Digital technology has been singled out as the most sustainable way to grow refugee camp economic systems where individuals have complex financial needs.
Kenya is home to several refugee camps including Dadaab, Kakuma and the newly established Kalobeyei settlement in Turkana County.
A research by MasterCard and the Western Union established that the camps suffer inadequate financial infrastructure in their banking, payments and remittances systems.
“Implementing a digital, scalable infrastructure that fits the reality of displaced people and their host communities is the logical economic solution for all stakeholders in this crisis,” reads the MasterCard Western Union Refugee Settlement Report.
Using the digital voucher platform — MasterCard Aid Network — refugees and host community members will be able to use a chip card loaded with points to redeem the items such as food and soap from a merchant.
Kakuma camp, which was established in 1992, has a population of more than 164,000 refugees and over 500 merchants majority of whom use mobile money to manage businesses.
The system, which can work both online and offline, keeps a record of every transaction, meaning that implementing agencies will have an easy time monitoring programmes.
Instead of providing unrestricted cash transfers, the system uses a card-based — debit or prepaid — or mobile wallet such as Equitel or M-Pesa, which offer people a safe place to store money.
Equity Bank holds 15,000 refugee accounts in their Kakuma branch with an estimated 90 per cent of these held by refugees employed by agencies.
Remittances at the camp are received through the Western Union and hawala agents, and these are often picked up in cash.
“Converting remittances to local currency is often confusing, as exchange rates vary and agents that handle conversions to US dollars are hard to find,” said the report.