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Author: Bobbi Gray. Next up in our series of guest blogs on the topic of the European Microfinance Award 2023 – Inclusive Finance for Food Security & Nutrition – Bobbi Gray from Grameen Foundation considers the (intolerable) sacrifices that poor households make to meet their financial services obligations, and the responsibility of the sector to address this. Almost 10 years ago, I’d finished the book The Last Hunger Season, by Roger Thurow. I was so impacted by the book that I wrote two blog pieces (here and here) considering the relevance of the book to our work in microfinance. As noted in Myka Reinsch Sinclair’s blog launching the European Microfinance Award 2023 – Inclusive Finance for Food Security & Nutrition, our work at Freedom from Hunger and then through the merger with Grameen Foundation was grounded in the theory that microfinance plus health and nutrition education would reduce poverty and improve household food security. Financial services alone were not enough. Health and nutrition education were not enough. You had to provide both to support household’s agency and decision-making regarding more and healthier food consumption. Fast forward to today, not much has changed. While we’ve celebrated reductions in global hunger in the past few years, it is again on the rise due to climate change and shocks, conflict, land degradation, to name a few. With support from CGAP several years ago, my colleague Megan Gash and I had the coolest opportunity to just study the concept of ‘resilience’ and its relationship to financial services. For an entire year, we conducted a series of frequent surveys with approximately 40 households in Burkina Faso. We studied their food security, their exposure to shocks, and how they coped with these shocks. In a CGAP blog, we outlined some of the findings that struck us, and sometimes that shook us to the core. At times, the entire cohort was food insecure. Fifty percent (50%) of them reported that they had gone hungry to make a loan payment or a savings group contribution. We wrote: “When shocks occur, many households use negative coping mechanisms that increase food insecurity, such as reducing daily food consumption and selling grain stocks, which solve an immediate problem but can have long-term consequences.” When we gifted our survey participants a bag of rice for their continued participation in our research, they noted in a subsequent survey that this was a “positive surprise” and shared that this bag of rice ensured they didn’t go hungry that week. An unintended—but positive—consequence of our research. This experience in Burkina Faso has spurred our continued interest in the unintended consequences of our work in financial services. Years ago, I remember being at a conference and participating in a group discussing client protection and the concept of unacceptable sacrifices came up, but this was directly related to the concept of measuring over-indebtedness. But the experience in Burkina Faso taught us that households make unacceptable sacrifices to make loan payments, savings group contributions and to engage in economic activities. More recently, we’ve studied the tradeoffs made by households that can result in child labor or the stresses that can result in gender-based violence. When I think about the relationship between financial services, food security and nutrition, I think there are actions we’re likely already taking and some areas where we can be more creative. First, we have a responsibility to understand and mitigate the use of sacrifices when people use our financial services. But we have to expand our definition of ‘do no harm’ to go beyond over-indebtedness. We have to study the sacrifices people make using our products when we conduct market research, client satisfaction studies and outcomes/impact studies. If we do not ask the questions, we do not have the data nor the understanding of what is occurring and therefore, we’re doing nothing to mitigate this harm. In our research on child labor, we developed survey questions to help us understand the sacrifices households might be making (See the Impact Survey in the Monitoring and Evaluation Guide, Section J.) Second, we can ensure that we’re aligning the designs of products on common cash-flow and seasonal constraints, providing refinancing options so that households can manage debt when a shock occurs, and ensuring households have a portfolio of services that address income growth, consumption, and risk mitigation. All of these play a role in preventing households from using unacceptable coping mechanisms, such as reducing food consumption and choosing less nutritious foods. Third, we have to pay attention to gender and social norms. While we’ve measured food security at the household level, we’ve also tested what happens when you ask a woman the same questions, but about herself. A woman often ‘eats last and the least’, forgoing food for her husband, family elders, and her children. While research has often shown a woman will prioritise food security when she earns her own income, she still may have limited agency and must negotiate with others within her household for money to purchase food. Finally, some financial institutions have a history of providing health and nutrition education. Others teach their clients new agricultural and food preservation techniques. Not every financial institution has to provide food security and nutrition support directly but can do so through partnership. But these cannot be one-off, periodic activities that make headlines. They have to be thoughtful, long-term partnerships designed to make food systems work better and that provide vulnerable clients holistic services. In summary, I don’t think the financial sector has to necessarily create something brand new. While it’s not sexy to make iterative improvements, sometimes this is what is most needed and could be the most impactful and responsible. Food security should be considered as part of the design of financial services, and not simply seen as an outcome. We have a duty to account for the opportunity costs of a family’s food resources. Use of financial services should not come at the cost of a household not eating or making other intolerable sacrifices. Photo credits: Grameen Foundation About the Author: Bobbi Gray is Senior Research Director at Grameen Foundation USA. She has more than 18 years of experience in designing, implementing and coordinating research and evaluation on financial, health and agricultural programs for underserved communities across Latin America, Southeast Asia and Africa. Much of her recent research and programmatic experiences include understanding the barriers and opportunities to women’s economic empowerment and developing programmatic and evaluation tools for the same as well as studying the unintended impacts of women’s economic empowerment initiatives on the lives of women and their families. Bobbi holds a Master of Public Administration degree in International Management from the Middlebury Institute of International Studies at Monterey and a B.A. in French and Spanish from Texas Tech University.

Author: Swati M. Dhawan. 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. Illustrations by Liyou Zewide. See Dhawan, S. M., & Zademach, H.-M. (Eds.). (2021). A Hope for Home: A Brief Compendium of Financial Journeys of Refugees and Asylum Seekers in Jordan. About the Author: 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.

Author: Hans Ramm. In the latest of our guest blogs on the topic of the European Microfinance Award 2023 – Inclusive Finance for Food Security & Nutrition – Hans Ramm discusses the key global threats to food security and nutrition – and five ways – including with practical examples – that they can be addressed. The problem The UN Food Systems Summit, held during the UN General Assembly in New York in September 2021, set the stage for global food systems transformation to achieve the Sustainable Development Goals by 2030. The meeting brought to the attention of national governments, development actors, food and non-food companies and investors, and civic sector actors the following three accelerating - and closely interconnected - global threats: 1. In 2021, 768 million people suffered from hunger - and 2.3 billion were food insecure. 2. Food production alone contributes to 25% of global CO2 emissions and the food demand value chains, including food processing and trading, make up 36%. 3. In 2020, 3.1 billion people could not afford a healthy diet. 40% of adults and 20% of children globally suffer from obesity and diet-related non-communicable diseases. And deaths attributable to poor diets have grown by 15% since 2010. What does this mean? It means that food availability is not keeping up with population growth, although access to affordable food remains the still greater challenge due to accelerating poverty levels even in higher-income countries. Unhealthy diets – driven in part by the proliferation from the US fast food industry - will take long to reverse. The repercussions of the pandemic, political conflicts (like the Russian war in Ukraine) and more frequent and intense droughts and floods triggered by climate change further undermine the stability of the already unstainable food systems. Of course, the most vulnerable populations are threatened the most. The sustainable agriculture NGO Farming First identifies extreme gender disparities in access to key agricultural resources, particularly in Sub-Saharan Africa, relating to land (15%), inputs (<10%), extension services (5%), assets, markets, decision-making authority, and income. Five ways forward The Food Summit triggered five major action tracks (broken down by multiple workstreams and solutions) and pledging of enormous financial resources by public and private actors. However, many actions initiated by the UN and multilateral organisations in their ‘top-down’ and supply-driven operational modus vivendi will be unlikely to facilitate effective and systemic changes of food markets. To avoid too much supply-driven activism, I believe there should be a focus on the following five market demand-driven and fiscal strategies to address the three main food security & nutrition threats outlined above, and I refer as examples to five promising blended finance case examples and a ‘true’ cost food study: 1. Internalisation of environmental and health costs of food production and consumption to be enforced by fiscal measures: Tax levies (as applied for cigarettes and alcohol) should be applied to environmentally damaging agri-chemicals so that the demand by food producers increases for comparatively ‘cheaper’ organic fertilisers and pesticides. This, in turn, encourages agricultural input suppliers to switch towards organic products. The value-added taxes on food products need to compensate for the environmental and health costs of particular food items to encourage consumers to switch towards healthy food items, including subsidies for healthy food. This requires that the societal (or ‘true’) costs of food items are measured and then followed by fiscal measures targeted at the global food and beverage industries and their strong lobbies to reduce, for example, the high sugar content of their products. Stronger awareness building of governments in the aftermath of the Food Summit may finally overcome their decades-long food policy failure of higher taxes on sugar-prone food and beverages, despite a proven positive correlation between diabetes, cardiac diseases, dementia, etc and sugar intake. A recent ‘true cost’ food study in Switzerland revealed that average food costs should be 90% higher than current market prices to internalise environmental (CO2 emissions, water pollution & use, biodiversity loss, etc) and health (diet-related non-communicable diseases) costs. Here are some examples of market versus ‘true’ costs for four selected food items per kg/l: Market cost ‘True’ cost Beef: 23.00 51.60 Chicken: 13.90 19.10 Milk: 1.50 0.80 Apples: 3.70 -2.90 2. Agricultural investors incorporating key ESG risks of their investees into their investment pricing: This requires analysis (similar to ‘true’ costing) on how specific agricultural inputs affect the quality of produce, the resilience of crops against adverse weather events, soil fertility, etc. of their investees and local communities. This would cause a shift of investments towards more sustainable food production. Indeed, Rabobank, the global triple bottom-line agricultural investment leader, has developed ESG risk scorecards for different typologies of agricultural production since the mid-2000s for incorporation into its investment pricing. 3. Strengthening the market positioning of smallholder farms within their agricultural value chains through ‘win-win’ partnerships with farmer organisations, value chain actors (input suppliers, processors, traders), and financial intermediaries, while supporting their transition to agro-ecological practices, are effective solutions to contribute to food security while reducing the negative environmental footprint. More than 500 million smallholder farms produce over 70% of global food and 90% of food in Sub-Saharan Africa. Inclusive growth of smallholder farming and agri-businesses also provides productive rural jobs and income - and is 2-3 times more effective in reducing poverty than growth in any other sector. There are promising blended-finance funder approaches with strong gender strategies to de-risk and deepen the ESG outcomes of investments by private smallholder agricultural impact investors. Examples include: Smallholder Safety Net Up-scaling Programme (SSNUP) is a multi-donor blended smallholder finance initiative, aims at sustainably strengthening resilience and the safety nets of ten million smallholder households over ten years. It is co-funding technical assistance for farmer organisations, agri-businesses, and financial intermediaries (being investees of the nine private agricultural impact investor partners) to: (i) develop/improve their financial and advisory services to smallholder clients; (ii) enhance market building linkages among agricultural value chain actors, including digitalisation of communication and business transactions; and (iii) upgrade their internal management and ESG performance. Aceli Africa is a multi-donor funded market-led platform offering first-loss financial incentives, social impact bonuses and technical assistance to local agricultural lenders and global impact investors. It thus reduces the “missing middle” by catalysing finance for credit-constrained agri-businesses along selected agricultural value chains that offer the best potential for income and job creation, food security and nutrition, gender and youth inclusiveness, and promotion of climate-smart and smallholder agriculture in Eastern Africa. Nutritious Foods Financing Facility is an innovative up-and-coming blended finance nutrition initiative, where GAIN facilitates more enabling environments for nutritious food and Incofin offers funding and technical assistance for businesses that support the supply of nutritious, safe food for domestic, low-income markets in Sub-Saharan Africa. It aims at four priorities: (1) increased access to nutritious food through wider distribution, improved affordability, variety, and desirability; (2) increased supply of nutrients and reduced harmful elements through improved reformulation; (3) increased food safety and reduced contamination during production; and (4) decreased food loss during production. 4. Facilitating digital transaction channels between smallholder farms and consumers to ensure direct market access and 'fair' prices. Whereas family farms are exploited by cartels of wholesalers and retail discounters in higher-income markets, they lose up to 40% of their harvest due to lacking storage/warehousing facilities and suffer from limited market access due to poor infrastructure in low-income countries. Two examples from Europe and Eastern Africa demonstrate this: Crowdfarming is a digital platform which provides logistics and customer service so that European farmers can sell their crops directly to the end-consumer. This cuts out the middlemen who control the market and pay the farmers prices that do often not even cover production costs. Crowdfarming fights against the 11% food waste at the source (crops not been harvested or not meeting optical standards of traditional market demands) thanks to crop adoption by the consumer. Pre-financing by consumers offers regular cash-flow to the farmers enabling them to invest in organic production while employing staff around the year at fair conditions. Apollo Agriculture is a digital platform which seeks to “redefine investment opportunities for farmers” in Eastern Africa by providing financing for better products, increasing their harvest, and turning their subsistence farming into commercial farming. Farmers can buy inputs in cash or credit by choosing from Apollo’s digital store and then picking it up at the closest of the more than one thousand agri-dealers. Credits are linked with drought/flood insurance coverage. Apollo offers agricultural training to all clients. 5. Stimulating demand for affordable nutritious food as demand creates its supply. This encompasses multiple initiatives from school gardening and feeding programmes, food stamp programmes up to including health & nutrition in the primary and secondary school curricula. It is equally relevant in the South and North. The five strategies outlined above follow simple economic logic that market demand creates its supply (not the other way round) and that government has to ensure that all food production costs are internalised to protect the public (and ultimately the planet) against environmental destruction and mounting health costs. However, there are three broad challenges to the pursuit of these strategies: Firstly, development actors still have little expertise and incentives in leveraging the knowledge and resources of the private sector through smart public-private partnerships to contribute to the Development Agenda 2030. Secondly, politicians show limited commitment beyond their next elections to address global food and nutrition threats and thus do not push sufficiently for regulatory/fiscal changes against strong lobbies from the global food and beverage industries. And thirdly, humans stick to old food habits even if they become fully aware of their negative health and environmental consequences and even if they have to pay more for them. Addressing these challenges will be critical in supporting the strategies to improve food security and nutrition. Photo source: SDC About the Author: Hans Ramm is a practitioner in financial inclusion and a SPI social auditor of financial institutions. He holds tertiary degrees in economics and political science and a post-graduate diploma in development co-operation. He has worked in more than 30 countries for various development organisations like the UN, bilateral agencies, development banks, consultancy companies, inclusive banks and microfinance institutions, and INGOs.

Author: Ayako Iba. In the latest in our guest blogs on the topic of the European Microfinance Award 2023 – Inclusive Finance for Food Security & Nutrition – Ayako Iba from the UN World Food Programme discusses the global food crisis and the role cash transfers can play in addressing access to food, while promoting financial inclusion at the same time. At the backdrop of a global food crisis, triggered by the effects of economic shocks, climate crises, and conflicts, the link between food security and financial inclusion has become ever more evident. In 2023, over 345 million people – more than double the number in 2020 – are facing high levels of food insecurity, amid soaring food prices and the ripple effects of cumulative economic shocks at the national and global level. By November 2022, the Horn of Africa had suffered four failed rainy seasons, over 1.4 million people in Somalia alone were displaced, and 66% of them due to drought. Halima Abdulle Samatar and her four children fled to a camp for internally displaced people (IDPs) in Dolow, after their family crops withered and 60 goats died. With the cash transfers Halima received from the World Food Programme (WFP), in addition to food, she paid for schoolbooks for her children and medication. Initially, she also saved $5-$10 per month to build a shelter, because they were sleeping in the open. Soon after, by continuing to save and buying goods on credit from a local wholesaler, Halima opened a small shop, made of corrugated iron sheets and wood, to sell batteries, pens, and groceries in the IDP camp. Cash transfers (also referred to as cash-based transfers) are cash assistance provided to the people who need it the most in the form of direct payments, which can come in many forms and from different entities. For example, WFP prioritises sending unrestricted cash transfers and avoids imposing conditions, in order to maximise the contribution of cash to meeting people’s needs and transforming their lives, particularly in the context of humanitarian emergencies. Other development organisations might focus on cash transfer programmes that are conditional to specific actions, such as attending a farm-management training. It can also be restricted to buying food items or making only cashless payments, depending on the programmatic objective. Several governments use cash transfers as a large-scale social protection programme as well. The funds can be transferred to bank accounts, electronic money accounts such as mobile money wallets, or distributed in the form of a voucher, prepaid card, or cash. WFP, The largest provider of cash transfers The UN World Food Programme (WFP), the world’s largest humanitarian organisation, is taking the lead in tackling Sustainable Development Goal (SDG) 2, by seeking to end hunger, achieving food security, and improving nutrition by 2030. Cash transfers for WFP have proven to be an effective tool to tackle the important intersection between this SDG on Zero Hunger and financial inclusion, because as the case of Halima demonstrates, cash transfers enable people to take control over their essential needs, including food security and nutrition, and, at the same time, build financial resilience. In 2022, WFP spent a third of its total budget in cash transfers, by distributing almost 3.3 billion dollars to 56 million people across 72 countries. WFP prioritises unconditional and unrestricted cash transfers, because its aim is to empower people with the choice to address their essential needs in local markets, while also helping to boost local economies. It also uses conditionality as part of programmes that are inherently conditional, such as school-based or resilience programmes. Most importantly, WFP designs cash transfer programmes in a way that the experience of people receiving the cash is the most dignified. That being said, WFP would not be able to deploy such a scale and volume of cash transfer programmes without forming strategic business partnerships with financial service providers (FSPs), NGOs, governments and retailers, which also play critical roles in implementing risk mitigation measures that ensure that the money WFP sends reaches the right people. For example, WFP had contracts with more than 109 FSPs as of end-2022, ranging from banks, mobile money operators, microfinance institutions, remittance service providers, amongst others including fintech companies. In addition to the WFP assurance framework, WFP benefits from FSPs’ expertise for transferring funds in a secure, traceable manner, and in compliance with local regulation. At the same time, the FSPs’ resources - such as staff, agents, and IT systems - help WFP maintain its wide outreach, by assisting people most in need, taking into account their needs and preferences, as well as the geographical area and the existing infrastructure. Cash transfers for essential needs and financial inclusion As the recently published WFP Cash Policy illustrates, cash transfers can contribute to addressing people’s essential needs while supporting to build their financial resilience in multiple ways: Unrestricted cash operations can help reduce the difficult trade-offs people face when deciding which of their urgent needs to prioritise. Evidence shows that 60-70% of income for vulnerable households is spent on food. It can also help avoid that people are forced to resort to coping mechanisms that cause serious harm to their physical or mental well-being, such as young girls marrying, sex work, or undermining their ability to bounce back from crises, for example, by selling their productive assets. People receiving cash transfers to support their essential needs will often be introduced to formal financial services for the first time, when they are requested to open bank accounts or mobile money wallets. Financial literacy trainings are offered when assisting people to register with the FSPs, for example, on the importance of keeping their PIN code confidential and how to submit complaints.Also, opening accounts in the name of women on behalf of their households can be a gateway to women’s empowerment, by counterbalancing the existing gender inequality, not only in terms of access to financial services, but economic opportunities in overall. The people we assist have to make financial decisions to better respond to shocks and often have pre-existing financial obligations. For instance, they might need to invest in fertiliser or crop storage to improve their food security situation. In such cases, most people have financial services of their preference that they rely on, whether they are saving groups, remittances, or informal lending. However, reliance on unstable or informal financial services often translates to limited access to adequate and cost-efficient payment services, insurance, or credit, which can help to seize economic opportunities or cope with sudden drop in income or unexpected expenses. Thus, cash transfer programmes should be designed to facilitate the transition to formal financial services, while taking into account the channels that the people are already familiar with. Cash transfers create a positive spillover effect for the local economy. In a programme evaluation WFP conducted in Kenya, it was reported that, after deploying cash transfers, the monthly sales volume of local traders increased by 94%. In a similar evaluation in Lebanon, it was observed that a multiplier of 1.51 dollars was generated in the local economy for every dollar of cash transfers. Hence, providing cash transfers can help to boost demand for local goods and since it is commonly denominated in local currency, it can also curb local currency devaluation. That being said, WFP commits to using the modality or combination of modalities (cash, value vouchers, commodity vouchers, in-kind food, capacity strengthening) that best addresses the people’s essential needs. Each context is different, and every household has specific needs and strategies for navigating through crisis and hunger. Through thorough assessments, including feedback from food-insecure people, WFP identifies the modality that is the safest and most likely to achieve the best outcomes for them. For example, where food is not available and markets are unlikely to respond to greater demand because commercial supply chains are seriously disrupted, or where people prefer other modes, WFP uses in-kind food or a combination of modalities. In all, well-designed cash transfers can give people their agency back and, crucially, their right to choose. The key to success is to design cash transfer programmes with a people-centred approach, by tailoring the transfers to their needs and enabling them to receive cash on an account in their name, so that they are better able to resist to shocks and build their financial resilience. In this way, cash transfer programmes can effectively and efficiently support people to meet their essential needs, while helping to break the vicious cycle of poverty and vulnerability and also boost local economies. About the Author: Ayako Iba is a Financial Services Specialist at the World Food Programme. Her focus is on monitoring WFP’s exposure to counterparty and operational risks of contracting FSPs for cash transfer programmes, by overseeing due diligence exercises and proposing risk mitigation measures. She has over ten years of experience in the financial inclusion sector, having worked for a microfinance institution in Mexico, evaluated financial literacy and client protection programmes of the World Bank, and assessed financial and social performance of over 70 FSPs worldwide. Ayako holds a MSc in Local Economic Development and a BSc in Sociology from the London School of Economics.

Author: Michaël de Groot. In the latest in our guest blogs on the topic of the European Microfinance Award 2023 – Inclusive Finance for Food Security & Nutrition – Michaël de Groot from Rabo Foundation shares how three of the foundation’s partners are working to build more sustainable and resilient food systems by tackling challenges across the food value chain. Farmers, both small and large produce enough food to feed 1.5x the global population. Despite this, 850 million people are hungry, and many of the world’s 450 million smallholders have to live on less than $2 per day. Add to that the significant role of our current food system in driving climate change, and we have a situation that we can’t sustain. Staple crops like rice, wheat and potatoes are already experiencing impacts from climate change. But so are cash crops. One of Rabo Foundation's partners, Norandino in Piura, Peru, has had to switch its cultivation three times over the past 15 years – from coffee to cocoa to sugarcane. Three different crops in 15 years, each time moving to crops more resistant to heat, drought and disease. To improve the climate resilience of farmers who grow our food, on-farm agriculture practices are important. But it is only one part of the change that’s needed. Farming households cannot change their crops and their agricultural practices, let alone invest in technology if they don’t have a living income. This is especially true for smallholder farmers that live at or below the poverty line, yet who produce 30% of the food consumed by increasingly urbanized communities. What we need to support and create is a food system change that responds to farmers’ needs and incorporates agricultural inputs, services, training, and access to markets. And the system change approach must not be limited to the institutional perspective, but must also tackle the way we produce – more regenerative, more circular, less external. Moreover, it must incorporate the entire value chain and not only a single solution. The following three examples show how to create a food system change. Sokofresh Cold Storage Kenya Africa In many countries, the mismatch between supply and demand is due to lack of infrastructure and absence of know-how that helps keep food fresh longer. A large part of that is the lack of access to affordable technology. SokoFresh - a company from impact venture company Enviu – has developed a process and business model that gives smallholder farmers affordable access to cold storage and links them to markets. Sokofresh manages off-grid, mobile cold storage units that are strategically placed at the farm-level to optimize aggregation from smallholders. Farmers, cooperatives and aggregators are linked to exporters, wholesalers and processors. The use of cold storage during aggregation has two effects: drastically reducing food loss during harvest and significantly reducing the transport costs from farm to off-taker. Through the margins gained in this process, SokoFresh can be paid on a per kg basis, and farmers can earn up to 50% more on their harvest, while buyers receive more and better-quality produce. Rabo Foundation was one of the first partners to recognize the value of this concept and invest in the SokoFresh pilot to increase the accessibility of cold storage. SokoFresh is just one of Enviu’s innovations that drive systemic change to address environmental and human issues we are facing today. Their FoodFlow program is creating a value chain for french beans, mangos, and avocados by developing the technology needed to eliminate post-harvest losses and create a value chain made up of sustainable, circular business models, achieving 0% post-harvest loss, increasing incomes and improving food security. Its ambition is to deploy 400 cold storage solutions over the next 5 years, leading to increased income for 35,000 farmers, 3,000 new jobs in rural areas and 37,500 MT CO2-equivalent emissions prevented annually. We are currently scaling up our cold storage capacity in Kenya. Furthermore, we’ve started to develop a farmer-centric market linkage platform to provide smallholders with greater choice of buyers to sell to. Indonesian Farmers Produce Biodiversity and Premium Rice Smallholder rice farmers in Indonesia often experience low productivity due to excessive use of synthetic pesticides. The agtech firm Pandawa Agri has developed an innovative reductant to help farmers reduce their overall pesticide use, resulting in better harvests, safer working conditions, improved biodiversity and a better life for the farmers. And with Rabo Foundation, Pandawa Agri also expands access to finance, markets, and farming inputs needed by smallholder rice farmers. Less dependent on pesticides ‘Pandawa Agri developed an organic pesticides reductant – the first of its because we wanted to help smallholder farmers’, recalls co-founder Kukuh Roxa. ‘Farmers often experienced failed harvests because they used too much synthetic pesticide. We wanted to make them less dependent on those kinds of chemicals, improve their harvests, while also staying healthier and putting less pressure on the environment –lowering costs along the way.’ The reduction in pesticides alone isn’t enough. To have a successful harvest and a good income, farmers also need good seeds and other inputs, Pandawa trains the farmers to use less water and fewer pesticides. The rice is now of very high quality to ensure that farmers can sell their premium rice for a good price, without intermediaries taking all the profit. Innovative Financing Rabo Foundation partners with Pandawa Agri in the following ways: long-term working capital loan which Pandawa Agri uses to provide access to financing for smallholder farmers. Pandawa Agri assumes the risk for these loans. working capital loan for Pandawa Agri to purchase the rice from farmers to then distribute it to buyers. Rabo Foundation also connected Pandawa Agri to ACA Insurance. Their agriculture micro-insurance coverage protects farmers from the financial risks of a failed harvest. Climate Smart Agriculture One-stop Shop Enhances the Output and Life of Indian Farmers Be it rice, peas, eggplants or bananas, Indian Agtech company DeHaat ensures a swift journey from field to shopping basket. They use an app and an enormous local distribution network for farmers in central, northern and western India to achieve this. In addition, DeHaat provides agricultural products and advice, as well as food storage and distribution channels. Through thousands of outlets produce from farmers reaches consumers incredibly quickly. Millions of Indian smallholder farmers pay intermediaries high fees to sell their produce. That is, if it doesn't perish on the way to market, where it often fetches a low price anyway. With their app and a local network of more than 11,000 DeHaat Centers, the company creates a direct link between farmers and buyers. The app provides crucial information on the latest market prices and puts farmers in contact with buyers, to whom they can sell directly at a fair price. They subsequently deliver their harvest to a DeHaat Center, where they immediately collect payment. Currently DeHaat serves around 1.8 million farmers across 118,000 villages in India. DeHaat Centers are managed by franchise operators from the local community. They supply agricultural input products and training is offered physically as well as digitally to properly educate farmers by DeHaat agronomists.  DeHaat Centre provides also temporary storage for farm produce sold. The DeHaat app also gives farmers important forecasts and advice – for instance, by calculating expected harvest yields and the expected demand for produce, as well as providing weather reports and warnings about crop diseases. In addition, DeHaat agronomy experts visit farms to collect data and provide farmers with customized training, based on local soil samples and historical cropping patterns. DeHaat then analyzes the soil samples in order to offer tailored advice on soil fertilization. The final step in the system, the storage and efficient market linkage of the harvest that has been sold, is also transparently managed. Post-harvest loss is significantly reduced thanks to local storage, reliable transportation to regional warehouses and demand led aggregation. Here, millet is collected for transportation. And in the DeHaat warehouse in Kasgani (Uttar Pradesh), rice lies safely and dry ready for buyers to supply to consumers. Photos: Rabo Foundation. About the Author: Michaël de Groot is senior investment manager for Rabo Rural Fund.

Author: Eugénie Constancias. Entrepreneurs du Monde celebrates its 25th anniversary this year in style, with one of its microfinance institutions, Yikri of Burkina Faso, winning the European Microfinance Award 2023 on Inclusive Finance for Food Security & Nutrition. e-MFP reached out to hear more. e-MFP: EdM celebrated its 25th anniversary this year, congratulations! Could you tell us a bit about how that journey has transpired - some milestones along the way, and how EdM has evolved in its focus and work? Entrepreneurs du Monde (EdM): Thank you! The NGO EdM was born in June 1998, with a clear mission: to help particularly vulnerable women and men to improve their living conditions on their own, by creating or developing an income-generating activity. To achieve this, EdM has been setting up and supporting local organisations and over the last 25 years the NGO has expanded its activities in Africa, Asia, Haiti and even France without ever losing its identity. Starting out operating in the social microfinance sector, we gained a very precise picture of the budget and needs of vulnerable people we supported. That is why we decided to address energy poverty, professional integration of young people or entrepreneurship in agricultural settings. Let's take a look at a few milestones: Back in 1998, EdM started by supporting Inter Aide's social microfinance programs: UPLiFT in the Philippines. In the early 2000s, we took over the management of programs initially carried out by the NGO Initiative Développement: Alidé in Benin, ID Ghana in Ghana and Palmis Mikwofinans in Haiti. In 2005, the teams' day-to-day contact with vulnerable families enabled them to understand the impact of energy poverty, and the team launched the first pilots of future energy access organisations. In parallel, a number of disillusions prompted the NGO to rethink its modus operandi. We decided not to support existing MFIs, but to create new organisations from scratch, by recruiting and training local teams, and supporting them until they were autonomous. This new approach relied on jointly defined vision and mission and the implementation of rigorous social microfinance methodology. At the same time, a new partnership with the French Ministry of Foreign Affairs provided fresh impetus. On January 12th, 2010, the earthquake in Haiti disrupted the actions of the NGO and its employees. Our in-depth knowledge of Port-au-Prince’s neighbourhoods and populations led our teams to cooperate with major international NGOs. In 2010, we started our impact investment activities by creating Microfinance Solidaire, a fund dedicated to providing loans to our network of organisations that could not yet attract investors. Investisseurs Solidaires came later in 2021 to take equity stakes. From 2010 to 2015, in India, Cambodia, Vietnam, Ghana and Benin, social microfinance institutions showed good social results while achieving financial sustainability. In 2019, we decided to prioritise developments in rural areas, because smallholder farmers are the first victims of climate changes and are key to ensure food security for all. Thanks to an effective methodological approach, strategic partnerships and rigorous management, Entrepreneurs du Monde has been able to consolidate its activities and earn the recognition of its peers. Today, we are active in 12 countries through 23 social enterprises mainly in the social finance sector, serving +180,000 beneficiaries – 85% are women with an average loan disbursed at 269 €. e-MFP: You’re noted in particular for your focus on gender equity and mainstreaming. How has the sector evolved over the last couple of decades on this particular topic; where have there been significant advances, and where has it even regressed, or with much work still yet to be done? EdM: EdM fully endorses the objectives of social justice and believes that taking greater account of gender equality issues will contribute to the fulfilment of our mission. We had been reflecting on gender issues for years and have continued in a more active way since 2017. Through are network of institutions, we were serving more than 85% women beneficiaries and wanted to make sure we were in line with our mission of empowering people. Adopting a ‘Gender and Development’ approach meant taking stock of the fact that unequal power relations prevent equitable development and the full participation of women. ‘Gender mainstreaming’ implies both the integration of gender into the design and delivery of products and services and taking it into account in the internal dynamics of the institutions, in order to bring about a profound change in power relations. This strategy echoes e-MFP’s 2022 Award publication  that went ‘beyond how financial services providers serve women clients, and also encompassed how they ensure a workplace that is conducive to women’s ambitions, leadership and talent, and how they can lead by example in changing the norms that underpin gender inequity’. For those who would like to know more about Entrepreneurs du Monde’s gender mainstreaming approach, we have recently edited a document that highlights our eight key learnings. From our perspective, we have seen significant advances over the last couple of decades with regard to gender equality. While progress has been made in some areas, challenges and disparities still persist. Advances include: Increased Access to Financial Services: Efforts to promote financial inclusion have led to more vulnerable people, women in particular, having access to financial services than ever before. The Global Findex 2021 saw the long-stagnant gender gap in developing economies decline from 9 to 6 percentage points in terms of account ownership. Client-Centric Products: Beyond a myopic focus on outreach, it is worth mentioning that financial institutions have started developing products tailored to the specific needs of women in particular, recognizing their unique financial goals and constraints. In-depth analysis of the gendered context and of different segments of women and men helped design better products and services for both vulnerable men and women. At EdM, the social microfinance methodology (group methodology with individual liability) we promote includes features to address the needs of vulnerable women who have limited education levels, mobility, awareness of their rights, etc. and capacity to provide collateral. Non-financial services: They are a key element for institutions seeking to empower people; training on income generating activity management, social awareness-raising sessions, and individual counselling are part of our social microfinance methodology. Complementary to financial products, those services are crucial to the rolling out of our theory of change. Empowerment considers both practical needs and strategic interests (advancement of social status, equal rights and opportunities, control of economic resources, participation in decision-making, etc.) of different segments of vulnerable people and differentiated roles of women and men. But we should not be satisfied with the progress made so far. Setbacks can easily happen when our attention wanders. Fostering equal rights and opportunities for everyone in all aspects of life and of society does require the ongoing awareness and commitment of the inclusive and responsible finance community. In particular, there are several key challenges to remain alert to: Addressing Gender-Based Violence: Gender-based violence both stems from and reinforces gender inequality. It is the most brutal manifestation of inequality and is a major human rights issue that endangers the life trajectories of women, girls and gender minorities in multiple ways, with a wide range of negative consequences not only for them, but also for their communities. Additional efforts should focus on fair and respectful treatment of inclusive finance clients in a setting where there is an asymmetry of power relations between those lending money and collecting repayments, and clients who owe money or are waiting for a disbursement. It is also about creating safe and supportive working environments for employees. Digital Gender Divide: Digital financial services are potential drivers in promoting gender inclusive finance. But while these services have expanded access, digital gender gaps are not reducing as illustrated by the recent Mobile Gender Gap report by GSMA. Women have less access to smartphones, internet connectivity, and digital literacy, limiting their ability to utilise digital financial tools. Legal and Regulatory Frameworks:  Some countries have implemented policy and regulatory reforms to promote gender-inclusive financial services (i.e. monitoring sex disaggregated data, and promoting measures to eliminate discriminatory practices). Yet many things remain to be done to promote equal opportunities for women and men in the financial sector. Ensuring the enforcement of gender-inclusive policies and regulations is crucial. Governments and financial services providers need to better work together to create an enabling environment for better women's economic participation. e-MFP: Yikri from Burkina Faso was announced as the winner of the European Microfinance Award (EMA)2023 on Inclusive Finance for Food Security and Nutrition (and Anh Chi Em in Vietnam, another EdM MFI, was a semi-finalist). Could you tell us about these two organisations, EdM’s role in their creation and development, and perhaps some of the other organisations you support? EdM: Yikri and Anh Chi Em deploy social microfinance for poverty alleviation. Through a group methodology with individual liability, they provide products and services that are accessible to the most vulnerable groups, those excluded from conventional microfinance. Within groups, beneficiaries have access to a savings account, loans without collateral or security, and economic training (accounting, sales, stock management, etc.), technical training (agro ecology) or social training (prevention of disease, domestic violence, civil rights, etc.). Anh Chi Em operates in Dien Bien province – a mountainous area in the northwest of Viêt Nam – with 4 branches and more than 6,000 beneficiaries. About 90% of them are women belonging to ethnic minority groups, and their main income comes from agricultural activities. Outside group trainings, Anh Chi Em supports its beneficiaries through counselling and market linkage. A specific focus is made on agriculture to build up beneficiaries’ competences to fight against and adapt to climate change, increase their crop productivity, and limit the risk of animal disease. The institution also enhances beneficiaries’ knowledge on sustainable agriculture and the preservation of the traditions of ethnic minorities: sustainable rice production, waste transformation by redworms, traditional weaving, and organic cotton production. Yikri operates in Burkina Faso, a country with among the highest global levels of food insecurity as well as long-term socio-political violence. The institution currently helps almost 40,000 people. It has seen that over an average support period of three years, the number of its beneficiaries in extreme poverty is cut in half while their monthly net income is doubled. The 2023 EMA was a fantastic opportunity to recognise the institution’s work toward food security and nutrition. Yikri field officers are trained to recognise the warning signs of malnutrition in mothers and children and refer them to associations offering subsidized milk programs. Yikri has a subsidised agricultural loan coupled with training on sustainable agri-practices, including increasing crop production while reducing environmental impacts. The institution has also started "field schools" to demonstrate recommended farming practices, as well as value chain training that connects farmers with input suppliers and buyers. EdM creates social microfinance institutions such as Anh Chi Em and Yikri. We provide technical and financial support to build sustainable and autonomous organisations. Entrepreneurs du Monde equips these institutions with appropriate operating procedures and management tools and strengthens their social and environmental performance. We also put in place registered local entities and create stable governance. From a financial standpoint, EdM covers institutions’ operating deficit until they achieve sustainability while our Impact Investing funds answer their loan and equity needs. e-MFP: Where do you see yourselves in another 25 years from now, what would be your hope for EdM’s role and purpose then? EdM: Our main aspiration is to broaden our impact by reaching out to more vulnerable people and addressing more effectively all their needs. We recently defined our strategy for the next three years and plan to serve 300,000 vulnerable people by the end of 2026, compared with 180,000 at present. To achieve this, our approach is to continue to create and support social enterprises in the field of microfinance and beyond. The ecosystem or organisations created by EdM (the NGO and the Impact Investing Funds) can enable these social enterprises to scale up and become influential players within their countries. Moreover, expanding our activities in new territories and domains is crucial to extend and sustain EdM's impact on vulnerable people. In 2024, we are launching activities in Liberia and Forest Guinea. We are also implementing new projects: supporting internally displaced people in Burkina Faso with Yikri, fighting against climate changes effects in Senegal with Fansoto and promoting menstrual health in partnership with Assilassimé in Togo. Convinced that the fight against poverty through entrepreneurship is a collective challenge, we consider it essential to join forces to build a social and solidarity economy dedicated to the financial inclusion and empowerment of vulnerable people. About the Author: Eugénie Constancias is Social and Environmental Performance Manager for Entrepreneurs du Monde. She leads the provision of technical support to reinforce the attainment of social and environmental objectives within the NGO’s affiliates in Asia, Western Africa and Haïti. Photos: Entrepeneurs du Monde/Yikri

Author: Ed Fraser. On March 14, e-MFP was pleased to open applications for the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 15th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs — Directorate for Development Cooperation and Humanitarian Affairs, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. Kicking off e-MFP’s annual series of guest blogs on this topic, Ed Fraser, a consultant supporting the EMA team, describes the scale and complexity of the displacement challenge, the barriers faced by the forcibly displaced, and introduces the role(s) that the financial inclusion sector can play, and argues for a collective approach, an ‘imperative’, that leverages what various stakeholder groups can offer in serving these groups. Each year, growing numbers of people are forced to leave their homes. Most are internally displaced within their country, but many others cross international borders in search of asylum. In the process, they face inordinate risks and inevitable challenges in meeting even the most basic of human needs. To make matters worse, they are often excluded from accessing social, economic and other systems that might otherwise enable survival, recovery and durable solutions. This includes financial systems, as forcibly displaced people consistently lack access to useful and affordable financial products and services that meet their needs, delivered in a responsible and sustainable way. Redressing this systemic exclusion is not just a matter of priority for all key stakeholders, but a collective imperative. Scale and complexity of forced displacement Forced displacement is a growing global phenomenon, with the latest UNHCR Global Trends report, published in June 2023, indicating that 108.4 million people worldwide were estimated to be forcibly displaced because of persecution, conflict, violence, human rights violations and events seriously disturbing public order. This figure is predicted to increase due to a proliferation of various root causes of displacement. In addition, displacement is typically now more protracted and complex in nature, for example often involving multiple movements both internal and external to the country of origin. While the prevailing narrative surrounding refugees is people making dangerous crossings to Europe or the US, the majority of displaced people remain in their countries of origin as Internally Displaced People (IDPs), or cross to neighbouring countries as refugees. As a result, most of the global refugee and IDP population remains in low- and middle-income countries typically, though not exclusively, in displacement camps or urban and peri-urban areas. Forced displacement of this nature and extent acts to impede the achievement of Sustainable Development Goals (SDGs) and other well-established commitments in respect of human rights, protection, assistance and development, not least those established via the Global Compact on Refugees and respective Global Refugee Forums. The role of financial inclusion Financial inclusion of refugees and other FDPs is a vital part of a necessarily holistic and collaborative response to the challenges posed by forced displacement at respective individual, community, national and global levels. Effective and sustained financial inclusion supports survival and coping in the immediate wake of displacement, as well as building self-reliance and resilience in support of longer-term recovery, empowerment and transformation. Whether enabling maximisation of skills and competencies through restoration of decent livelihoods, encouraging net contribution to local economies or facilitating voluntary, informed return or resettlement, financial inclusion constitutes an essential pillar of a dignified life for people affected by displacement. In this vein, it is right to advocate for equality in inclusion of Forcibly Displaced People (FDPs) in local financial systems, such that they benefit equally from sustainable access to those same financial products and services offered to local or so-called host communities. Alternatively, the unique spectrum of needs, preferences and vulnerabilities experienced by FDPs often require at least adaptation, if not creation anew, of financial products and services. Similarly, refugees and other FDPs face unique, typically higher and undeniably systemic barriers to achieving safe and sustainable financial inclusion. As such, beyond adaptation or creation, impactful solutions must seek to redress such barriers through use, support and change of local financial systems such that they more consistently accommodate FDPs and cater to their unique needs, preferences, and vulnerabilities. Key factors & challenges FDPs have complex financial and non-financial needs which vary according to a range of factors, not least the phase of displacement and specifics of the context in which they reside. However, they experience a range of individual or demand-side barriers to fulfilling their needs, such as: lacking linguistic skills, financial literacy or awareness of available services which, for example, limits their ability to demonstrate that they are a secure and potentially profitable clients for Financial Service Providers (FSPs) and others; an absence of legal status, identification or business registration for legal compliance (e.g. with Know Your Customer (KYC) requirements); a lack of financial track record or viable collateral assets for credit or loans; movement restrictions or absence of digital means or connectivity in order to access otherwise available solutions; or insufficient purchasing power to afford associated costs. As pressing as these challenges are, however, it is imperative to also consider supply-side and broader systemic barriers if responses are to support more formal, durable solutions. From a supply-side perspective, there are many challenges, but they include a lack of knowledge, familiarity or in-depth understanding on the part of FSPs of FDPs as a potential client base; lacking willingness or ability of FSPs to develop affordable products adapted to the unique needs, preferences and risks of FDPs; adaptation or creation being based on simplistic assumptions and (mis)perceptions which limit effectiveness of otherwise well-intentioned initiatives; or stringent consumer identification rules that inherently exclude FDPs. From a systemic perspective, FDPs are often disadvantaged, intentionally or otherwise, by impractical, untested, unsustainable and exclusionary policy, regulation, risk assessment and strategy. In particular, KYC legislation frequently acts to exclude FDPs who either lack proof of ID to fulfil stringent KYC requirements. This is without even mentioning the stigmatisation and outright hostility FDPs often confront from host communities, FSPs and political actors alike, or the insufficiency of support services and infrastructure to allow truly equitable inclusion. Solutions: Who’s Responsible for Doing What? There is a role to be played by all key stakeholders in advancing financial inclusion of FDPs, not least the Private Sector, including traditional FSPs or emerging FinTech companies, but also the Public Sector, notably national governments, civil society actors, including Non-Government Organisations from global to local levels, and others, like related networks or communities of practice. This recognises that the enhancement of financial inclusion for FDPs constitutes a collective imperative. It is vital to also consider FDPs and the communities that host them as participating stakeholders, as opposed to passive actors or recipients. In doing so, it is important to recognise that not all FDPs, even those with comparable experiences of displacement, are the same in terms of needs, preferences and vulnerabilities. For example, forcibly displaced women face intersecting barriers related to their displacement status and gender that drive financial exclusion, including restricted access to livelihoods, legal status, safety risks, and discriminatory social norms. As such, pursuing effective, sustainable solutions for FDPs requires nuanced analysis and, in turn, the participatory design and implementation of bespoke approaches. With this in mind, it is crucial that any solutions aiming to enhance financial inclusion for FDPs: Favour formality, but recognise the necessity or preference for informality by FDPs, thus adapting to evolving needs and vulnerabilities of different displacement phases and contexts; Respect principles of participation by soliciting and responding to FDPs’ views and preferences, being sure to mainstream protection principles and manage protection risks; Appreciate that effective solutions are not limited to the realm of innovative FinTech, but may include more basic, context-appropriate solutions from actors across the system; Clearly define and measure intended impact, considering broader measures of financial health and wellbeing, not solely access to functional financial market systems; and Determine the most feasible, relevant and appropriate means to understand, avoid harming and, ultimately, support or change local financial systems via more facilitative approaches. I am honoured to be supporting this year’s Award process and look forward to seeing the range of institutions and initiatives that show what financial inclusion organisations can - and currently - do to help displaced groups build resilience, restore livelihoods, and live with dignity in host communities. In order to reply to any questions that applicant organisations may have when applying to the Award, there are three Application Guidance sessions: an English session held March 25th (see recording here); a French session held also on March 25th (see recording here); and a Spanish session on April 3rd (register here) About the Author: Ed Fraser is a collaborative humanitarian consultant with a particular focus on the economic recovery of displacement affected people. He is supporting the e-MFP team on the design, development and evaluation process for the European Microfinance Award 2024

Author: Swati M. Dhawan. On March 14, e-MFP was pleased to launch the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 16th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs — Directorate for Development Cooperation and Humanitarian Affairs, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg), in cooperation with the European Investment Bank. In the second of e-MFP’s annual series of guest blogs on this topic, Swati Mehta Dhawan discusses the importance of integrating a financial health lens into strategies to advance financial inclusion of FDPs, and the role that community networks play in achieving this. To mark World Refugee Day in June last year, I wrote a blog that emphasised integrating a financial health lens into our strategies to address the challenge of financial exclusion among refugees. It has been a few years since the foundational research, which was called Finance in Displacement (FIND) and which informed both that blog and this one too. However, as refugees continue to remain in protracted displacement in developing host countries without durable solutions, we see that many of the findings remain pertinent: Between 2019 and 2020, we tracked the financial trajectories of more than 170 refugees across a span of 12 to 18 months in Kenya and Jordan. The high-level findings produced were informed by similar research in diverse contexts including – Uganda, Columbia, Mexico, and even developed countries such as the United States and Germany. The lead researchers continue to document new insights from across the world on the Journey’s project website of the Fletcher School. This blog seeks to delve deeper into these findings, focusing on the pivotal role of community-led approaches in enhancing the financial well-being of refugees and forcibly displaced people (FDPs). The critical role of community networks In the intricate web of challenges that FDPs navigate, informal social networks and community-driven organisations (CDOs) stand out as fundamental pillars of support. Initially, family and kinship networks (bonding social capital) provide indispensable support to refugees and FDPs. However, these connections can weaken over time due to migration, loss, and the ongoing pressures of displacement. As these networks erode, refugees often find themselves without the internal community support that once played a critical role in their lives, leaving them increasingly vulnerable. Simultaneously, building new networks with the host community (bridging social capital) is invaluable during different phases of displacement. These connections are crucial for finding housing and work opportunities, developing skills, accessing capital, building businesses, and sharing risks. For instance, in Kenya, refugees were unable to access M-Pesa, a critical financial service, and often borrowed the IDs of Kenyan friends to carry out transactions. Connections with the host community helped refugees and internally displaced people (IDPs) to secure better-paying jobs and the necessary financial capital to start or expand businesses—support that the displaced community alone cannot provide. However, building these connections is challenging in a low-trust environment where certain groups face greater exclusion. Women and individuals from minority groups are particularly vulnerable, often isolated due to language barriers, cultural expectations, and social stigma. Women who head households face compounded challenges, burdened with the dual responsibilities of caregiving and providing for their family, further restricting their opportunities to engage with both refugee and host communities. In the FIND research, several examples highlighted how these social networks effectively supported managing financial risks. In Jordan, we heard of Yemeni and Somali refugees successfully raising funds for immediate medical needs upon arrival. A Syrian woman crowdsourced US$200 for a medical emergency through 40 members of a faith-based group she attended, while a Somali woman received financial aid facilitated by her local mosque's sheikh to settle debts. We also saw Jordanian small shop owners extending shop credit to refugees and low-income locals, allowing them to purchase essential goods and pay later. Though routine for the shops, this practice played a critical role in ensuring food security by offering unbureaucratic, flexible, and timely financial support. For internally displaced persons (IDPs), their networks are crucial for maintaining a semblance of stability through translocal livelihoods. These livelihoods involve the movement and exchange of goods, money, and information between their places of origin and their current residences. Such networks are vital for managing day-to-day survival and maintaining connections that could facilitate eventual return to their homes. However, these translocal networks are fragile and can be disrupted by factors such as increased security issues or economic downturns, which in turn can exacerbate the isolation and vulnerability of displaced individuals. A key insight from the FIND research was about the role of Community-Driven Organisations (CDOs), which are grassroots organisations where refugees themselves are members and are able to set the terms for providing support. Unlike traditional support agencies that view individuals as “clients,” CDOs treat their participants as “members,” offering support with dignity and a community focus. Being closer on the ground, they are able to better listen and respond to the ever-changing needs of the heterogeneous group of FDPs they serve through different phases of displacement. These organisations engage in various activities, from providing debt relief and distributing food to offering medical services and educational programs. They provide these services through personalised support, counselling, and mentorship, often in ways that are often more accessible and culturally sensitive than the more formal support institutions, fostering personal connections and bonding over shared experiences of displacement and recovery. Common across all the above examples is support that is rooted in solidarity. Social solidarity is defined as “the glue that keeps people together, whether by mutually identifying and sharing certain norms and values, or by contributing to some common good, or both.” Unlike modern-day humanitarianism characterised by hierarchy and bureaucracy, these solidarity-based support networks assist in a horizontal and anti-bureaucratic manner, emphasising mutual support and collective well-being. Critical questions to address… We know that financial health outcomes are often less about financial resources and more about social resources: the ability to find better-paying jobs, access information about humanitarian and financial systems, seek legal support, and receive psycho-social support. These capabilities hinge significantly on the relationships that FDPs can forge. However, humanitarian programming frequently overlooks the importance of strengthening these essential relationships, underscoring a critical area of focus for humanitarian and development agencies. Looking ahead, several critical questions persist regarding how humanitarian organisations and the private sector, including financial service providers, can enhance their support for FDPs through community support mechanisms: What non-financial interventions might be necessary to strengthen the existing mechanisms of financial support offered by community networks? What insights could service providers gain from the adaptive responses of CDOs to the evolving needs of FDPs? How might they facilitate a greater role for CDOs in improving the financial well-being of FDPs? How could financial services (product design or delivery) be adapted to leverage these community networks? By addressing these questions, we can help ensure that FDPs are not only surviving but thriving in their new communities. Embracing community-led approaches offers a model for humanitarian aid that is not only effective but also dignifying and empowering for all involved. We hope to explore some of these questions during the discussions leading up to the European Microfinance Week in November 2024. Among other thematic streams, as always, this event will spotlight this year’s European Microfinance Award topic on the financial inclusion of refugees and FDPs. ______ Illustrations by Liyou Zewide: No.1 - Ismail, a 29-year-old Somali refugee, volunteers as an English teacher for fellow refugees at a Community Development Organization in Amman, Jordan (2020). No.2 - Farah, a 35-year-old Yemeni refugee, participates in an informal sewing course led by a Jordanian tailor in Amman, Jordan (2020). For more details refer A hope for home: A brief compendium of financial journeys of refugees and asylum seekers in Jordan For biographies from Kenya refer Refuge?: Refugees’ Stories of Rebuilding their Lives in Kenya The European Microfinance Award 2024 on “Advancing Financial Inclusion for Refugees & Forcibly Displaced People” was launched on March 14th and seeks to highlight organisations active in financial inclusion that help forcibly displaced people build resilience, restore livelihoods, and live with dignity in host communities. The Round 1 application period is now closed and received 49 applications from 26 countries. The multi-stage evaluation process will culminate with the winner of the €100,000 prize (plus the two runners-up, who each win €10,000) being announced during European Microfinance Week in November. About the Author: Swati M. Dhawan is an independent consultant. Her primary focus is on conducting research related to financial inclusion at the intersections of gender, displacement, climate change, and digital transformation. She holds a PhD in Economic Geography and her dissertation was based on the Finance in Displacement research in Jordan. She has previously worked with GIZ and MicroSave Consulting, and was a German Chancellor Fellow in 2017-2018

Author: Deborah Foy. On March 14, e-MFP was pleased to launch the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 15th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs — Directorate for Development Cooperation and Humanitarian Affairs, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. In the third of e-MFP’s annual series of guest blogs on this topic, Deborah Foy, summarising themes from a new Opportunity International paper on the topic, outlines the critical (and growing) role climate change plays as a driver of forced displacement and ways the financial inclusion sector can respond to the challenge. In 1990, the Intergovernmental Panel on Climate Change warned that the greatest single impact of climate change could be the impact on human migration. Fast forward to 2024, and climate change has become a leading cause of new displacements globally. It is also a ‘threat multiplier’, magnifying the impact of other drivers of displacement such as conflict and violence. Most of those forced to move are displaced internally, with national governments bearing the primary responsibility for their protection and welfare – nations which typically lack the resources needed for both prevention and response of climate displacement. In the coming years, as the adverse effects of climate change worsen, cross-border movements will become increasingly likely. Against this backdrop, financial inclusion plays a vital role in both preventing climate-induced displacement, by helping communities to be more resilient, and in supporting forcibly displaced populations (FDPs) to rebuild their lives. For not only do the vast majority of the world’s unbanked live in climate-vulnerable economies, but people who have been forced to move within and across borders are often completely shut out of the financial system. Action Needs to be Proactive and Forward-Looking To address the challenges and leverage the opportunities presented by mass climate-induced displacement, those in the financial inclusion sector must ask ourselves: How can we provide meaningful support to mitigate the effects of climate impacts and minimise climate-induced displacement? How can we support those who have been forced to move to rebuild their lives? What are effective solutions that have the potential to address the complex interaction between climate change, financial inclusion, and human mobility? How do we finance and deliver these solutions at the scale required? Opportunity International sees two key areas of focus, outlined in more detail here: 1. Scale Up Efforts to Prevent Displacement As a sector, we must do more to help communities to be stronger and better prepared to handle disasters, thereby lessening the necessity to move. Inclusive and resilient development that increases the capability of vulnerable nations to adapt could reduce climate-related displacement by as much as 60%. We must also support those who face multiple constraints to mobility, and who simply cannot move – the typically most marginalized and resource-constrained communities. On the one hand, we need to expand climate adaptation efforts. This could include agronomist advice on regenerative agriculture techniques better suited to a changing climate, as well as enabling vulnerable communities to access the resources to implement adaptation measures. On the other hand, we need to accelerate efforts to support disaster-affected people who persist in place – such as keeping agent networks active in a crisis situation to ensure continued access to financial services. In Colombia, for example, Bancamía’s climate vulnerability maps combine publicly available climate prediction data with a geolocation system for clients using ArcGIS. This helps Bancamía to generate climate alerts that both identify the bank’s exposure to weather events such as floods, and help to design mitigation and/or adaptation strategies tailored to the needs of affected clients. More attention should also be focused on addressing protection gaps. These disproportionately affect low income groups, particularly smallholder farmers. Globally, insurers are already over-exposed to climate risk. Unless significant progress is made to innovate and develop new insurance models, Christiana Figueres warns that we risk moving into a world that is ‘systemically uninsurable’. 2. Support Those Who Have Been Forced to Move Financial inclusion has a major role to play in supporting people who have been forced to move because of slow- and sudden-onset climate hazards. This includes accessing cash (one of the most critical needs when preparing for displacement), as well as the resources and support necessary to help the transition to new livelihoods – particularly for those in situations of protracted displacement. There has been significant progress in this space over the last ten years, much of it due to the UNHCR’s leadership and convening power. Yet exclusion rates of FDPs to the formal financial system remain persistently high. It’s a complicated space – FDPs are socio-economically diverse, with differing levels of vulnerability. Financial service providers typically perceive the risks of serving FDPs to be high. Challenges are compounded by negative cultural perceptions of FDPs, a lack of identification and documents, differing legal frameworks, language barriers, and a lack of data. Existing solutions include simplifying onboarding processes, facilitating access to remittances services, and incorporating psychosocial support for ‘'migratory mourning'. No doubt this year’s European Microfinance Award will spotlight best practice and shed more light on new innovations. Opportunity International’s own experience following decades of working with FDPs has taught us this: The humanitarian-development-peace nexus is complicated and requires excellence in partnering with governments, NGOs and humanitarian organisations. We must meaningfully include FDPs in design and decision-making processes, as well as work with refugee-led organisations. We need to leverage digitization in order to amplify opportunities. For example, digital payments and mobile wallets are already shifting how humanitarian aid is distributed. We must work in partnership to address documentation gaps. Encouragingly, some regulators now allow UNHCR-issued IDs to satisfy KYC requirements. A final priority is helping already displaced communities affected by climate change. 60% of FDPs displaced by conflict live in countries on the front line of the climate crisis and are thus at risk of secondary displacement. Noah Ssempijja, Opportunity International’s Refugee Programme Coordinator in Uganda, has seen this first-hand. “Most refugees here depend on agriculture for survival. But growing conditions for smallholder farmers in the settlements are now almost impossible.” One of the main challenges is that financial inclusion actors typically approach the two critical issues of climate resilience and displacement management separately. Going forward, we need to break down organizational silos and ensure much greater integration. The Window of Opportunity The global conversation on the role of financial inclusion in the context of climate change urgently needs to include the impact on forced displacement. The climate crisis is deeply connected to the movement of people both within and across borders. With a billion people projected to join the ranks of the climate-displaced by 2050, the window of opportunity for the financial inclusion sector to act is rapidly shrinking. It requires a massive step change in efforts to prepare for displacement at scale. What is encouraging is that solutions are already at work that are sustainably preventing, minimizing and addressing climate-induced displacement. The success of financial inclusion initiatives for refugees in Uganda for example provides important global learnings about how to build comprehensive resilience solutions for people on the move. These solutions need to be scaled, and new solutions need to be identified. Finally, let’s not forget that climate-induced displacement is a global issue, and thus requires a global response. A sense of shared responsibility is especially important in light of prevailing sentiments in the Global North around migratory movements across borders. It’s vital that the international community ensures sustained and targeted investment in solutions to the complex challenges presented by climate-induced displacement – and do so in way that upholds human dignity.

Author: Laura Cordero. On March 14, e-MFP was pleased to launch the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 15th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs — Directorate for Development Cooperation and Humanitarian Affairs, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. In the fourth of e-MFP’s annual series of guest blogs on this topic, Laura Cordero presents the history of displacement within and to Colombia, and how that country has put public processes in place and mobilised its financial inclusion actors  to address this challenge  - with valuable lessons for others. Colombia has a long history of forced displacement. The internal conflict has lasted almost 80 years and resulted in one of the largest internally displaced population in the world: more than 8.6 million people. It is also the number one destination of migrants from Venezuela: 2.8 million as of 2023. Totally combined, they represent around one fifth of the Colombian population. Few other countries in the world have had to face a displacement challenge paramount to this in terms of volume, share of the population and diversity. And unfortunately, both types of forced displacement continue to grow. As in most countries, issues affecting those that have been internally displaced are handled by public and private actors separately from those regarding foreign immigrants. Yet, many of the challenges that both populations face are similar, and a significant proportion of them end up joining the ranks of the most vulnerable groups, posing similar pressures to the national health, education, and social protection systems. Over the last twenty years the Colombian government has put in place several measures to tackle the complex and multi-faceted problem of forced displacement. The Victim’s Law, issued in 2011, kickstarted a comprehensive reparation program for the victims of the armed conflict and strengthened humanitarian attention to those forcibly displaced (around 90% of the registered victims). Now Colombia is currently in the process of approving a new law related to climate-related forced displacement, an increasing cause of internal population movements. Migration from Venezuela is not new to Colombia, but since 2018 the migrant population has more than tripled, requiring new targeted policies being implemented. Among other important measures, the creation in 2021 of the Temporary Protection Statute for Venezuelan Migrants has allowed  almost 2 million migrants to acquire legal status in the country. Public efforts to financially include forcibly displaced populations n terms of financial inclusion, both groups – IDPs and migrants from Venezuela – have been targeted by public policies, often using similar instruments but via different programs and entities. While the 2020 national financial inclusion policy provides the general framework to support financial inclusion in the country, targeted strategies such as the National Strategy to Promote the Integration of Venezuelan Migrants have specific financial inclusion targets. In practice, examples of public sector support measures to both target groups include the following: Issuing financial norms and legislations aimed at facilitating access to financial products, such as the first simplified savings accounts, or providing guidance to financial institutions on Know Your Clients (KYC) processes for the case of Venezuelan migrants; Including financial inclusion-related measures within the humanitarian and reparation programs to those displaced by the conflict; Linking social protection and financial inclusion efforts via the conditional cash transfer programs. These programs have often resulted in massive opening of deposit and transactional accounts thanks to Government agreements with banks and e-wallet operators; Issuing targeted credit lines to financial institutions via Bancoldex and FINAGRO (apex institutions) or providing guarantees via the National Guarantee Fund (FNG) to finance these specific groups; and Partnering with international development organizations to fund and implement financial inclusion programs, such as UNHCR, USAID, or the International Finance Corporation. The role of financial service providers But beyond public and international cooperation actors, how is the financial sector in Colombia including forcibly displaced populations? The answer is not so straightforward. To start, there is a big information asymmetry: we have good information on financial inclusion of Venezuelan migrants, not so much regarding internally displaced population. We know, for example, that approximately 27% of Venezuelan migrants in Colombia have a deposit product in a financial institution: a big improvement over the last few years. The Temporary Residence Permit (PPT) is increasingly accepted by financial sector providers, yet there are still obstacles related to validation, documents equivalence and internal systems adaptation that still need to be surmounted. According to Fundación Capital, Fintechs are currently playing a leading role in the financial inclusion of migrants in Colombia, offering digital wallets associated with an increasing variety of financial services. These products respond to migrants' immediate need to be able to send and receive money, make payments, send remittances. Also, some of this often digitally-savvy population prefers this channel that reduces the (conscious or unconscious) biases that they sometimes encounter in the face-to-face service. Transactions with some of these wallets are used by credit bureaus and there are even digital platforms that offer ‘nano-credits’ based on scoring systems. There are also a few microfinance banks and cooperatives that also target this segment, some in partnership with cooperation agencies such as the German Savings Bank’s Foundation to provide a more comprehensive support to the migrants. Yet, the perceived high risk and operating costs hinder traditional (micro)credit supply: latest available figures indicate that only 1.3% of this population have access to formal credit. There are however no disaggregated data on financial inclusion of internally displaced population. The latest financial inclusion figures in the country – with 91% of adult Colombian population with access to an account or digital wallet in 2022 - indicate that most internally displaced probably are financially included. However, scarce data are available regarding access to credit or other financial services, since financial service providers do not normally collect displacement related information in their systems. Many financial institutions have made use of the public specialized credit lines mentioned above, funding at least 165,000 credit operations to victim owned businesses since 2012 (Bancoldex, 2024). Different but similar market segments Therefore, with available data we cannot draw a global picture on financial inclusion levels of all forcibly displaced population in Colombia. Financial institutions view these two groups as different market segments and each of them pose distinctive challenges. The Venezuelan migrant population is very heterogeneous. Yet, data show that Venezuelan migrants have a harder time finding a job, when they find it is often not related to their education or prior experience, and they are offered worse conditions than to their Colombian counterparts. Credit histories from Venezuela are incomplete or inaccessible, and most have no records in Colombian credit bureaus. Language and cultural differences are not significant, yet the relationship between the financial system and its clients differs in both countries, so cultural awareness is needed from clients and financial service providers. But most importantly, migrants are considered as a high-risk market due mainly to the real or perceived “flight risk”. Internally displaced population do not present the same challenges in terms of access to the financial system: most have Colombian nationality (although some ID documents may have been lost during displacement). Many were suddenly -and violently- displaced, leaving with nothing but the clothes on their back. Some resettled in rural areas, but most went to the informal settlements around bigger cities. Their poverty levels are also higher than the Colombian average. Their credit histories have also suffered, despite the issuance of specific regulations creating a “special risk category” for loans affected by the displacement and other violent events. Overtime, many have integrated in their host communities and are no longer seen as “displaced”. There are important similarities among these two -yet very heterogeneous- population groups. And these similarities revolve around the displacement itself and its consequences: the loss of assets and livelihoods; the need to rebuild their life and perhaps start a new economic activity; the traumas associated to the forced displacement; the reliance on personal networks in the host community. From a financial institutions’ perspective, these two population groups present distinct challenges in terms of KYC compliance, but credit risk analysis may not – in principle - differ too much. After all, Colombian financial institutions have a long experience attending forcibly displaced populations: but do they know to what extent are they serving them? Are there any good practices or lessons learned? Can the experience with one group be useful to serve the other? Further research would be needed to answer these questions. What lessons can we draw? Colombian public and private institutions have a long experience supporting the financial inclusion of forcibly displaced population. While most internally displaced have access to the financial system, more needs to be known regarding the depth and effectiveness of that inclusion. With regards to Venezuelan migrants, it seems a matter of time that their ID documents are widely accepted, and a majority can access a deposit product. Access to a wider range of products and particularly credit remains low and calls for further innovation in de-risking strategies. Financial service providers in Colombia may have some interesting practice in client screening and segmentation (for example, assessing recovery from displacement and integration in the host community), risk appraisal adaptations, or portfolio metrics that could be applied to Venezuelan migrants. Further evaluating the results of public policy investment in supporting the victims of the armed conflict can also shed light on how to further support the Venezuelan population. There are certainly lessons to be learned, such as the type and duration of support needed for the socioeconomic stabilization and recovery. An important one is that “rebuilding their life project”, a central idea around the comprehensive support provided to the victims, is a pre-condition to positive socio-economic outcomes. In summary: without forgetting the important differences, let’s focus on the experience and learnings from the impressive effort that Colombia has already made and can be applied to financially include all those forcibly displaced in a meaningful and sustainable way. Special thanks to: Aida Solano, Alicia Rueda, Daniela Pradilla, Diego Andrés Rueda, Liliana Cortés, María Fernanda Manrique, Meik Proescher and Veruschka Zilveti for their invaluable contributions. About the Author: Laura Cordero is an independent consultant with more than 15 years of professional experience supporting financial inclusion of vulnerable population in Africa, Latin America, Asia and Europe. She has worked on Colombian internally displaced and migrant population topics since 2013, collaborating with Fundación Capital and the German Savings Banks Foundation, among others. She holds a BSc. in Economics from the Complutense University of Madrid, and a MSc. in Foreign Service from Georgetown University.

Authors: Lene M. P. Hansen & Micol Pistelli. On March 14, e-MFP was pleased to launch the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 15th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs — Directorate for Development Cooperation and Humanitarian Affairs, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. In the fifth of e-MFP’s annual series of guest blogs on this topic, Lene Hansen and Micol Pistelli from UNHCR discuss the role of public-private partnerships between humanitarian actors, development agencies, host governments and the private sector,  and the factors that underpin their effectiveness. In recent years, the importance of partnerships between the humanitarian, development, and private sectors in protracted displacement contexts has become increasingly evident to enhance the socio-economic wellbeing of forcibly displaced and stateless persons. However, developing these partnerships to be effective, sustainable and impactful is not always easy, and guidance is scarce. How can solutions be co-created in partnerships between the humanitarian sector (with its focus on immediate aid through cash assistance), development agencies (with their focus on longer-term poverty alleviation), and the private sector )with its focus on profitability and value creation)? And how can this be done in ways that also engage host governments, focused on cost-effectively improving the lot for citizens? Bridging the gaps between differing terminology, priorities and systems for funding and measuring impact is a work in progress. But progress has been made. There is widespread recognition that working through markets as shared platforms can channel sustainable contributions to improving the wellbeing of People and the Planet while enabling business Profit. But working together to support – rather than distort - market systems and make them stronger, more inclusive, and more environmentally sustainable, is no small feat. For longer-term sustainable partnerships between public and private sector actors in displacement contexts to succeed, the business cases must be clearer. To broker better market-led partnerships, we propose focusing on at least four elements: A shared understanding of a contextual problem; Jointly defined common goals; Policy anchors and trust-building to enable flexible collaboration; and Capacity for sustainability and scale. But who takes on which roles in the partnership? How are comparative advantages and additionality applied? How can all actors work better together, given the constraints of each context of displacement? Let’s look at each of these elements in more detail. 1. Defining and Documenting a Shared Contextual Problem: Better Data Effective partnerships define a common problem and seek solutions together. In many markets, exclusion or restricted access to labour markets, formal employment and entrepreneurship remain a challenge for the forcibly displaced. This prevents them from contributing meaningfully to the local economies, building resilience, and be less aid-dependent. Humanitarian organizations with their field presence can bring in-depth knowledge of the needs and challenges faced by people who are forced to flee in accessing labour markets and financial services. When such insights and data are presented to provide evidence of benefits and value creation, collaborative solutions can more easily be designed. Importantly, humanitarian actors can leverage their networks to bring representatives of the forcibly displaced and their hosts, to the table through Refugee-led Organisations or other NGOs, to help clarify the challenges, based on their lived experiences. Development agencies can apply their analytical expertise to assess existing gaps,  and clarify the costs and net benefits of increased inclusion for host governments, providing evidence of the contributions and economic dividends of the forcibly displaced – and other migrants – to local economies, when their skills match the local labour market needs. As a source of expertise, innovation, and sustainable business models, the private sector is an integral part of any local economy, working to produce, exchange and distribute goods and services, while also serving as one of the main sources of employment and livelihoods, both locally and increasingly remotely. But for the private sector to engage, there must be win-wins. There must be additional value created, and there must be a use case. Private sector entities can help define how these use cases should look and what data is needed to demonstrate their viability. For this reason, they should be engaged from the very start of the process. Governments create the conditions under which effective participation in markets is possible. By limiting access to work, they inadvertently prevent the forcibly displaced from becoming self-reliant. This perpetuates their dependency on scarce aid budgets and overwhelmed social protection systems, while contributing to informality in the labour market. Prioritizing these - or other - problems can help pinpoint how market-led solutions may have the greatest impact. 2. Defining Common Goals: Diverse Contributions based on Comparative Strengths All stakeholders in a partnership need to understand each other’s realities, comparative advantages, and constraints to define common goals in their specific context. Partnerships should have clear, measurable objectives that focus on delivering positive change for local communities of forcibly displaced and their hosts, e.g., increased financial wellbeing for all through employment and entrepreneurship opportunities. Financial wellbeing goes beyond inclusion—access to income and financial products and their usage – to measure resilience and behaviours such as spending wisely, building reserves, and planning ahead. By leveraging the comparative strengths of all actors, stronger, more sustainable and more inclusive local economies can be built, improving the wellbeing for everyone. For humanitarian actors, it’s easy to get caught up in the immediate delivery of basic services to the forcibly displaced. To develop more effective partnerships, it helps to extend the outlook and clarify the outcomes to be achieved for the forcibly displaced – and their host communities. The aspirations  of the forcibly displaced for peace, stability and a more secure, resilient life where they can contribute meaningfully to their community, resonate better with other stakeholder groups. In their overall drive for poverty alleviation, development actors tend to focus on market failures, poor infrastructure, and weak governance, which can make both private and public investments costly and risky. Documenting how existing markets function can help more people better contribute to these markets and crowd-in more actors. Private sector partners can offer innovation, technology, and financial resources to help close the gaps identified and demonstrate use cases of inclusion in employment and entrepreneurship. Recognizing that inclusive local markets can offer employment and entrepreneurship opportunities that benefit both the forcibly displaced and their host communities and also reduce dependency on aid and eventually decrease budgetary pressures, governments can design and implement policies encouraging economic transformation and inclusive growth. This involves creating regulatory environments conducive to investment, productivity growth, business expansion, and employment. By creating incentives for the private sector to engage in displacement locations, which may otherwise be overlooked due to profitability considerations, public sector actors can foster inclusive markets growth, as the Shirika Plan in Kenya aims to do. 3. Building Trust with Policy Anchors and ‘Skin in the Game’ Actors have different takes on solutions for better socio-economic inclusion and financial wellbeing for all. Great partnerships are built on principles of equality, respect, and shared accountability. However, partners don’t have to agree on everything and do things in the same way – as long as everyone aligns their interests and works towards the common goal. Committing to core values such as inclusivity, transparency, and sustainability helps build trust and a common vision for positive change, serving as a frame of reference for the partnership even during difficult patches. International agreements and frameworks like the Kampala Declaration on Jobs, Livelihoods and Self-reliance in East Africa and its Roadmaps, aim to foster community resilience and economic participation. Linked to the Global Compact on Refugees and the Global Forum for Refugees, there are currently 86 pledges made by governments in the area of economic inclusion and social protection whose effects on the labor market participation of the displaced would multiply if matched by interventions sustained by the private sector – including investors and financial institutions. Private sector initiatives like IKEA Group's NESsT Refugee Employment Programme in Poland and Romania, and the pan-African Amahoro Coalition highlight the transformative potential of market-based solutions for economic inclusion. Key actions to strengthen the partnerships into alliances and crowd-in new actors include: Organizing policy dialogues, roundtables, and forums to enable direct engagement between policymakers, private sector entities, development actors, humanitarian partners, and the affected communities themselves to review progress on initiatives and suggest course-corrections; Conducting joint research on the impacts of inclusive policies, initiatives and pilots to identify remaining pain points, opportunities, and progress towards financial wellbeing for all; and Sharing learnings and case studies on both successes and lessons learned. Colombia's integration of Venezuelan refugees and migrants, for example, has boosted the economy by filling labour gaps and increasing consumer demand, despite ongoing challenges like credential recognition. Effective partnerships require willingness, capacity, and readiness to invest time and resources in relationship-building over time. Joint investment fosters a sense of shared ownership, as demonstrated by the Joint Initiative between IFC and UNHCR aimed at increasing private sector engagement in creating better markets in displacement contexts worldwide. Financial inclusion is also a key component of this initiative to enable access to finance for forcibly displaced people across Latin America and in Europe. All partners must be prepared to commit resources – whether financial or human – towards achieving the common goal, pilot the agreed use cases, share risks, and work towards scalable solutions. However, uncoordinated efforts and silos between stakeholders often prevents the right capital to get to where it’s needed most. Communication and building alliances with local partners can amplify the partnership and enhance sustainability. Local partners are often better at finding and selecting the right partners, and  including refugee-led and other local community organisations is especially important. The assumption that Refugee-Led Organizations are “too risky” is generally unfounded, and both humanitarian and development partners need to be better at engaging with them. 4. Capacity to Deliver Outcomes Sustainably and at Scale A good partnership needs the right mix of capacities, which may change over time. These capacities include: Physical Presence and Networks: On-the-ground presence is essential for reaching forcibly displaced people where they reside. Humanitarian organizations often have field offices and a broad supportive network of Refugee-Led Organizations  and other NGOs, which can provide private sector and development partners with real-life examples of challenges as well as logistical support to reach displacement settings. Technical Capacity: Relevant expertise in areas such as financial technology, mobile banking, data analytics, regulatory systems management, and convening power is crucial for designing and implementing effective inclusion programs. Complementary expertise in supportive areas such as financial education and technical support to financial service providers is important. An example of supportive non-financial service is provided by the ILO’s financial education program for refugees and host communities and their trainings addressed to FSPs. Financial Capacity: Adequate funding is necessary to support the scaling of inclusion initiatives. Impact investors, development financial institutions and FSPs can provide the resources needed to extend their services and pilot new approaches. Blending concessional capital, commercial capital, and grants is becoming increasingly popular in the development sector. Successful partnerships require a willingness to invest in the agreed use case, share risks, and work towards scalable solutions. Sharing the Perceived Risk: Partnerships should include mechanisms for sharing the perceived risks. Governments and development finance institutions can provide subsidies, concessional capital, and other mechanisms to mitigate risk for private sector entities and ensure profitability. The joint blended finance program launched by Swedish Sida, UNHCR and Grameen Credit Agricole Foundation in Uganda in 2019, comprised debt funding and technical assistance, as well as a lender’s guarantee and reached over 120,000 refugee and host entrepreneurs with credit and other financial and non-financial services. New initiatives, like the Refugee Development Impact Bond model in Jordan leverages the complementary resources of private and public actors on a ‘repayment for results’ basis, enabling the testing of solutions beyond the constraints of activity-based annual funding cycles. Scalability: The goal is to develop interventions that can be scaled to benefit a larger population of forcibly displaced and their hosts. Partners need to consider how their initiatives can grow beyond initial pilot projects to reach scale across different regions and contexts. For example, KIVA has a large and diverse network of FSPs and has demonstrated proof of concept with the most scalable initiative in the financial sector, additionally reporting a 96% client repayment rate among displaced customers. At the last Global Refugee Forum, Kiva pledged to scale their lending to displaced populations, and by the end of 2025 the organization aims to provide an additional $40m in loans to at least 65,000 people. Measuring outcomes: Without measuring outcomes, no partnership can know if objectives are being attained. The Global Partnership for Effective Development Cooperation has recently launched the Kampala Principles Assessment process in Burkina Faso to collect evidence on the challenges and opportunities to improve private sector engagement. Measuring financial wellbeing (or financial health) is still a work in progress, but indicators of the four aspects of financial health have been incorporated and benchmarked in the annual 60-decibel Microfinance Index. These indicators could be disaggregated by population segments, to enable tracking of progress towards better financial wellbeing in displacement contexts, as demonstrated by FIND research across markets. About the Authors: Lene M.P. Hansen has worked for 25 years as a field-based consultant in inclusive financial sector development and microfinance. Since 2005, she has specialised in expanding access to finance in fragile and conflict-affected environments. She has focused on financial inclusion of migrants and refugee populations since 2015, when she began the research resulting in the global Guidelines for FSPs, and has since worked with FSPs in Lebanon, Jordan, Iraq, Afghanistan, Mozambique, and Uganda to financially include foreign born and displaced residents. Lene has served in longer-term project management positions in Nepal (1995-99), Uganda (1999-2003) and Palestine (2007) and provides shorter-term technical assistance in ‘refugee-readiness’ for FSPs, project design and appraisals, portfolio reviews and evaluations for donor agencies, investors and central banks; as well as training, performance monitoring and industry building support to microfinance industries primarily in Africa and the MENA region. Based in South Africa, Lene holds a Master’s degree in Political Science from Copenhagen University and has been a visiting fellow at the Feinstein International Center of Tuft’s University, USA. She served on CGAP’s SmartAid Review Board in 2011 and is a member of the e-MFP Advancing Refugee Finance Action Group and the Danish Microfinance Forum. Micol Pistelli is a Senior Financial Inclusion Coordinator at UNHCR, where she provides technical support to country operations aimed at promoting initiatives and efforts to ensure that forcibly displaced persons can participate in and benefit from formal financial services. Before joining UNHCR, Micol was the Director of Social Performance at MIX, where she helped shaping the international standards of social performance management for financial service providers in the microfinance industry.  She has also been a board advisor of several initiatives in the financial inclusion sector, a lecturer at the Master in microfinance and entrepreneurship at the Universidad Autonoma in Madrid, and a consultant with the Italian Ministry of Foreign Affairs, and with microfinance institutions in Egypt and Paraguay. Micol  holds a Master’s Degree in International Economics and Development from the Johns Hopkins School of Advanced International Studies (SAIS) and a Bachelor’s degree in Political Science from the University of Bologna.

Author: Weselina Angelow. A basic account is a secure entry point for previously unbanked people to become more resilient. It also opens a wealth of opportunities – for investing in education, or growing their businesses. Programme background A six-year partnership with the Mastercard Foundation and WSBI, Scale2Save is a programme to establish the viability of low–balance savings accounts and to understand the extent to which savings allow vulnerable people to boost their financial resilience and wellbeing. The programme’s work is anchored by developing viable business models with a broad mix of financial service providers that create high-usage cases that widen financial inclusion. This occurs by improving the quality of savings, alternative distribution channels and the financial service offer in general. Scale2Save balances project work with research conducted and shared among partner banks and the wider sector. Scale2Save in a nutshell Between 2016 and 2022, Scale2Save financially included more than 1.3 million women, young people and farmers in Kenya, Uganda, Nigeria, Morocco, Senegal and Côte d’Ivoire that helped us better understand how, when and why savings contribute to household wellbeing, financial resilience or (creating) business opportunities of or for the people served. Gender and age aspects mattered hugely, but also location and income levels for driving inclusive savings. Scale2Save customer research observed differences between ways in which young female customers and young male and elderly customers used their savings. While young females more often use savings for consumption smoothing and for other household-related expenses, young males and older women of the age of 35+ more frequently used their savings for business-related purposes. Given that Scale2Save happened in the midst of a pandemic, in locations where weather shocks are rather frequent, and where partner FSPs were targeting some of the most vulnerable income groups, we were pleased to see that more than 65% of customers who reported experiencing one or multiple shocks indicated that they were able to use some of their savings to cope with these emergencies. Since most customers are low-income, investments in expanding, restarting, or opening a business can increase income quickly, thereby improving customers’ economic status and financial stability. On average, about 49% used their savings for investment purposes, and most of the time for business-related investments. Almost all financial service providers recorded use of savings for businesses with 50% of them being male adults. Business investment was also quite common among adult women. This largely stems from the fact that partner FSPs purposely targeted female micro-entrepreneurs and encouraged them to save toward the purchase of a productive asset or another business-related goal. In our smallholder farmer portfolio we saw that savings allow producers to more easily access quality inputs on credit that subsequently lead to greater productivity gains but also higher resilience. Further, increased access to credit for other income generating activities as well as access to skillset-building offers and agric platforms pushed up farm productivity overall. Beyond business investments, approximately 20% of customers used their savings to cover daily household needs or to finance educational needs. In the words of one of the customers of a Scale2Save initiative, implemented in partnership with Centenary Bank: “I got to know about CenteXpress account from my friend who helped me open the account. I learned about its benefits from my friend and I also started opening accounts for other students (through the digital link feature) I have greatly benefited from CenteXpress through the commissions that I have received for opening accounts for others. Further, my parents send me school tuition digitally via CenteXpress. I also use it to buy airtime. More importantly, it helps me save the little amounts that I can set aside from my tailoring business.” - Nakayima Magret, Student and tailor. Kikuubo, Masaka, Uganda During the implementation of the project, 12 unique business models were tested Scale2Save tested and explored 12 unique business models with a broad range of financial services partners to prove the viability of low balance savings and understand how the institutional model affects the ability to serve the low-income market. Business models were tested with Advans Cote D’Ivoire, Al Barid Banque and Barid Cash Morocco, BRAC Uganda Bank Limited, Centenary Bank Uganda, Cofina Senegal, FINCA Uganda and FINCA International, First City Monument Bank Nigeria, Kenya Post Office Savings Bank, LAPO Microfinance Bank Nigeria, Postbank Uganda. The variety of institutions created a whole world of experience that all worked towards the same goal: build partnerships and solutions that are intentional and simple but meet the needs of the specific customer segments they are serving. Digitalisation has been a game changer throughout and not just during COVID but needs to be handled with a gender lens and accompanied by human touch if it is to be successful. If a product worked for women, it equally tended to work for men. The local sales forces, roving agents, field officers, family & friends equipped with digital devices were instrumental for creating the volumes of transactions and deposits needed for making the business case for small balance savings work. Financial education – in particular, personal ‘nudges’ – that take women’s needs and the digital gender gap into account are considered key for improving digital account usage. Research Scale2Save became a strong brand and a community of practice that conducted useful sector research, collaborated with a wide array of sector players and that facilitates disseminating the learnings amongst our members and strategic partners. Our sector research For four years in a row, The State of Savings and Retail Banking Sector Series that we put out in partnership with FinMark Trust shed light on innovative models, applied by the now 27 WSBI member institutions in 20 countries on the African continent, sometimes enriched with insights from other sector players such as MNOs, Fintechs, the national Financial Sector Deepening units, the most recent on the state of SME Finance and separately on Innovative Agric Platform models on the African continent. Collaboration with sector players Jointly with Efina (the lead Financial Sector Development Organization in Nigeria) we piloted a customer segmentation tool that creates evidence-based customer personas and allows Nigerian financial sector players to define their pro-women, pro-youth financial or green pro-farm outreach strategies. The tool is a powerful data marketplace that combines demographic and livelihood data hosted on and AI platform with financial inclusion data and has already generated interest from other financial markets. Together with the Bank of Uganda (BoU) – the Central Bank – we tested the CGAP customer outcome framework in Uganda. This framework could help Ugandan FSPs to assess how they meet customer needs around safety, convenience, fairness, voice and choice of services. It can also help the Ugandan and other central banks to assess how the sector meets the goals of its financial inclusion strategy and could thus be taken to other countries. Insights from Scale2Save also allowed us to participate in the European Microfinance Platform’s Action Group on better metrics for savings. The way ahead We now have a better understanding of the metrics that track high-level outcomes. This will help WSBI to leverage on the impact its network of 6400 savings and retails banks globally makes to develop people, businesses, and communities. It has also enabled us to position ourselves for the climate resilience and adaptation agenda that lays ahead of us and the upcoming COP 28 in UAE to make sure that financial services offered through the network of WSBI members continue to be an enabler helping address global shocks, inequalities, and underdevelopment. For more resources from Scale2Save on: Women & Youth: click here MSMEs, Agents And Agriculture Value Chain Suppliers: click here Business Models: click here Côte d’Ivoire: click here Kenya: click here Morocco: click here Nigeria: click here Senegal: click here Uganda: click here About the Author: Weselina Angelow leads WSBI’s Scale2Save initiative in partnership with Mastercard Foundation. She has managed and implemented large-scale financial inclusion and financial sector development programmes with WSBI for more than a decade across the globe. Part of WSBI worldwide efforts to provide an account for everyone and making a contribution to universal financial access, Weselina manages the institute’s learning agenda on small-scale savings where she places focus on understanding the viability of low-balance accounts, the drivers of account usage and factors that improve the financial health of underserved and low-income people. Prior to joining WSBI, she worked with pixell, an Amadeus Leisure Group company in Germany, and in private sector development with GIZ – Germany's Agency for International Cooperation – in Chile. Weselina holds a Master in Economics and Social Sciences from Bonn University and an Executive Master in Responsible Banking from Instituto de Estudios Bursatiles in partnership with London School of Economics and WSBI. weselina.angelow@wsbi-esbg.org