Garment factory workers stand in a truck, which they use to commute to and from work, in Kampong Speu province, Cambodia, in December 2019. Photo: AFP
Opinion
The View
by Sonja Kelly
The View
by Sonja Kelly
From Ukraine to Cambodia, women far from home need access to finance
If displaced people are unable to access financial services, they are at heightened risk of poverty
While private sector tools such as digital wallets have proved helpful, government efforts, including creating easy-to-access identity documents, are much needed too
Water, food, shelter and income are widely acknowledged basic needs of displaced people. But another critical need is often overlooked: finance. Access to banking, money management, payments, insurance and credit are fundamental to modern life.
Once the challenges of travelling and settling in a new place are solved, displaced people need to keep money safe, build savings, ensure against catastrophic risk and send money to relatives back home. The world, and Southeast Asia in particular, cannot meet the crisis of displacement without including financial services.
The need is urgent and expanding. Economics, conflict, climate change and human rights issues all are driving rising displacement. The world’s refugee population has doubled in the last decade and is expected to continue to grow at an alarming rate. According to the UNHCR, more than 100 million people had been forced to leave their homes and seek refuge in another country through 2022, and even more have moved internally within their country.
When we forget enabling access to relevant financial services for displaced people, we risk plunging them into poverty. For example, Women’s World Banking recently spoke to forcibly displaced Ukrainian people now in Moldova and Romania to understand the life-altering challenges related to travelling with and managing cash.
One woman’s life savings were taken by a host family she thought she could trust. Another wanted to set up a business but found she was unable to order the supplies she needed in cash as she lacked the credit or debit card required for an online transaction. One study of microfinance customers found that in the course of a year, people on average lose 22 per cent of funds saved in cash.
But we have cause for hope. Many examples show that when we lend a hand, displaced women have a chance to thrive.
In Cambodia, a group of migrant women factory workers left their families to seek factory jobs that allowed them a stable income they could send home. Once employed, these factory workers needed a place to store, save and send their salaries.
Thanks to a collaboration between Wing Bank, Women’s World Banking, and the factories, the workers received their wages in a digital wallet and learned how they could use the wallet to manage their money. Early results from this project indicate that those who received financial capability training were about 40 per cent more likely to use the wallet and benefited from saved time, increased safety and more agency over their finances.
In Indonesia, Women’s World Banking has been working with digital wallet provider DANA Indonesia to engage domestic workers, who are nearly always from outside urban areas, in more active use of formal financial tools. For domestic workers who signed up for the wallet, 56 per cent actively used it and had an average balance of 1.3 million rupiah (US$90) at the end of the pilot period.
The wallet provider also benefited from an increase in the profitability from these customers. The wallet has since been rolled out across Indonesia, encouraging more active use of financial services among people choosing to live in a new place because of better economic opportunities.
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Indonesian women call for protection of domestic workers’ rights on International Women’s Day
Indonesian women call for protection of domestic workers’ rights on International Women’s Day
Solving the problem of financial access in displacement is a responsibility for financial services providers as well as governments. Displaced people are less likely to have valid identity documents, a record of using financial services or collateral. They tend to have lower financial capability, particularly if they are in a new country with an unfamiliar financial system, and the family or community members they would consult for financial advice might be far away. These barriers are felt more acutely by women around the world.
Policymakers can help by creating easy-to-access identity documents associated with formal refugee status. They can reduce or suspend know-your-customer requirements on financial institutions, as the European Banking Authority did in April 2022 for Ukrainian refugees, allowing people living in displacement to open accounts with alternative IDs.
As a policy and support community, we can learn from innovations in cross-border data portability such as the United Nations’ experimentation with using blockchain-based systems to move transaction history across borders. Creating interoperability between banking systems, particularly for small value transactions, will help displaced people send and receive money.
With innovations like these, finance will no longer be an inconvenient necessity and become an enabling force for inclusion.
Our collective focus on equipping displaced people with the tools they need to achieve their goals – even short-term ones – cannot neglect the role that finance plays in increasing economic resilience and opportunity. With financial inclusion, displaced people will be able to manage day-to-day expenses, protect themselves against risk and take advantage of opportunities. They can care for their families, grow their businesses and improve their lives.
The global crisis of displacement will not end quickly, but we can take steps to make lives better for those who suffer from it.
Dr Sonja Kelly is vice-president of research and advocacy at Women’s World Banking, a global non-profit organisation dedicated to empowering low-income women and tackling the inequalities they face. This topic will be discussed at Women’s World Banking’s Making Finance Work for Women Summit in Mumbai on May 24-25.
