Nairobi – Erastus Mwaka, a refugee from the Democratic Republic of Congo (DRC), dreamt of a peaceful life in Kenya. But his reality is far bleaker.
Mwaka fled rebel violence in his home country, where he had a stable job with an NGO. He arrived in Kenya in 2014, believing it to be a welcoming haven for refugees.
Initially, his savings kept him afloat. However, finding work proved impossible without proper identification. He obtained an alien ID card, but it offered limited benefits. Banks and mobile money platforms wouldn’t accept it, effectively cutting him off from the financial system.
For years, Mwaka and his family lived in poverty, relying on handouts. Today, he runs a phone repair shop thanks to charity support. Yet, he still lacks access to credit, hindering his business growth.
Mwaka’s story reflects the plight of many urban refugees in Kenya. Strict regulations and a backlog of asylum applications make it difficult to obtain the documents needed for financial services.
Farhiyo Mohamed Elmi, a Somali refugee, used to have a mobile money account but recent regulation changes have excluded her. Many refugees rely on proxies to access basic financial services, a risky and inconvenient workaround.
“They don’t have access to financial services,” says Teddy Kinyoro of GiveDirectly, a charity that helps refugees. “The biggest reasons are lack of proper documentation and negative perceptions.”
Refugees struggle to compete in the job market without access to bank accounts for money transfers or online applications. Even starting a small business is hampered by the inability to access loans.
“Unlike rural refugees, who may have access to land,” says Kinyoro, “urban refugees can only rely on small businesses, which require capital they can’t get.”
The issue goes beyond documentation. Refugees often lack the information needed to navigate the complex financial system. Meanwhile, the system itself is overloaded by the sheer number of asylum seekers waiting for processing.
Kenya currently hosts over 538,000 refugees and 152,000 asylum seekers. Compared to neighboring Uganda, processing times are slow, potentially discouraging refugees from settling in Kenya.
“Uganda is a much friendlier place for refugees,” says Muthoki Mumo of the Committee to Protect Journalists. “They have an open-door policy and allow refugees to access all services.”
In Uganda, a refugee card or even a family attestation document suffices for opening a bank account. Obtaining these documents is faster and easier, and refugees can even own land and vehicles.
Experts believe Uganda’s success stems from considering refugees in its national financial inclusion policy. They also point to collaboration between regulators, banks, and mobile network operators for seamless verification of refugee documents.
In Kenya, such collaboration is lacking, leading banks and mobile operators to be wary of accepting refugee documentation.
While the Kenyan government recently received a grant to improve refugee participation in the labor market and access to social services, financial inclusion remains a challenge.
