Building trust and improving financial literacy

Table of Contents

Activities, stakeholders and guidelines

Building trust and improving financial literacy

Practical tips and guidelines on key activities and stakeholders involved

Click on one activity below to see detailed guidelines

Stakeholders involved
Financial services providers- commercial banks and microfinance institutions,
Refugee and host community members
Guidelines
There may be a lack of trust in banks and other FSPs on the part of refugee and host communities. This is especially true if there is no physical presence (a bank branch) in their locality. If refugees lost savings when they fled their home countries, they may believe that avoiding banks is to their advantage. Host community members who live in countries where the banking system has collapsed may also be unwilling to engage with banks.
Address distrust that refugees and host communities may have towards banks but encourage a direct interaction with FSPs, showing that the latter are reliable and safe.
Financial education (FE) training programmes can foster trust, especially when FE trainers are representatives of financial institutions. The training fostered direct ties and trust between participants and these institutions. Participants begin to view financial institutions as less intimidating, while the institutions see that the participants pose less of a risk and have stronger business foundations than they initially anticipated. This mutual understanding helps establish a positive relationship early on, paving the way for successful financial engagements.
Adopt a village-agent model where refugee populations are located at a distance from bank branches. PROSPECTS partners, namely commercial banks and microfinance institutions, recruited, trained and employed refugees and host community members as local bank representatives. This allowed members of these communities to become familiar with the FSP and build trust by interacting with these agents over time. In Ethiopia, the bank partner hired female banking agents to support outreach to female clients in more conservative areas. [link to Ethiopia case study]
Another measure used to build trust and confidence in engaging financial institutions was the use of group savings and loans. In Iraq and Ethiopia, cooperatives served as a collective entity with which financial institutions could engage to provide tailored credit, savings and loan products. By engaging with refugee and host community members as collective groups, rather than individual clients, the financial risk to both sides was mitigated.

Stakeholders involved
Financial services providers- commercial banks and microfinance institutions,
Trainers and master trainers,
Refugee and host community members
Guidelines
Leverage the ILO’s Global Programme on Financial Education and adapt an associated set of financial education training materials. In Iraq, training materials were translated into Arabic and Kurdish. Characters and stories were also adapted to the local context so as to effectively convey the meaning of such topics as goal-setting, savings, budgeting and record-keeping.
Tailor financial education to the specific needs of different subsegments of the population. In Sudan, for instance, FE trainers employed more games and role-play to illustrate concepts for participants with lower levels of literacy and numeracy.
The predominantly Muslim population in Iraq and the Somali region of Ethiopia also required that certain concepts, such as loans, be articulated in a way that complied with Sharia law. As an outcome of this adaptation, PROSPECTS Iraq helped produce the first Arabic and Kurdish versions of the training manual Financial Education for Refugees, IDPs and Host Communities. Similar adaptations were later made in other PROSPECTS countries and were used to facilitate FE in Lebanon and Egypt, for example. Some further steps were taken to ensure that the loan products were Sharia-compliant. In Iraq, this involved getting a letter signed by an imam, explaining how the financial products were compliant. In Ethiopia, the project assembled a Sharia advisory board for interventions implemented in the predominantly Muslim Somali region.
Financial inclusion was also pursued based on needs identified within value-chain development initiatives. For example, in Ethiopia's milk value chain, producer cooperatives opened a group bank account, and a digital platform was introduced to facilitate direct payments between producers and processors.
Incorporate financial education into broader business development services (BDS) and cooperative training efforts, such as Start and Improve your Business (SIYB) and Get Ahead. This will allow individuals with limited knowledge to engage with financial education.

Stakeholders involved
(I)NGOs,
Community based organizations,
Refugee-led organizations (RLOs),
VSLAs,
Government representatives (local),
Financial services providers,
Central banks,
Business development services providers
Guidelines
Training of trainers in financial education involves a three-step process:
training on FE content and methodology;
trainees replicate the FE training with a group of beneficiaries, with oversight by certified FE trainers;
trainees go through a certification workshop.
Trained trainers generally come from national institutions, as well as international organizations, business development services providers and NGOs. National institutions have an interest in rolling out FE to support national initiatives related to financial inclusion, business development and employment. As shown in PROSPECTS Egypt and Iraq, training the staff from ministries helped integrate financial education (FE) programmes into the Ministry of Youth and Sport’s youth centres.
Identify training partner(s) who can access refugees and host communities, particularly in instances where FE is planned inside refugee camps and settlements. There are often additional entry and movement requirements in these locations. Read the story of one ILO-certified trainer from Kenya.
In training the trainers, try to select candidates who can help institutionalize FE nationally. In PROSPECTS, central banks and networks of microfinance institutions were instrumental in adapting and implementing FE at scale. In the case of Ethiopia, FE was institutionalized in the Association of Ethiopian Microfinance Institutions, which spanned more than 52 microfinance institutions nationally.

Stakeholders involved
Financial services providers (FSPs),
Refugee and host community members,
Cooperatives,
Community-based organizations,
Refugee- and youth-led organizations,
VSLAs and
SACCOs
Guidelines
PROSPECTS countries all have a legacy of receiving humanitarian assistance. Consequently, their populations have grown accustomed to varying degrees, to receiving grants and free services. The result is a culture in which individuals are seen by service providers as passive recipients of finance, rather than active customers who use finance to build and strengthen livelihoods.
Pivoting away from humanitarian assistance and towards the use of investment, savings, loans and credit is a long-term process that requires changes in mindset. It is also contingent on market readiness and economic stability.
Having positive examples of engagement with these types of financial products can strengthen the case, but in contexts where humanitarian assistance continues to be on offer, the transition can be more difficult.

View all activities

Education & Training

Employment

Enterprise

Social Protection

Building trust and improving financial literacy

Stakeholders involved

Guidelines

Stakeholders involved

Guidelines

Stakeholders involved

Guidelines

Stakeholders involved

Guidelines