African Entrepreneur Collective

Africa is host to 26% of the world’s refugee population; more than any other continent. 80% of refugees seek safety in a neighboring country, often under-resourced, creating an economic and unemployment burden for the host. With the global refugee crisis growing even faster because of the COVID-19 global pandemic, host countries and donor agencies are being forced to stretch their finite resources thin.

With the new market realities due to COVID-19, refugee entrepreneurs, who are the lifelines for essential goods and services in their communities, are specifically hampered by access to finance.

AEC provides low-cost debt capital, and we are the largest lender to refugees in sub-Saharan Africa. We are filling a gap with flexible, affordable capital for refugee/host entrepreneurs who would otherwise not access the growth capital needed to build better businesses and lives, which is critical now, more than ever before. With the Elevate Prize, by 2022, AEC will disburse 7,000+ below-market investments to refugee/host entrepreneurs across Rwanda, Kenya, and Ethiopia, and open up pilot-sites in Lebanon and Jordan. Extrapolating our previous impact results, we project that these entrepreneurs will generate $18M additional revenue in refugee communities and create at least 19,000 new jobs for other refugees/host residents.

My name is Claude Mazimpaka, Regional Loan Portfolio Director of AEC.

I worked as a commercial banker for nearly 13 years prior to joining AEC in 2017. I never thought about lending to refugees because I never knew they had viable businesses, and would be able to repay a loan.

Today, I manage a portfolio of 1,500+ active refugee borrowers in Rwanda and Kenya, with a 97% repayment rate; proving that refugee entrepreneurs represent an untapped and commercially-viable market for financial institutions.

With our impact results, I am committed to advocate for more inclusive policies with host governments.

With the increasing global refugee crisis, Africa is also a continent with a ballooning unemployment problem. The population is expected to double in the next 25 years, but there will only be about 100M new jobs, less than 20% of jobs needed for this growing cadre of working people. 

The solution to the growing refugee crisis in Africa, and Africa's growing jobs need is the same: refugee entrepreneurs. 

Refugees have the potential to contribute widely to Africa's economic development and reduce the burden on host countries and humanitarian funding. However, they currently lack the dedicated support need to do so. 

UNHCR's 2017 refugee assessment revealed that refugees need assistance with livelihoods and income generation to support themselves or move outside of the camp. AEC’s assessments identify gaps in business skills and access to financing.

AEC provides low-cost debt capital for refugee and host community entrepreneurs to build thriving businesses, improve their own livelihoods to live self-reliantly, create new jobs and contribute to the economic development of their host communities.

So far, AEC has distributed $2.5M USD to more than 1500 refugee/host entrepreneurs, and there are hundreds of thousands more across the continent. 

AEC’s lending service to refugee/host community entrepreneurs is unique and demonstrates innovation in our approach by delivering sustainable impact for our clients. Below are three differentiating factors of our work:

• AEC is the largest lender to refugee entrepreneurs in Africa – although at 1,500+ investments are numbers are still small. But nobody else is doing this. Where many other programs offer investment-readiness and match-making, refugees are still confined by steep collateral requirements and predatory interest rates and investors don't actually put money into these communities. AEC does. With a 97% repayment, AEC is demonstrating that refugee businesses are just as investable as any other.
• Many people view refugees as social burdens who have nothing to offer. To us, refugees are assets. They deserve dignity and choices. Ours is not a charity model, but an economic development one which features refugees as clients -- allowing them choice, skin in the game, and mutual accountability.
• We believe that the integration of refugee and host community is key to inclusive economic growth, and we foster this integration through both services and hiring practices. In each of the 7 refugee camps where we work, we have a mix of refugee, local, and national staff.

Findings from our Focus Groups Discussions and surveys show that 25% of our borrowers run businesses stable enough to afford to live self-sufficiently. This demonstrates that access to finance allows refugees to afford greater dignity, financial independence, and contributing to the larger economic development in their communities.

AEC measures our success based on these key metrics:

• Revenue, customer, and profit, and income;
• Livelihoods improvements, education spending, procurement of durable assets, and meals/ protein consumption; and
• Community impacts, including customers, products, and jobs created. 

To date, AEC has disbursed more than $2.4M over 1,500+ low-cost investments to refugee and local host community entrepreneurs in Rwanda and Kenya. Below are some of our key milestones:

- 97% repayment rate for refugee entrepreneurs, including a 5x ROI converting money lent to new business revenues generated. Of note, this is higher than the industry average, dispelling the myth that refugees aren’t capable of understanding or properly using debt capital.

- Refugee entrepreneurs have created 3,000+ jobs over the last two years, about 60% going to other refugees and 40% for members in the local host communities. In addition, our borrowers have seen a 78% increase in monthly revenues, and 91% in livelihoods improvement.