Guest Articles

May 8

Anjali Ramachandran

Four Stories of Financial Exclusion: How Identity Barriers are Blocking Financial Access for Refugees and Other Vulnerable Groups

Venezuela has been in the middle of an emigration crisis since the late 1990’s, but it has now reached epic proportions. From 2015 to 2019, the number of refugees fleeing Venezuela more than doubled, growing from around 695,000 to over four million. The crisis has been primarily driven by the Bolivarian Revolution, in which Presidents Chavez and now Maduro have aimed to redistribute land and wealth, and concentrate political and financial power in the national government, causing significant economic and social upheaval. 

Candy Farias Olivero left her home in Caracas, Venezuela when the situation there became untenable. Having reached Cúcuta, a Colombian border town, she did everything she could to make money – from recycling trash to working as a porter ferrying goods between the two countries. She and her partner then hitchhiked more than 500 miles to get to the Colombian capital Bogotá, where they hoped to rebuild their lives. 

There, she faced numerous problems in trying to get a job: Even though she had a temporary permit from the Colombian migration authority in Cúcuta that allowed her to work legally, some places would turn her away as soon as they discovered her nationality. Candy finally succeeded in getting a job with a fast food chain, and she then used her passport and work permit to open a basic payment account at a bank. But because her girlfriend doesn’t have either a permit or a passport, which is the ID Colombia requires of Venezuelan migrants, she can’t do the same. And neither of them can get a loan, which requires more detailed documents than either of them have.

Candy is luckier than most others in a similar situation; she had enough documents to be able to get a job and open a bank account, though this was not all she needed. But countless people continue to fall through the gaps when it comes to financial access because they struggle to prove their identity – and this barrier is especially challenging when it comes to access to credit. There are many such people, and they often belong to disadvantaged groups for whom credit access could make a major difference: refugees like Candy, people from lower-income groups who often don’t qualify for loans from regular banks – and even ex-convicts with bad or no credit history who are trying to turn their lives around.



Financial Inclusion for Refugees

At Storythings, we’ve been privileged to work with Experian on our Identities of the World project, which highlights identity-related issues that affect a person’s ability to access credit. We’ve also had the opportunity to work with partners like the UN Refugee Agency, UNHCR, to identify people like Candy, whose stories need to be told. 

Working with the UNHCR familiarized us with the importance of an inclusive market approach to financial inclusion for refugees: This approach identifies where better market conditions for employment (via traditional jobs or entrepreneurship) are needed, and works to create those conditions and provide vulnerable groups like refugees with the necessary tools and training to access these opportunities. It also focuses on a number of other conditions that can help these groups to be successful: awareness-raising among the local population and governments, logistical support, and so on. 

This inclusive market approach is reflected in the UNHCR’s own work: The UNHCR Registration Card is sufficient documentary evidence for refugees to get a bank account in the Dzaleka refugee camp in Malawi. And in Zambia, the UNHCR’s partner UNCDF worked with the Bank of Zambia to change its policy on what is an acceptable form of ID for opening a bank account. Today, Refugee Certificates and Refugee ID cards issued by the Zambian Government’s Office of the Commissioner for Refugees are now accepted as valid Know Your Customer documents by financial service providers like banks. The UNHCR’s Refugee Livelihoods and Economic Inclusion Global Strategy Concept Note 2019-2023 further explores the importance of advocacy to ensure that refugees get decent work, the value of partnering with experts to help refugees get access to financial services, and the need to implement interventions that fill the gaps in services needed by refugees. 


No ID Card, No Business Loan

We’ve tried to help strengthen the case for these types of policy and market interventions by highlighting the stories of the people who would benefit. For example, in Brazil, Yilmary Perdomo is a former occupational therapist who fled her home in Venezuela in 2016 when  criminals began calling her family, threatening to kidnap her daughter. Now safely in São Paulo, Brazil, Yilmary is trying to launch a catering business to earn money, while her husband, previously a special education teacher, is working as an Uber driver. Despite having the necessary official documents, she found it hard to open a bank account: She went to the bank seven times to no avail, always rejected for missing one document or another. She finally got help from the NGO Caritas, which was able to open a bank account for her in 15 minutes, as they knew how to navigate the bureaucracy. But she still lacks full financial access: She’d like a loan to expand her catering business, but can’t get one – she doesn’t have the ID card that public banks want, and the interest charged by private banks is too high. Yilmary’s experience shows us the issues faced by a lot of people in emerging markets, where they don’t have the necessary connections, not to mention the paperwork, to truly access the finance they need. 



A Former Guerrilla Struggles to Rejoin Society

As part of Identities of the World, we also discovered the story of Rubén Dario Jaramillo, an ex-FARC fighter who got together with a few other former FARC members to start an artisanal brewery in Icononzo, Colombia. His is a truly fascinating case: As a guerrilla fighter, phones weren’t a part of his daily life, and he rarely visited cities. This all changed when FARC signed a ceasefire with the Colombian government in 2016, and 13,000 people like him committed to re-integrating into society in 200 designated demilitarized zones. 

This was the beginning of a different set of issues: The government committed to giving Rubén and his fellow ex-fighters 90% of the minimum wage for an eight-year period if they did not run into problems with the law – the idea being that they would lead a peaceful life, with at least some of their financial needs covered. But that money is not enough for most people like Rubén, particularly those who have families, and getting jobs isn’t an easy task with their lack of traditional employment history. As Rubén says, “For many of us living in remote rural areas, the money still falls short. This is mainly because it is put into our new bank accounts, which we can only access if we pay a lot to travel a long way to the nearest bank or cash machine. The bank system in Colombia is fine for people who have money and live in the cities, but it doesn’t really include people like me.”



A Local Currency Success Story

Despite the many difficult experiences we’ve heard, we’ve also come across success stories that show how local communities are working to solve the challenges of financial access. One such community-oriented solution is Banco União Sampaio in Brazil. The bank was created in 2009, with the support of the University of São Paulo’s Technological Incubator for Low-Income Cooperatives. It issues its own “social” currency, the Sampaio, properly registered with Brazil’s Central Bank and accepted in over 20 establishments throughout Campo Limpo, a district of São Paulo. There are more than 100 social currencies in Brazil, moving over R$6 million (around US $1.13 million) per year within poorer communities. Banco União Sampaio gives loans to residents in the form of the Sampaio, and merchants who accept the currency in the area can exchange them for Brazilian reals in regular banks. All customers need to prove is that they are a local resident (paying local taxes, for example) – they don’t need to show documents proving who they are, such as passports or work ID cards. 

Sonia Levino, a customer of Banco União Sampaio, borrows Sampaios to buy necessities like glasses, which allow her to sew items she can sell locally to earn money. She also uses the Sampaio to buy bus tickets to take trips with her friends – even if her husband is against the idea. This is the kind of imperceptible yet important benefit of bolstering a woman’s livelihood that helps Banco União Sampaio achieve one of its original goals: to empower women and reduce gender inequalities in society. 



An Issue Whose Time Has Come

The UN’s Sustainable Development Goals place “No Poverty” first on their list, while SDG 8 calls for “Decent Work and Economic Growth,” and SDG 10 focuses on “Reduced Inequalities.” Each of these goals is impacted by access to credit and other essential financial services – and this access won’t be possible unless stakeholders address the obstacle of valid IDs. 

The importance of this issue is becoming clearer to development organisations across the spectrum looking to help people access credit. And increasingly, fintech startups that provide alternatives to bank loans and commercial insurance policies are working on digital products that customers can access without traditional ID requirements, so that vulnerable people might have newfound access to credit and other financial services. Hopefully other startups and large corporations alike will also see the significance of this need, and will act to address it. By elevating stories like the ones above, we hope to help the issue get the attention it deserves.


Anjali Ramachandran is a Director at Storythings


Photo courtesy of Ramon Campos Iriarte / Storythings.



financial inclusion, fintech, incubators, refugees