Rural Finance Initiative Uganda

Rural Finance Initiative Uganda Limited (RUFI) was created by RUFI South Sudan, a non-deposit-taking MFI founded in 2008. During the civil war, many of its clients fled across the border to Uganda and settled in refugee camps. RUFI followed its clients and began operations in northern Uganda out of necessity to recover those loans. This was possible due to the trust established with borrowers when they were still in South Sudan. At first, the MFI simply continued lending to refugees if they were previously RUFI clients. Gradually they expanded services to other immigrants who have been in the country for 5+ years and became established in the Ugandan communities, but still lacked access to funding. The local population also benefits from RUFI. Ugandan MFIs are heavily concentrated in urban areas surrounding Kampala, and a large percentage of the population remains excluded, especially rural women. In addition to finance, RUFI provides clients with training on local norms, financial literacy, and the use of funds.

RUFI’s success in serving refugees with credit is extremely rare in the microfinance sector. Annette Ecila and Jon Bishop attended a session on refugee financing during Africa Microfinance Week in October 2023 that focused on the challenges of providing credit to refugees. The few examples given of refugee lending programs were funded by aid agencies. The best practices that were presented in the session were virtually identical to the practices RUFI has developed independently. RUFI is using a for-profit business model to do what is largely considered to be in the realm of the development aid sector. The RUFI management team stressed that lending to refugees is complicated, and most recent arrivals fall outside of the segment of borrowers who can be served at an acceptable risk level. RUFI’s experience serves as an example of the possibilities and limitations of providing credit to refugees.