2022

Chart 6 – FDI Database, IMF, 2021


[1] Cambridge Dictionary, Cambridge University Press online resources, 2022.

[2] The Integration of Refugees, A Discussion Paper, UNHCR, 2014.

[3] Financial Inclusion, The Wolrd Bank, 2018.

[4] Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail , Ray Dalio, 2021.

[5] Sirian Refugees, UNHCR, 2022.

[6] Emergency in Ukraine, UNHCR, 2022.

2 The Integration of Refugees, A Discussion Paper, UNHCR, 2014.


[7] Labour force, OECD, 2022.

[8] FAQ: How is UNHCR funded?, UNHCR, 2001-2022.

[9] Financial Inclusion, UNHCR, 2001-2022.

[10] Applying for Asylum within the Spanish Territory, UNHCR, 2001-2022.


9 Financial Inclusion, UNHCR, 2001-2022.

12 Financial inclusion for refugees and host communities, ILO, 1996-2022

Originally published on 25th March 2022


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