From South Sudan to Uganda: The Inspiring Journey of RUFI in Supporting Refugees

Rural Finance Initiative (RUFI) was the winner of the European Microfinance Award 2024, which highlighted organizations active in financial inclusion that help forcibly displaced people build resilience. At last year's European Microfinance Week, FinDev Gateway caught up with Yengi Lokule, CEO of RUFI, to learn more about the inspiring journey of this microfinance institution in supporting refugees through tailored financial services.

Below is the transcript of the interview:

What does the European Microfinance Award mean to RUFI?

The biggest thing about the award is the recognition that has been put on what we are doing. It has put us on the map to make the world know that actually... somehow we are doing something that is changing the lives of people. 

What inspires you to work with refugees?

A lot of inspiring things have happened when we are providing these services, and most of it is from when I hear it from the refugees themselves. I remember one of our refugee clients who was a client of ours in South Sudan came and found us doing business in Uganda. He shook his head and said, "You people, you lost a lot of money in South Sudan, and here you are coming to give us the same services. What drives you?" So you could see the emotion in this person that he has come to a foreign country, and here we are, people who had helped him there have also come to help him on this other side. So really, what is inspiring is what we have done, what for us we thought was normal, simple work. We're trying to deliver service, but then you found out that it has really touched the lives of people.

How RUFI got started serving refugees

We started operations in South Sudan in 2008, and it was a brainchild of two of the present shareholders. Around 2005, when South Sudan seceded from Sudan, they sat down and were thinking, "How do we get engaged in actually rebuilding the country?" So a lot of ideas were floated, but then they said, "Hey, why don't we try to help the common person by putting financial resources there first?" 

The first conflict in South Sudan brought refugees into Uganda. So when they went back and peace was signed and South Sudan became independent in 2011, that's when a lot of returnees were going to South Sudan, and that's when Rufi came on board. Initially, it was return, and then now in Uganda, it is refugees, but we still have those operations in South Sudan, although not much has gone on because again of the issues of stability. But then most of our operations now are in Uganda.

How does RUFI work with refugees in Uganda?

It really depends at the level you are getting engaged with the refugees. You know, the moment they come in, in the first year or the first six months, these are people who are traumatized. They cannot handle loans or whatever, so that's where the NGOs come in. But now, when they are settled and now they want to rebuild their livelihoods, that's when we are able to come in. So that's the time when we can design specific products to help these people. And what we do really is try to conduct an assessment first, talk to the refugees or internally displaced persons, and try to understand their needs. So we have to tailor the products we offer. 

I remember when we started in 2017, we had to design two specific products that were meeting their needs. We had what we called the "Remedy Product" for refugee empowerment through market-led enterprise development for youth, which was targeting women, youth, and we added in widows who had lost their business assets during conflict. They came, they have their skills, but they don't have a startup capital, so we designed that product to meet that need.

Then in between, we also developed another project product we called "SMILE" for refugees' savings mobilization and innovative lending efforts that was actually targeting VSSLA groups. How do we help them to mobilize their savings and then innovate on lending and also digitize their operations? So ultimately, when we move them, like the Remedy, we call it an incubator because we're trying to build you up. Then after that, now we can come to the conventional products. 

We right now also have an individual loan product, especially for individuals who don't have security. So we can use their land documents in South Sudan, which we can verify, and then give them a loan in Uganda based on collateral that's based in South Sudan. So those innovative ideas have helped us to be able to give resources and loans, especially loans to refugees who are not there. For those who want to do savings, we are agents because we are a Tier 4 microfinance institution, which means we don't collect voluntary savings, but banks don't reach that far. So we have been working as agents of commercial banks where these people can open accounts, and then they should be able to save.

What contributes to RUFI's success in serving refugees?

Most of our staff are refugees because they operate within the refugee settlements. So if you have to employ somebody who doesn't understand the language of the refugees or the context of the refugee, it becomes very difficult. That's why you find for all our branches that are in the refugee setting, we use the refugees. However, as we come out in branches that are not in the settlements, we also make a combination of host communities and refugees so that the dynamics go well and they understand each other. And this has been possible thanks to the government of Uganda, which has a refugee framework that allows refugees to get employed. Without that, it would have been very difficult to employ the refugees to work in the refugee context and actually be able to have that empathy with the refugees themselves.

Can you talk about the challenges you face?

There are a lot of challenges that microfinance institutions or any financial service provider would face when you're working with refugees. Initially, of course, it was the fear of flight where everybody thought the refugee will basically be able to run away. But when you really understand the refugee, you'll find out that they appreciate being able to access finance. They cherish it because they are in a foreign country and they didn't expect that they'll be able to get that. 

One of the challenges we face is the cost of operations. You know, most of the settlements that we work in are in the rural settings, and then we have to make sure that we take services to the people. So it reaches a point where every other time we have to go there. So you find out that the cost of this movement, the logistics, some of the areas we cannot even use vehicles, we have to use motorcycles, and our staff have to be prepared for that. So it takes up the cost of doing business.

But then at the upper level is the aspect of access to online capital. This is on my side. Others may not be facing that, but in the side of Rufi, we have a background that came from South Sudan. So you find out that getting the relevant on-lending capital or technical assistance to be able to do the trainings I'm talking about becomes a bit of a challenge. I want loans so that I can give, I can lend, to loan. And then some of the lenders may need me to provide physical collateral. It's definitely impossible. Okay, so you find that becomes a challenge where, yeah, the resources are needed, but then the terms of being able to do that is difficult. And refugees usually take small loans. So you find out that if I get a higher interest loan relative to what I'm going to do, it becomes a bit of a challenge. 

So for us, really, if there's that opportunity ... for what I call affordable loans, interest rates a bit high, and then the collateral expectations are a bit relaxed or even get a guarantee to be able to give these loans, it will help us to reach a lot.