Inkomoko Entrepreneur Development

There are 103M forcibly displaced people worldwide. Africa, home to 38M forcibly displaced, sees 75% of all new IDPs globally. While displacement in Africa grows annually due to climate change (flooding and droughts) and insecurity (i.e. Sudan situation), UNHCR simultaneously faces an unprecedented $700M funding gap on the continent (resources to Ukranians), threatening to leave millions in need. 

Inkomoko works in East African countries that generously host refugees from their neighbors, while also struggling with internal displacement challenges:

• Ethiopia has 867,000 refugees, and 4.5 million internally displaced persons from the Tigray region, including our colleagues separated from their families there. 

• South Sudan, one of Africa’s largest producers of refugees, has 2.3M refugees living in the diaspora. The country is also home to more than 300,000 refugees from the region and nearly 2.4M people internally displaced due to ongoing conflict and annual flooding.

• Kenya hosts over 600,000 refugees and asylum seekers. Since November 2022, Dadaab, once the world’s largest refugee camp, has received nearly 100,000 new refugees fleeing drought-stricken Somalia.

With a systemic pattern of underfunding and a growing displacement crisis, African RDPs can no longer rely on humanitarian aid to live. Private sector approaches are required for sustainable livelihoods improvements. Inkomoko has the solution to lead RDPs out of extreme poverty through entrepreneurship development.

Objective: The objective of this project is to increase Inkomoko’s ability to deliver financing to refugee entrepreneurs through fortified back-end technology at Inkomoko, and easy-to-use client-facing products that allow refugees to access finance, and leverage digital technology to increase the skills and readiness of refugee entrepreneurs to absorb that financing. 

Outcomes: Over 24 months, Inkomoko will serve 50,000 refugee entrepreneurs across Rwanda, Kenya, Ethiopia and South Sudan. 50% of these entrepreneurs will receive $27M in direct low-cost financing through automated digital transactions with 90% repayment rate. With the development of a core banking system for Inkomoko and appropriate client-facing applications and digital training on investment readiness for clients, Inkomoko will achieve the following outcomes.

1. Improved Financial Inclusion for Marginalised Refugees:

By providing a client-facing app in which they can apply for low-cost loans, refugee entrepreneurs will be able to access financing that was previously out of reach.  The digital application will also allow refugees to be assessed on AI/psychometric approaches, rather than rely on standard metrics of investability, such as credit score, which most refugees do not have. 

1. Improved Operational Efficiency:

By developing a core banking solution as the platform for these innovations, Inkomoko will also benefit from significant operational efficiencies, which allows us to move resources into client-facing programs, and decrease our operational costs and turn around time.  With integrated applications, Inkomoko will speed the decision making time to approve loans for clients - we can digitally review client biodata and performance instantly rather than relying on in-person due diligence, which is costly and inefficient. By digitising investment committee decisions by moving review and decisions to an asynchronous platform-based process, Inkomoko will reduce the turnaround time and process lag. By linking our core banking solution to banks through APIs, we will be able to push funds and be notified of repayments in real-time. Today, it takes about 200,000 data entry points to disburse and collect 4,000 loans (our current portfolio size). With a new core banking solution, the number of data entries will reduce by 98%. Realising this efficiency alone, will increase the capacity of our team to grow our portfolio significantly.

Impact:  Inkomoko has a track record of delivering training and finance to more than 50,000 entrepreneurs, creating more than 40,000 jobs, and our impact metrics below are based on extrapolating this impact to a larger scale only accessible through digital enhancements. 

As a result of the proposed project, Inkomoko will create the following impact:

• 75% increase in skills improvement.

• 25,000 refugee entrepreneurs will have access to financial resources with a 90% repayment.

• 80% increase in average business revenue.

• 60,000 new jobs created across East Africa (an average of 1.2 jobs per business).

• Inkomoko will use our experience, portfolio performance, and impact to influence other commercial banks and MFIs to introduce refugee lending products. The need is vast, and the opportunities are great. The market is too big for Inkomoko to be the primary service provider.

As refugees and displaced persons (RDPs) settle in a host society, they encounter many barriers in restrictive policies, social stigmas, and traditional labor markets that create a “refugee gap” in economic development. Except for international organizations such as the United Nations High Commission for Refugees, there exist few community-based interventions that target refugee economic inclusion. This leaves a need for programs working to maximize the skills, productivity and experience needed by displaced populations and their host communities to thrive. Our organization has developed a private sector solution to explore the experience of forced migration and business development in new socioeconomic contexts.

Inkomoko Entrepreneur Development was founded to address the significant gaps in entrepreneurship skills and financial offerings for refugee and displaced persons communities in Africa. To us, RDPs communities are ripe for private sector solutions-business development support, employment readiness, and direct investments. Since 2012, Inkomoko, the anchor partner, has supported more than 40,000 MSMEs across 12 refugee communities in Rwanda, Kenya, and now Ethiopia.

In all three countries, we serve a diverse range of entrepreneurs from women, youth, religions, and nationalities. While the problem we are solving remains economic integration of refugees and displaced persons, there are also contextual factors that restrict this. From the family rights of women to work businesses, religious beliefs, among others, our organization also addresses these factors through our comprehensive suite of services. We have developed Sharia compliant services, best practices on serving women entrepreneurs, and overall inclusive programming to make sure all our entrepreneurs have access to high quality services, direct investments, access to new markets, in order to be resilient and self-reliant contributors to Africa's economic development.

Inkomoko’s values of bravery, achievement, purpose, improvement, and togetherness are embedded into our daily work, decisions, and relationships. Here are some examples of how they show up:

• When we first considered working with refugee communities, we put the decision to vote by our staff. It was about 17 of us then, including the Associate who is now our Regional Director seven years later; 

• We were awarded the Gold Standard (highest) from Rwanda’s Gender Monitoring Office for equity in pay, inclusive policies, and processes for women; 

• Inkomoko’s semi-annual “Happiness Audit” is intentional leadership accountability as we ask all staff “how can we make you happier?” The results are anonymized and shared broadly for accountability along with a plan for change; 

• No directors has their own office, ensuring accessibility, humility, and transparency; 

• #WeEatGoat is our team tag for celebrating success and holding each other up in hard times (over BBQ and drinks); 

• Employment candidates are assessed on a transparent job matrix that includes job skills, how they demonstrate our values, and lived experience; 

• We communicate JEDI stats, pay equity/scales, employee protections and have multiple communications channels to report challenges; and

• All new managers receive a copy of Radical Candor, with an expectation that we improve through caring personally and challenging directly.

As we grow, we need to adapt our systems for efficiency (i.e. automation in lending, psychometric testing in hiring, SOPs) and increased structures for safety and fraud prevention, but always filter these through the lens of justice values.

Launched in Rwanda in 2012, Inkomoko Entrepreneur Development supports Refugee entrepreneurs and medium, small, and micro businesses with business development services, access to finance, market linkages and supply chain integration and uses our experience and data to advocate for inclusive policies for refugee populations. 

For 10 years now, we have supported more than 40,000 MSMEs across 12 refugee communities in Rwanda, Kenya, and now Ethiopia through in-person and digital channels. We provide these businesses with training and consulting focused on the key levers of growth – financial management, sales, and operations – as well as access to our in-house, below market rate investment fund. This comprehensive suite of services have enabled businesses to strengthen their operations, capitalize on market opportunities, and grow efficiently and sustainably.

With the number of refugees increasing each year and UNHCR cutting services, now is the time for new private-sector solutions to scale so that refugees are included in Africa’s economic growth. 

It could fundamentally shift the entire humanitarian system on how refugees and displaced persons are viewed, supported, and empowered to be meaningful contributors to their own livelihoods and in their host communities. This project could serve as a blueprint for the world. We are looking for partnerships, thought-leaders, and trailblazers who can help us achieve this important work.

Inkomoko is unique in concept, delivery, and ethos.  

In communities of forced displacement, livelihood activities like vocational skills (soap making and auto mechanics) from traditional NGOs are marked with a humanitarian mindset. Partners give savings groups small grants to start an “income generating activity.”  Inkomoko offers a dignified, private sector approach that builds sustainable businesses with sizable investment.

Today, we are the largest lender to refugees in Africa, and boast a 98% repayment rate. We’ve invested millions in RDP communities, and have seen a 3x financial return from entrepreneurs generating new revenues circulating in local economies after our programming. Our offerings are comprehensive, combining business development services with direct access to finance, market linkages, and advocacy; plus, we work with both the demand & supply sides to create inclusive markets across both RDP- and host communities. 

For delivery, we are embedded in the communities we serve and engage for the long-haul. When Covid hit and many programs suspended activities, we were able to grow because we were already inside refugee communities. We don’t just offer a few days of training, we engage for months and years on as clients come back for repeat investments. Plus, we’re developing bespoke fintech solutions in 10 languages, tested by and for RDPs, to ensure relevance and scalability as we grow.

Around us, NGOs disburse cash grants and offer vocational training; banks open accounts, but no lending or real financial management programs aimed at running a business. We address these significant gaps in business development skills and financing, and demonstrate that entrepreneurs are best equipped at solving the problems in their communities when given the tools to succeed, and the belief that they can.

By serving both displaced persons and the local host community, we foster greater business growth opportunities through market linkages and joint advocacy spurring regional stability, social cohesion, and integrated economic development.

With a holistic approach – capacity building, private sector investments, and improved regulatory framework – Inkomoko expects 4M RDPs in South Sudan, Ethiopia, and Kenya will no longer need on-going humanitarian assistance by 2030. This compelling precedent and resultant body of evidence will be the strong policy case for this approach, setting the stage for millions more RDPs across the continent to move off insufficient aid and out of extreme poverty. 

To do achieve our long-term impact, Inkomoko projects the following:

1) Capacity Building and Direct Investment

Input: 320,000 RDPs and hosts receive skills trainings, consulting, and investment

Output/Client Benefit:

- Average business revenue doubled after 12 months

- Average household income increases $2400 per year 

- $260M new revenues (cumulative) circulating in RDP communities

Outcomes/Short-Term:

- 315,000 entrepreneurs and their families have improved livelihoods (1.5M+ people) - 400,000 new jobs created supporting an additional 2M people

2) Private Sector Investment

Input:

- Market linkages and economic incentives for engagement

Output/Client Benefit:

- $100M in new private sector investments in refugee communities.

- Private sector mindset shifted to see economic opportunities.

Outcomes/Short-Term:

- Infrastructure (roads, manufacturing, financial services) for long-term development 

3) Advocacy for RDP Rights

Input:

- Advise governments on economic inclusion strategies.

- Share data/studies.

Output/Client Benefit:

- Governments see economic inclusion of RDPs as advantageous, and craft policies to that end.

Outcomes/Short-Term:

• RDPs in target countries have “real” rights: mobility, banking, and the right to own a business.

With our experienced Monitoring, Evaluation and Learning (MEL) team, Inkomoko has the capacity to fully assess our entrepreneurs on an individual basis, and to generate trends and learnings across various programs. Inkomoko will evaluate each entrepreneur by conducting baseline and endline surveys based on a 95% confidence interval, pre- and-post-tests after every module, and periodic focus group discussions. 

Key areas of our data collection include: 1) Revenue growth, 2) Jobs growth, 3) Skills adoption, 4) Tools adoption, 5) Access to finance; 6) Livelihood improvement (new assets purchased, household meal consumption, educational and medical spending, etc); all with measure with demographic lenses including gender, youth, business industry, and other factors as needed.

Inkomoko currently has nine (9) full-time MEL staff spread across Rwanda, Kenya and Ethiopia, who have designed evaluation protocols to be intentional in diversity, equity, and inclusion.

We have worked with UNHCR and other livelihood partners to incorporate indicator standards in our data collection, and regularly share reports with relevant key stakeholders, and publish insights when possible.

Our methodology to evaluate our success includes:

1. Baseline data: Survey participants prior to their engagement with the program intervention on: Demographic information (gender, age, income, etc.) skills history (prior employment, education level) revenue, customer, and profit data collection

2. Real-time assessments of progress: Inkomoko administers short post-training surveys and regular monitoring of ongoing training (through Interactive Voice Response metadata) and consultancy to determine satisfaction with training material

3. Endline data: The endline survey is comparable to baseline so that we can determine changes during the program. At the close of each cohort, Inkomoko MEL team conducts evaluation surveys with a sample to assess how well participants are doing at all metrics and KPIs – accessing financing, skills increases, and revenue increases to the point of self-reliance.

Of note, the sample size of respondents for our baseline and endline surveys yields a 95% confidence interval. The framework that follows the above methodology is meant to track our key metrics for impact at our three levels:

Individual Level:

-New jobs created through program participants’ hiring;

-Wealth/asset accumulation at household level;

-Entrepreneur’s income levels above poverty thresholds; and

-Refugee households with self-sufficiency income to move out of camps.

Market Level:

-Businesses reaching new customer bases through market linkages;

-New revenue generated due to market connections; and

-New and intentional participation of the private sector.

System Level:

-New policies developed/applied that increase the economic inclusion of refugee entrepreneurs to be included in mainstream markets; and

-Entrepreneurs across Inkomoko’s markets benefit from more productive economic policies and more inclusive mindsets, allowing entrepreneurs to make more meaningful strides in their businesses’ growth.

Across Africa, access to capital for micro and small businesses is still a significant barrier to entrepreneurs who want to leverage business as a pathway out of poverty. For refugees and displaced persons, access to affordable financing is nearly impossible, as lenders often require significant collateral requirements or other barriers to financial inclusion – a significant hindrance to self-sufficiency and durable solutions. In Kenya for example, a market analysis shows that both Equity Bank and KCB have opened branches in the Kakuma Refugee Camp, but since opening over two years ago, KCB has yet to disburse a loan to a refugee entrepreneur, and despite claims of investing in refugees, Equity Bank has only disbursed a handful of loans. A few other financing entities have entered the Kakuma market, but high interest rates and deposit thresholds mean these options are still out of reach for the majority of refugee businesses. 

The rationale for Inkomoko’s services is to directly fill a market gap. Inkomoko addresses these challenges by offering direct access to capital through our in-house finance fund to eligible businesses who have participated in our business development services components. We believe-and have the data to prove - that refugee businesses are as investable as any other, as evidenced by our 98% repayment rate from deploying more than $12M USD in low-cost investments across East Africa. 

Inkomoko’s core theory of change is that when refugee entrepreneurs are enabled with more durable solutions, including access to finance, they will be able to access market-level opportunities to create thriving businesses, thus creating jobs and moving themselves and community members out of poverty. For this specific project, access to digital technologies related to financial access will increase the capacity for a refugee to apply, be positively reviewed and have approved access to financial services.

Because other financial intuitions are unwilling to lend to refugees, Inkomoko is offering an innovative approach to solve a long-standing challenge.

To ensure that clients are investment ready to access finance for their businesses, Inkomoko will develop an in-house Interactive Voice Response (IVR) platform to push trainings to clients on both feature phones and smart phones.  Inkomoko has previously used a vendor (Viamo) to develop and deploy these trainings, but we are limited in the functionality as the vendor platform is becoming cost-prohibitive for our large number of clients and number of trainings and number of languages.  Through a cost-benefit analysis, we can develop the in-house IVR platform to continue to push digital trainings - including on financial literacy, cash management, investment readiness, etc - by developing our own platform to match our own content.

All of the technologies proposed are already tested in the market, and the Inkomoko innovation to bundle them and deploy to a new market segment that has been previously overlooked.  

• The core banking solutions we are exploring are market-tested by other microfinance organisations in Africa and globally, and are fit-for-purpose. The technology upgrades needed by Inkomoko include additional servers and bandwidth in our areas of operation to deploy the CBS. APIs and payment gateways are already available.   

• The proposed mobile solution is simple enough to develop, and will be backed by a more complicated and powerful core banking solution equipped with artificial intelligence solutions. The accessibility of the platform through mobile operators in all areas of operation is not a hindrance, and we have begun discussions for approvals with mobile operators for the development of these solutions. 

• The interactive voice response solution has already been tested from Inkomoko through our previous partnerships with Viamo and we have the experience of benchmarking our technology against this international platform. 

• For all of the above, Inkomoko is mindful of data protections and regulations and we are in full compliance of data storage, security, and the technical regulations that we would abide by that are relevant to the regions in which we operate. 

These solutions are feasible and appropriate for users  in East Africa, based on the existing technologies, mobile penetration/use rates, and accessibility of mobile operating systems through the countries of operation.

We believe solutions to communities’ most pressing problems come from communities themselves. Inkomoko has JEDI principles written into our by-laws; our leadership team is proudly 78% African, 50% refugee, 61% women. Our Board has committed to two-third African membership, and we have local advisory boards to guide program decisions.

Inkomoko has equity at its core, as refugees and IDPs should access the same economic and social rights as all community members. Half of our borrowers are women, and we offer Islamic financing products so people don’t have to choose between faith and finance.

One example of our values in action was when refugee camps were locked-down at the start of Covid. Other (non medical) service providers were kept from moving in and out, but Inkomoko was allowed to operate continuously throughout, when our clients needed it most. Our staff are refugees themselves, and able to move freely in their communities.

Sustainability is an evident part of our solution. In the long run, the path to sustainability is through public-private adoption. By building the economies of RDP communities, the private sector will ultimately create wage-earning jobs and pull in government investment in infrastructure. 

This concept already exists but at a limited scale. The refugee-hosting community of Kakuma Town is a Kenyan municipality of 75,000 people.  Less than 1km from the entrance to the Kakuma Refugee Camp, retail shops, wholesalers, auto mechanics, and banks line the main street; trucks and buses load passengers and goods all day. Refugees move and trade freely between the camp and the host community.  As an integrated economic market, this is the model of refugee-investment triggering knock-on private sector and government investment. The refugees inside the camp are at the cusp of self-sufficiency, and can tip into a fully sustainable community as a result of this model, ultimately allowing Inkomoko to exit as the community thrives.

Since the founding of our organization, our businesses have collectively generated $30M+ USD  in new revenues and created over 22,000 new jobs in their communities. The result of our work with over 40,000 entrepreneurs across East Africa shows that individually, each entrepreneur on average increases monthly revenues by 140%, improves their livelihood by increasing household spending by 240%, and creates opportunities for longer-term sustainability with 60% of participants purchasing new assets, despite largely operating in isolated and under-resourced markets. 

And with more than 4,000 direct investments and at a 98% repayment rate, these entrepreneurs have demonstrated that refugee communities are just as investable as any other.