Formal Micro-Credit for Refugees: New Evidence and Thoughts on an Elusive Path to Self-Reliance

Swati M. Dhawan (), Kim Wilson and Hans-Martin Zademach
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Swati M. Dhawan: Department of Economic Geography, Katholische Universität Eichstätt-Ingolstadt, Ostenstraße 18, D-85072 Eichstätt, Germany
Kim Wilson: The Fletcher School, Tufts University, 160 Packard Ave, Medford, MA 02155, USA
Hans-Martin Zademach: Department of Economic Geography, Katholische Universität Eichstätt-Ingolstadt, Ostenstraße 18, D-85072 Eichstätt, Germany

Sustainability, 2022, vol. 14, issue 17, 1-21

Abstract: The provision of formal micro-credit for refugees has been promoted as a dignified way to improve their ability to generate income through small-scale enterprises and reduce poverty. As humanitarian funding declines in protracted displacement situations, such approaches are sought to transform refugees into self-reliant, resilient, entrepreneurial agents who are no longer dependent on aid and can overcome a crisis with their own resources and financial confidence. The paper in hand questions this claim on the basis of new, comprehensive empirical insights on the financial lives of refugees in non-camp settings in Jordan. By applying the perspective of the credit users, not the suppliers, our evidence shows that the pervasive use of debt (mostly informal) does not signify latent demand for formal micro-credit. In a context where refugees face restrictions on right to work, move, set up businesses, and imagine a future in the host country, formal credit cannot improve self-reliance. The paper sheds light on a larger variety of sources of debt that are crucial for refugees to manage their lives. In conclusion, the paper argues that the rhetoric around micro-credit as a path to refugee self-reliance has to be re-visited as problematic, even damaging, and humanitarian actors should push this agenda with caution.

Keywords: protracted displacement; financial health; micro-credit; informal credit; refugees; Jordan (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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