by Kim Wilson, CEME Senior Fellow & Lecturer, The Fletcher School
Predictably, the long tentacles of financial inclusion have coiled themselves around the most vulnerable targets of humanitarian aid: low income refugees, migrants and displaced populations (hereon: “refugees”).
Just as predictably, the financial inclusion agenda is driven by suppliers (aid providers, donors, financial intermediaries and governments). Few refugees are demanding to be included in a digital/formal ecosystem. That does not mean they don’t appreciate the shelter, food and cash that humanitarian agencies have mustered on their behalf. They do. They also appreciate the efforts of those same agencies to make cash assistance easier. E-cash that can be transformed into physical cash at convenient times and places is an example. Use of debit cards at ATMs to withdraw cash from digital accounts can cut valuable time otherwise spent waiting in long cash distribution queues. Very appreciated, indeed.
But beyond handily retrieved cash assistance, refugees, obsessed with the business of surviving, aren’t all that interested in being co-opted by yet another development agenda, in this case, financial inclusion. They aren’t demanding a bank account, a mobile wallet, or a branded payment card. Nor are they demanding that their cash retrieval method turn into a savings program. In fact, such programs, however well-intended, can backfire. Some NGOs place restrictions on cash withdrawal amounts – an attempt to force savings or nudge smoother consumption. But such restrictions can lead to cash cards getting swallowed at the ATM; refugees forget, or perhaps never understood, the various constraints layered into their cards.
Despite the supply-side’s lust for data, refugees, especially older ones, reject the notion of being traced. It’s easy to see why. Some are fleeing such ruthless trackers as the Taliban, ISIS, or their home governments and thus are protective of data that might expose even a whiff of their whereabouts. As a consequence, some reject debit cards, e-vouchers, or e-wallets for anything other than maximum withdrawal of cash as soon as a digital distribution is made.
There’s more. As part of addressing a “financial inclusion gap,” agencies and donors are examining the closed loop nature of the cards they issue. Wider use of cards and access points across networks is one reason to lengthen the loop. That sounds good. Agencies and donors also promote individually owned e-wallets and cards. Refugee-owned accounts (versus NGO-owned accounts) allow users to top up their cards and wallets with remittances and earnings. That sounds good, too. And agencies hope to increase digital transactions to improve data collection.
Wait, that definitely does not sound good.
Again, data collection is exactly what many aid-receiving refugees fear. They worry that humanitarian actors (NGOs, UN agencies, governments and commercial intermediaries) will know too much about them, that the full content of their accounts – not just the aid-funded portion – will become visible to anyone with the right permissions, permissions over which refugees have zero control.
The refugee wonders: if aid agencies can track all transactions in my account, which transactions will be deemed “good” (the purchase of milk?), which “bad” (the purchase of cigarettes?), and which up for grabs (the purchase of condoms?)? Will bad purchases signal that I am irresponsible and thus trigger a closure of my cash assistance? If I receive remittances on the same account that holds my e-cash assistance, will my aid agency assume that I no longer need that assistance?
Getting the answer right requires users to fathom a bottomless pit of aid agendas. It’s easier to withdraw cash as soon as it becomes available than to imagine the possibilities that might arise from storing funds digitally.
But what if the world of financial inclusion suddenly were to become relevant to refugees? What might real demand look like? In the summer of 2016, faculty, students and alumni of the Fletcher School, Tufts University, embarked on a study called the Financial Journey of Refugees. The study was sponsored by CRS Greece, GiZ Jordan, DRC Turkey, and the Trampoline House in Denmark. We researched 109 subjects and dozens of key informants in Greece, Turkey, Jordan, Denmark and Afghanistan. Our primary research question was: how do refugees finance their journeys and manage their money along the way? In the course of our qualitative discussions, they told us far more than we asked. Many confided their financial experiences and their experiences of aid across multiple countries. Results can be found in a recently released essay.
So, what are refugees demanding, if not financial inclusion? One way to find out is to understand what they do today to manage their financial tasks. Here are a few highlights: they are using kinship networks to finance their journeys, to store savings and to borrow to fill gaps in income as they settle and make their way. They are using local hawaldars – money traders – to store and release funds to their smugglers at different waypoints in their journeys as well as to settle debts within cross-border kinship networks. But, perhaps an important takeaway goes beyond use of financial services and peers into the workings of a close cousin of finance: information services. Refugees are using Facebook, Whatsapp, and Viber, enabled by smart phones that they own or borrow. Together these platforms constitute a refugee communications backbone.
Facebook is deeply trusted (maybe more than justified). Refugees use Facebook to check whereabouts of relatives, indicate a need for funds, or refer a good smuggler. With mobile phones ubiquitous and smart phones prevalent, Facebook is accessible (and VPN workarounds possible in places where it is banned, such as Iran). Refugees monitor and update Facebook often, particularly in places where batteries can be charged easily.
The near-ubiquity of Facebook and the perpetual fear of digital financial accounts seem incongruous. Our study does not reconcile these divergent claims. We only acknowledge them and ask: what value proposition makes Facebook so attractive that it overshadows the fear of traceability? Can Facebook move beyond its current third party offerings via Messenger, out of banked transactions, into bankless P2P transactions, like the hawala? Might they link to a crypto-currency and brand it in a friendly way? What would regulators need to do to make this possible?
But there are other questions, too. Can progressive central banks, such as the Bank of Jordan, focus on a demographic that is unafraid of being digitally tracked, such as young people whose goal is to assimilate and impress? And in good time, could it let the behavior of the young become the norm? Meanwhile, can cash assistance providers applaud their own efforts as humanitarians, shedding concerns about whether their life saving cash and e-cash services – remarkable for what they are – contribute to a financial inclusion agenda?