At a refugee camp in Malawi in southeast Africa, a fintech and its bank subsidiary are helping to turn a seemingly hopeless situation into the beginnings of a prosperous community.
MyBucks has set up a branch of its New Finance Bank subsidiary in the camp, which is said to be the first of its kind. The bank provides mobile banking, financial literacy training, professional training, group loans and personal loans. It opened in April and it’s already profitable.
It’s proof that it’s possible to give refugees financial help, even if they have no identity documents or assets.
A plaque was unveiled at the official opening of MyBucks New Finance Bank branch in the Dzaleka refugee camp in Malawi.
Building something from nothing
About 40,000 refugees live at the Dzaleka refugee camp. They have fled from conflict in the Republic of Congo, Burundi, Rwanda and Mozambique. Most of them arrive with no money, no government-issued ID, no food or goods. The refugees don’t have bank accounts. What little money they have is typically put under a mattress.
“They come with nothing,” said Mark Vivier, chief operating officer for banking at MyBucks, which so far serves Africa, Poland and Australia. “They walk a very long distance, all across Uganda to Malawi.”
The refugees are not given money. The United Nations and relief organizations provide food, medical services, schooling and psychological and social support. When refugees arrive, they are given iron sheeting and poles they can use to build homes. That’s it.
The camp is cramped and electricity is spotty. Lights run on solar panels that generally work. But there are cooking fuel shortages and only one pit latrine for every 500 or 600 people. The hope is to lower this to one latrine for every 50 people.
The first thing MyBucks undertook was a three-week training program on financial management skills and the bank’s products, services and features. Fifteen hundred adults have gone through the program so far.
It is also engaging in entrepreneur training. Many of the refugees have skills — some make clothes or mats, others are farmers, barbers, hairdressers, teachers, doctors or nurses. The course helps them turn those skills into small businesses.
After the two rounds of training, the refugees form groups of 10 to receive group loans. Within each group, individuals apply for small loans, say $100, for their own purpose (toward a farm or purchasing materials for a small business, for example).
A financial literacy training session held by MyBucks at the Dzaleka refugee camp in Malawi.
There’s peer pressure: members of the group back each other’s loans. If one person defaults, no further loans will be granted to the group. If the overall default rate is too high, the bank will stop lending to refugees in the camp.
“It’s in everyone’s interest to make sure they have as high a repayment rate as possible,” Vivier said. “They will choose people they are comfortable with and who are reliable and trustworthy. They’re not going to let people in the group they are not comfortable with and whom they know are not going to pay.”
So far, 72 loans have been made and none are in arrears.
Those that go through two group loan cycles successfully are then offered personal loans.
There’s an immediate necessity here. The United Nations’ World Food Programme provides food for the families in the camp, but it has a budget shortage, so the food only lasts 21 days. For the remaining 10 days, refugees have to come up with their own resources to survive.
The branch, the technology
MyBucks’ New Finance Bank branch in the camp looks like any other, except it’s smaller, Vivier said. The fintech has recruited refugees to staff the bank, so they can explain the benefits of the products to their peers, in their own language, and get them to sign up.
MyBucks handles the refugees’ lack of identification with the help of the United Nations. When a refugee comes into the camp, they go through a registration process and get a U.N./Malawian government refugee ID. Their photo is taken and attached.
Bank employees are given a tablet to use in the field to set up new accounts. The MyBucks app lets them take a photo of each new customer and uses facial recognition thereafter to verify the person’s identity.
“It’s sort of like a private banker for the unbanked to deal with customers in their environment, in their natural habitat,” said Dave Van Niekerk, founder and executive chairman of MyBucks, which is based in Luxembourg.
They’ve opened 4,200 accounts so far.
“People are slowly bringing their cash into the bank, where they get interest,” Vivier said. “Slowly but surely, we’re changing behavior. But it’s not something that happens overnight. There’s a lot of effort. We spend quite a bit of money on the training.”
MyBucks offers the same mobile banking app it offers in other countries and a normal bank account in the camp. The app is multilingual.
The bank runs on an Oracle core banking system, with MyBucks’ artificial-intelligence-based banking and lending software on top. Among other things, the software helps predict borrowers’ ability to repay and helps with facial recognition.
“When NFB started discussions with us, we were excited but cautiously optimistic because we were unsure what they would ask us,” said Monique Ekoko, Malawi representative of UNHCR, the U.N. refugee agency. “Refugees have U.N. 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.”
MyBucks seeks to prove it’s possible to bank people in the most rural, disadvantaged places.
“You could literally go into a place where people don’t have much, and enable and empower them so they can start setting up businesses, get access to credit, be able to handle remittances that are sent to them by friends and family, to have a bank account, to have a sense of purpose when you’re starting from scratch,” Van Niekerk said. “Malawi as a whole is one of the poorer countries in Africa. It has a lot of potential, people are extremely willing, it has a big entrepreneurial spirit and the financial services sector needs to support them.”
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