World’s first refugee camp bank a resounding success

02 October 2018
MyBucks SA, has reported impressive uptake of its products among refugees in the Dzaleka refugee camp.

LILONGWE, 1 October 2018 - Months after launching the first-ever bank branch in a refugee camp, New Finance Bank (NFB) in Malawi, a subsidiary of Frankfurt-listed Fintech MyBucks SA, has reported impressive uptake of its products among refugees in the Dzaleka refugee camp. According to the United Nations High Commissioner for Refugees (UNHCR), the initiative has already had a positive social effect on the refugees and surrounding areas.

In a world’s first, NFB opened a branch in the Dzaleka refugee camp in Malawi, just outside the capital Lilongwe in April 2018. The camp was established in 1994, and evolved from an old prison camp situated on 201 hectares of land. The branch serves as a base for banking services, remittances, and also provides ATM services, while NFB’s innovative scoring model and technology allows the bank to disperse micro loans that serve as the fuel to fire the existing entrepreneurial spirit in the Dzaleka refugee camp.

Refugees and asylum seekers by definition have been driven away from livelihoods and are often the most excluded members of society. The camp is made up of displaced Congolese, Rwandans and Burundians, among others, who have experienced the worst distress on the continent, yet have managed to build a vibrant community with their skills as barbers, teachers, builders, doctors, nurses and more.

“To their credit, NFB was very smart to have recognised the immense human potential and talents of the 40,000-odd residents of the Dzaleka refugee camp, and how providing real financial inclusion would unlock the power of the human spirit. It has been an incredible success, so much so that traditional banks, including international ones, have contacted us,” said UNHCR’s Monique Ekoko. An estimated 5,000 refugees own various micro businesses ranging from grocery shops, barbershops, saloons, restaurants to poultry businesses.

To date, more than 4,000 accounts have been opened at the NFB branch, including business accounts belonging to the various organisations that operate within the camp. NFB hires agents, who are refugees, who go out into the communities within the camp and bring NFB services to their attention. In this way NFB is able to build a footprint to reach all 40,000 residents.

The UNHCR and the camp in general have been able to make the progress they have through the assistance and foresight of the Malawian Government via the Reserve Bank of Malawi, and the Ministries of Home Affairs, Internal Security, Police, Finance, Economic Development, Health, and various organisations such as the World Food Programme, Plan International Malawi, Jesuits Refugee Services, Churches Action in Relief and Development and others. Due to regulations in Malawi, the refugees are not entitled to assimilate into the surrounding communities and must remain in the camp, and so it was to this backdrop that NFB spotted the gap in the market and entered the equation.

“When NFB started discussions with us, we were excited but cautiously optimistic because we were unsure what they would ask us. Refugees have UN ID cards but do not have official ID documents and papers. These are the kinds of things banks usually ask for. Were they going to ask refugees for collateral? They did not. Their technology and business allow them to overcome these so-called obstacles. They took the plunge and it is doing very well,” said Ekoko.

“The vision of financial inclusion is made possible with technology. The Dzaleka initiative is putting this into practice in the real world, building up a use case of just how important access to finance and micro loans are for those who have been excluded. The potential for both the bank and the refugees, including the wider community, is huge and despite the immense success, we have just scratched the surface,” said MyBucks Executive Chairman Dave van Niekerk.

Ekoko said that group loans have become popular among the Dzaleka refugees. A group comes together with an entrepreneurial idea and then pool together to get a micro loan from the bank. This micro loan is used to fund a micro-enterprise that then grows. The host community has also benefited, making use of market days to come and trade with the Dzaleka refugees. NFB partnered with a training NGO to offer a comprehensive financial literacy training programme to its clients. So far, a total of 1,500 refugees have been reached. Before accessing group loans, clients undergo a 3-week training programme to equip them with financial management skills and to understand the bank’s products, services and features.

“There is a lot of peaceful coexistence between host community and refugees. Hosts do not want refugees to leave as the whole area has become vibrant. The health clinic in that district is one of the best. It serves 60% host community and 40% refugees. People from outside come to the market days to buy products and services,” said Ekoko.

“Within the actual camp, we have 82 churches, clinics and schools, all the way up to tertiary, with 6,000 school going children. There is a correspondence programme with Jesuit University of Colorado, where people can get diplomas in different fields and so forth,” said Ekoko.

In perhaps an exciting development and a sign of the tech-savvy mindset of the refugees, the embracing of technology has been phenomenal. Through a partnership with Microsoft and their programme App Factory, Dzaleka refugees are now building their own apps within the camp. “This is a great opportunity for outside parties to get involved in different programmes,” said Ekoko.

“The refugees have developed an app that they use to share information about food distribution days, what services will happen on what days. There is also a community radio station, where information is disseminated.”

Ekoko said that inside the camp itself there is a vast community that has developed over the years, and while there is immense talent and drive to achieve, which is what NFB is enabling, there are very real challenges such as a shortage of pit latrines or solar panels for energy requirements.

Refugees are not given money. They are provided with food, medical services, schooling and psycho-social support. When they arrive, they are given iron sheeting and a few poles, and they build homes using these materials and mud. Beyond this, it is up to them to generate money and be entrepreneurial.

“However, it is not all plain sailing. The camp is very cramped and there is a serious problem with electricity. Cooking fuel is also a problem. We have tried to make an impact here by providing energy-saving stoves and tips on how to cook using less electricity, such as soaking beans overnight.

“Lighting is not good in the camp. Lights run off solar panels. This is an area where we are trying to find partnerships or get sponsors, because it is not merely about light, there is a security element too. Many Dzaleka refugees buy their own small solar panels and run some lighting off that but not everyone can afford to do so. There are various proposals on the table such as using biogas manufactured from the pit latrines but so far this has all proven too costly.”

Ekoko said that besides the lighting and electricity shortage due to few solar panels, the amenities are also a pressing problem. “There is currently one pit latrine to 500 or 600 people. We simply do not have the resources to lower this to about one latrine to about 50 people,” said Ekoko.

“What the refugees can achieve, and what we can do to provide the right environment for this to occur, is limited without support. Partnerships will definitely provide much support that the camp needs,” added Ekoko. “That being said, this is a camp with a lot of talents. These refugees don’t just want to sit around. They have dreams and drive.”

Van Niekerk said: “Despite the immense challenges, the refugees are able, with some support and technological innovation, to start and run successful businesses. At MyBucks we want to make a real difference and are in no doubt that as other partners come on board with UNHCR, be that with solar heating or lighting or amenities, more positive change will take place for the people at the Dzaleka refugee camp.”

NFB CEO Zandile Shaba said: “Obviously it made good business sense for us, and it is paying off. The exciting aspect is witnessing the positive effect it has on the community. Being able to make a profitable business while simultaneously having a very real impact on the wider society is a very rewarding and enriching experience.”

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