The ET Interviews: Banking the Unbankable
December 10, 2018·0 comments·In Brief
Financial institutions around the world refuse to lend to refugees, citing flight risk and lack of credit history. Yet when given the opportunity, refugees repay loans at nearly identical rates to non-refugee borrowers. The contradiction between perception and data reveals a fundamental blindness in how capital allocators assess risk.
• Banks have created a lending desert for exactly the populations most motivated to repay. Refugees are shut out not because they default, but because institutions treat displacement as inherent risk rather than circumstance. The assumption persists despite mounting evidence to the contrary.
• A single organization proved what should have been obvious: when you give refugees access to small loans, they use them to build actual livelihoods. From wedding dress rentals in Beirut to microenterprises across four continents, the data point is stark. Repayment rates sit at 96.6% for refugees, 96.8% for everyone else.
• The gap between who refugees actually are and how they're treated by financial systems isn't getting smaller. 68 million people are forcibly displaced globally. The number is rising. And most of them have no way to access capital, despite being exactly the kind of borrowers that lenders claim to want.
• Even when one lending model works and scales to millions of dollars, the broader financial sector hasn't shifted its stance. The existence of proof hasn't created systemic change. This suggests the problem isn't lack of evidence but lack of will or incentive structures that reward taking on perceived risk.
• The real question emerging isn't whether refugees can repay loans, but why that question ever needed to be asked in the first place, and what it takes to move institutional capital at scale toward populations that have everything to lose and everything to gain.
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