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Shifting the paradigm: Kiva strengthens ties between lenders and refugees

The WRF is an innovative approach to mobilize individuals from around the world to visit to lend to refugees, helping them rebuild their lives.

August 23, 2018

While refugees seek economic opportunities, most financial institutions, whether local microfinancing organizations or traditional banks, are unwilling to serve refugees because they are perceived as too risky. But as refugees experience protracted periods of displacement—sometimes upwards of 20 years—the real need for economic stability and even growth becomes more pressing.

Since 2016, Kiva has worked to overcome the obstacles preventing refugees from becoming financially included through the launch of the World Refugee Fund (WRF). With over 68 million people around the globe forcibly displaced, the opportunities for refugees to make a living grows more difficult. And the opportunity for them to start their own businesses to support themselves, their families, and their host communities, with no access to financial services to help them rebuild, is often one of the most pressing needs once the immediate needs of food and shelter are met.

The WRF is an innovative approach to mobilize individuals from around the world to visit to lend to refugees, helping them rebuild their lives. The WRF utilizes Kiva’s microfinance crowdfunding platform, where users, known as lenders, can review loan requesters and their projects, providing funding per their ability and interest. The loans are used by refugee borrowers to start small business, pay for critical medical needs, or continue their education. As borrowers repay their loan, Kiva then repays the individual lenders.

Refugees can establish their own businesses but often lack the resources to do so. Kiva's new World Refugee Fund helps bridge the gap between need and lenders.

With the WRF model, as loans are raised on the Kiva platform, funds are then transferred to local financial institutions, providing them with the risk-tolerant capital they need to lend to refugees at scale.

Kiva has now funded over $6.6 million in loans to nearly 8,000 refugees and is excited to share their results, demonstrating that refugees can–and do–repay loans. Through their original model, there is a 96.6 percent success rate in repayments. These lessons are important in enabling systems change and moving refugees from being financially excluded to included, making them more fiscally independent.

Recently, NetHope’s No Lost Generation Tech Task Force conducted a webinar, hosted by NLG’s  Leila Toplic and featuring Kiva’s Lev Plaves who manages the WRF. The webinar outlined the successes of the WRF as well as strategies for how organizations working with refugee populations can utilize the opportunities presented by WRF.

Today’s discourse often frames refugees as a burden; a population solely in need of aid. And while refugees certainly need the support of the international community, there must be a paradigm shift that understands that refugees also have the ability to be significant contributors to local economies and societies as a whole.

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