Financial inclusion of Forcibly Displaced Persons (FDPs)
Leveraging financial inclusion to leave no one behind
How does financial inclusion empower Forcibly Displaced Persons (FDPs)?
Populations who are displaced and, on the move, do not always have easy access to formal financial services. With 68.5 million people forcibly displaced worldwide, FDPs represent an important segment of the world’s 1.7 billion unbanked. Financial inclusion empowers FDPs to:
- Safely store money
- Build up savings
- Receive and make money transfers
- Conduct everyday financial transactions
- Secure jobs
- Insure themselves against risks
Access to formal finance services create conditions for FDPs to establish coping mechanisms, build self-reliance and resilience, apply their skills and competencies, restore their livelihoods, and realize their full potential. In turn, they are able to contribute to the economic growth of their host country, voluntarily return home, or resettle to a third country.
However, there are key challenges in advancing the financial inclusion of FDPs:
- FDPs lack acceptable identification to satisfy Know-Your-Customer (KYC) and Customer Due Diligence (CDD) requirements to comply with global Anti-Money Laundering and Countering Financing of Terrorism (AML-CFT) standards
- Insufficient financial infrastructure in host countries particularly in refugee camps
- Financial service providers do not view FDPs as a viable client segment
- Limited data on FDPs and their financial needs
There is an extraordinary array of experiences across the AFI network that can help to enhance the diversity, value, and quality of financial services offered to FDPs. Financial regulators and policymakers can support and influence efforts to design and deliver financial services to FDPs by supporting the compliance of existing services and promoting innovative new services.
How have AFI members shown policy leadership?
Da Afghanistan Bank
Da Afghanistan Bank simplified KYC requirements that allowed FDPs to open transaction accounts at banks, and MNOs with their Ministry of Refugees and Repatriation (MRR) cards, UN Migration card, UNHCR card, and WFP card. The Central Bank also ensured that FDPs are included in Afghanistan’s National Risk Assessment (NRA) and National Financial Inclusion Strategy.
Bangladesh Bank provided financial services for the Rohingyas by issuing a circular to financial service providers confirming that photo identity documents generated by the Government of Bangladesh, and UN organizations are acceptable for KYC purposes.
Bank of Zambia
Bank of Zambia granted approval for mobile money service providers to provide MFS (within transaction and balance limits for mobile money and e-money) to refugees who present identification cards or registration documents issued by the Ministry of Home Affairs. These mobile money service providers include Airtel Money, Zoona, Kazan, Zamtel Kwacha, and MTN Mobile Money.
Bank of Tanzania
Bank of Tanzania worked closely with the Government of Tanzania and Financial Intelligence Unit (FIU) on the National Risk Assessment (NRA) to identify risks that can be posed by refugees in the financial system. Establishing the level of risks is important to develop tiered KYC processes and integrate into the second National Financial Inclusion Framework (NFIF 2.0). Bank of Tanzania continuously empowers banks and MNOs to develop products that are suitable for FDPs.
National Bank of Rwanda
National Bank of Rwanda enabled digital cash transfer programs for refugees in Nyabiheke, Gihembe, and Kigeme camps to complement other humanitarian efforts. The Bank work with partners in visiting refugee camps to raise awareness on financial consumer protection regulations, and encourage adoption of cashless means of payment.
Central Bank of Jordan
Central Bank of Jordan included refugees in the Jordanian National Financial Inclusion Strategy (2018-2020). The Central Bank also launched the Jordan Mobile Payments (JoMoPay), its national centralized payment switch that connects refugees to a payment ecosystem comprising of financial and payment intermediaries such as telcos, banks, and transfer companies. JoMoPay offers benefits to refugees as its KYC requirements are uniquely designed for them to use their UNHCR ID number to register, providing refugees with access to a mobile wallet.
The way forward
- Where appropriate, FDPs should be given the opportunity to indicate their individual preferences and needs. Displaced communities have an important role to play in designing local solutions to advancing financial inclusion.
- Evolving payment landscapes and implementation of digital technologies, including biometrics and distributed ledgers, have the potential to substantially improve compliance, cost efficiency, and accountability for financial inclusion of FDPs.
- Risk management should address barriers such as compliance with KYC requirements, and FDP issues within the context of NRAs and AML-CFT regulations is a priority.
- Concerted coordination should continue among financial regulators and policymakers, global and regional standard-setting bodies, UNHCR and other humanitarian agencies, and civil society to develop a clear plan of action.
World Refugee Day
AFI has joined global advocacy efforts to support World Refugee Day on 20 June as part of its awareness raising activities to highlight the role of the sustainable, and responsible financial inclusion of FDPs. We strive to share practices and solutions of AFI member in advancing the financial inclusion of refugees, as well as provide guidance in developing and implementing tangible policy actions. Read the blog posts below for more insights.