World’s first bank in refugee camp brings hope to residents

For the first time, a bank branch in a Malawi refugee camp is providing banking services and credit to residents to set up their own businesses.


A bank branch in a Malawi refugee camp – the first of its kind in the world – is providing banking services and credit to residents, many of who are setting up their own businesses. Stephen Williams reports

Seventy kilometres from Malawi’s capital, Lilongwe, the Dzaleka Refugee Camp in Dawa, established in 1994, has evolved from an old prison camp situated on just 201 hectares of land to a vast township of 42,000 refugees and asylum seekers. 

The number of people who have fled to Malawi rose from almost 17,000 in 2013 to nearly 45,000 at the end of 2019, swelled by asylum seekers from the Democratic Republic of the Congo, Burundi, Rwanda, Somalia and Ethiopia escaping poverty and cycles of violence. In common with refugee camps across the continent, many of Dzaleka’s residents are economically inactive and struggle to access sustainable employment, finance and healthcare.

It may seem counterintuitive that any financial services company would consider offering lending to displaced persons. Refugees typically struggle to access credit given that many lack a permanent address, official documents and ID papers. But financial services company MyBucks is now helping to provide residents with a credit lifeline, offering services to customers with a poor or non-existent credit record.

First of its kind 

The initiative began in April 2018 when the Frankfurt-listed firm’s New Finance Bank subsidiary opened the first ever bank branch in a refugee camp. The branch serves as a base for banking services, remittances and ATMs, while technology enables the bank to disperse micro loans to budding entrepreneurs – MyBucks’ lending software can predict borrowers’ ability to repay, thereby allowing the bank to make and manage the loans.

The bank hires refugee agents to promote its services to other residents of the camp. Figures released in November 2019 indicate that since the launch of the initiative more than 7,500 accounts have been opened for Dzaleka residents. The camp has seen an increase in entrepreneurship, which has given rise to successful micro-businesses ranging from piggeries and poultry farming to fashion design, grocery stores, hair dressing salons, and restaurants.

The United Nations High Commission for Refugees (UNHCR), which co-manages the camp alongside the Malawi government, helps to support the initiative by providing inputs to refugee enterprises. The UNHCR works to ensure that refugees and asylum seekers receive international protection and have access to education, healthcare, food, shelter, water and sanitation.

A vibrant local economy

Richmond Msowoya, the UNHCR’s livelihood officer at Dzaleka, says that many of the displaced people in the camp have the skills to run smallholder farms and have negotiated with local land owners for plots where they can raise high-value crops such as soy beans, cabbages, onions, tomatoes and spices. Meat processing, milk processing, feed making, poultry and egg enterprises and mushroom cultivation provide diverse income streams. The UNHCR plays its part in these enterprises by drilling boreholes and installing solar-powered pumps to irrigate crops. This has resulted in Dzaleka becoming one of Malawi’s major tomato growing areas.

A key focus of the finance initiative is group lending – in which a group come up with an entrepreneurial idea and pool together to get a micro loan from the bank. The bank facilitates loan management training to these groups, including advice on business management, managing cash and growing businesses. A dedicated team within the bank facilitates such training sessions before groups access loans.

By November 2019, the bank had taken the equivalent of $177,173 in deposits and opened 280 loan accounts, pointing to the emergence of a vibrant and growing economy at Dzaleka. New products are being developed using mobile applications for individuals, but for now, loan amounts remain relatively small, reflecting the continuing risk of such loans. Nevertheless, a strong credit history and proven success will lead to further injections of finance.

Developing skills for success

Such schemes are one just answer to improving the lot of refugees. According to the UNHCR, sub-Saharan Africa hosts more than 26% of the world’s refugee population. In all, over 18m people have been forced to flee their homes on the continent, including refugees, asylum seekers and internally displaced people. Sub-Saharan Africa experienced more internal displacement than any other region in 2018, according to a report from the Internal Displacement Monitoring Centre of the Norwegian Refugee Council. Unresolved and cyclical conflict combined with new waves of violence triggered 7.4m displacements between January and December 2018.

In order to further improve refugees’ access to finance, the UNHCR says that analysing market data, widening the range of acceptable refugee ID, boosting technical assistance and opening regular communication between loan officers and customers can help.

To further boost refugees’ prospects, the UNHCR runs training schemes in the camp that are designed to teach skills to enhance livelihood prospects. The schemes on offer are publicised on UNHCR’s radio station, Yetu Community Radio, which launched in August 2018. Successful candidates receive a small grant for the duration of their course.

One of the most successful has been App Factory, an initiative to train refugees in app coding and programming. Supported by Microsoft’s 4Afrika initiative, which runs another 15 such sites across the continent, the refugees have developed an app to share information about food distribution days. Others have worked on a project to digitise the recording of parliamentary proceedings. In addition, a number of App Factory graduates have been taken on as interns by MyBucks to further develop the bank’s digital offerings.

Rolling out the model

MyBucks chief executive Tim Nuy says that the extension of finance to refugees has proved successful and could soon be rolled out to other refugee camps across Africa. The firm has extensive African operations with a presence in South Africa, Zimbabwe, Mozambique, Botswana, Uganda, Tanzania, Swaziland, Namibia, Zambia and Kenya.

“Our Dzaleka ‘pilot’ has been performing very well, exceeding expectations,” says Nuy. “Accordingly, we are keen to expand in 2020, with a view to replicating this initiative in Mozambique and Uganda.” 

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