World Refugee Day: How innovation is solving access to financial services for refugees in Uganda
For refugees, building credit history is a challenge – not anymore!
The Challenge
A challenge faced by many refugees and rural community members in Uganda is the safety of saving money and the opportunities to access loans. Refugees frequently do not have access to banks, nor are they able to open bank accounts due to a lack of credit history or collateral. Not having a secure place to store money, makes saving challenging and risky. A common method for communities in rural Uganda and many other countries around the world, both refugee and host communities, is to pool savings to support more substantial investments for families or the community. This method has excellent success due to the accountability metrics built-in when funds are used for purchases – loanees are accountable to their community, neighbors, and even family. Even more, the pooled structure allows for an individual’s savings to build an even more significant impact as it’s combined with others, and the return on investments is compounded.
“Yet, without a place to safely store money, it can be catastrophic if the pooled fund is stolen or the records are lost or damaged by such disasters as fire or rains.”
Yet, without a place to safely store money, it can be catastrophic if the pooled fund is stolen or the records are lost or damaged by such disasters as fire or rains.
The Solution
Akaboxi is tackling these problems straight on and transforming opportunities for financial service providers across Uganda. The cloud-based digital financial technology – Akaboxi - enables communities to manage and monitor their monetary savings and transactions within community or village saving groups.
Akaboxi was co-founded by Businge Joshua Muleesi and Sarah Atuhaire Baryaija. Sarah was working with rural communities in Uganda at the time, helping women (groups of 20-30) to come together and save as a collective. Sarah worked in micro-finance institutions, banking, gender awareness, empowerment, and had developed a particular insight and interest that paved the way to Akaboxi. While in the city, she was introduced to Joshua, a computer scientist who had worked at another start-up that specialized in cashless payment, and was no stranger to innovative ways of handling cash. After learning of the success of the village saving groups that Sarah had witnessed, he wanted to apply his previous knowledge to the current situation at hand. Meeting with the community himself, Joshua soon realized he could digitalize the Village Savings and Loans Associations (VSLA) process to move it past physical book-keeping - and Akaboxi was born.
Akaboxi provides each savings and loan group with a card-reading machine (a POS terminal) that captures digital transactions. Each member also receives a card. By implementing cashless technology and digitalizing the process – they can obtain consistent data relating to monetary savings. It also dramatically increases transparency and trust in the saving process for the participants, which in turn encourages them to save more. The data can, in turn, be used to link the communities to financial institutions within Uganda. As it stands in Uganda, out of the 40 million+ population, only around 17 million individuals hold a bank account. The financial structures are focused more on businesses and ignore a large segment of potential customers with low-incomes. Women and young people tend to be excluded from these financial services as a result. Still, Akaboxi seeks to plug-the-gap in this respect, empowering both the individual and the community.
What is Next?
The collaboration between RIL and Akaboxi has accelerated growth for the innovative start-up. Through the RIL’s support, they have been able to start collaborating with 15 new saving groups, with 375 end-users, in the refugee settlement of Kiryandongo, demonstrating the relevance of their solution for refugees and host community members alike. By the end of 2020, Akaboxi would like to work with 100 saving groups and onboard around 2,500 end users on the platform.
To be able to achieve this, and to elevate the start-up to the next level – Akaboxi is looking primarily for financial support to facilitate
Technological developments – Important upgrades are moving the app offline and being able to use multiple types of devices, like a mobile phone, to make the innovation more easily accessible
Additional testing - The initial funding allowed Akaboxi to develop the pilot product within a refugee setting with complicated dynamics. The new funding would enable further testing in other contexts.
Building partnerships with Financial Service Providers - support the saving groups through Akaboxi’s technology.
Akaboxi plans to expand its network of users; they need to break away from the initial pilot product and move towards a scale and growth model. In doing so, the innovation can be available for more saving groups and help more communities across a variety of contexts, thus pushing the financial services market event further in expanding its engagement, and opportunity, for marginalized and rural populations.
