End-User Finance Study & Payment Systems Research in Displacement Settings in Kenya

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Regional Overview

There are more than 500,000 refugees and asylum seekers registered in Kenya with approximately 40% located in Kakuma Refugee Camp and Kalobeyei Settlement in Turkana County [1]. Despite having about 75% of Kenyan households having access to electricity, counties like Turkana still have electricity access rates as low as 10% with almost the half of interviewed refugees being connected to solar PV systems while 30% are connected to mini-grid electricity. Improving access to sustainable energy for households and social institutions via market-based approaches will first require addressing end-user finance barriers, opportunities to enhance market development of energy products and services within the displacement contexts, and the incorporation of development and humanitarian organizations to remedy market failures.

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Income and Business

Entrepreneurial activity as well as an informal economy can be found in the market centers consisting of more than 2,500 informal businesses that offer a range of goods and services such as haircutting, eateries, hardware stores and food items. Few refugees engage in animal husbandry, an activity reserved for the host pastoralist population. South Sudanese refugees in Kalobeyei have a higher median income at 40 USD per month compared with 23 USD per month in Kakuma. Humanitarian assistance is still the main source of income and livelihood for refugees; it is estimated that about a third of the refugees have no other source of income than humanitarian aid and remittances.

Occupation in Displacement Settings shown as a pie chart
Occupation in Displacement Settings.

Access to Financing

Demand for financial services is high in both the camp and town. Those who would like to start a business and have not done so, are limited by inaccessible capital or credit services. Main credit facility is only available from family members, friends and small groups savings. Banks and other financial service providers can bridge this gap by providing credit to start and expand businesses while providing goal-oriented savings accounts. Since collateral is not easy to get, they can use credit history ranking to assess the risks. In addition, business stock can act as collateral. The main financing model for the energy products includes cash, fee for service, leasing, and Pay-as-you-Go (PAYGo), the most prominent financing system. Access to these financing options for the energy products is dependent on various due diligence process inquiries. While the requirements for financing are relatively similar among host town residents and refugees, it is less likely that the refugees are required to provide proof of residential address, and details of place and date of birth.

Mobile and Internet Infrastructure

There is a fairly good network coverage in Kakuma and Kalobeyei refugee camps and host towns with a number of airtime shops and mobile money agents. About 85% of the host town residents have a mobile phone while 69% of refugees have a mobile phone. Over 86% of mobile phone users in host community use it for mobile banking, money transfer and payments as compared to 31% of those in refugee camps. This use of mobile banking, transfer and payments in town is higher than in the refugee camps and can be attributed to the regulatory restrictions on foreigners use of mobile banking. 19% of camp residents access internet via their mobile phone as compared to 33% of town residents.

Regulatory framework

Since inception of the refugee camps in Kakuma, the Government of Kenya restricted them from moving outside the camps, seeking education and employment, though this has slightly changed over time. The restriction of movement for refugees reduces their livelihood opportunities and results to overreliance on humanitarian aid. This in turn restricts their ability to add value to the hosting economy leading to an increase in informal businesses and trade. The refugees say this restriction would leave them hopeless, kill their dreams, and limit their thinking. There are notable government restrictions against use of mobile phones and mobile banking by refugees, but the host communities have allowed some of the refugees to register for SIM cards through informal agreements.

Aerial Photo of 2,000 Permanent Shelters in Kalobeyei Village 1

Payment Systems for Energy Products

Mobile payments are the most preferred payment modality for the energy products. However, for the host communities, use of cash payments for the products is significant. For the host community at the same time, use of pre-paid, and credit/debit cards is used, while these options are not used by the refugee communities.

Barriers to End-User Financing (EUF) and Payment Systems

A number of barriers were identified that hinder financing and payment of energy system. Barriers are majorly categorized in six areas:

  • economic and financial
  • market barriers
  • awareness and information
  • ecological and geographical
  • cultural and behavioral and
  • political and government Issues

Under these categories are listed:

(1) High initial investment cost of energy services and systems (11) Logistical challenges for players outside Kakuma and Kalobeyei areas
(2) Low capacity and willingness to pay for energy products and services (12) Weak mobile network in some areas
(3) Higher payment delay and/or default in displacement systems (13) COVID 19 uncertainties
(4) Long procedure in carrying out due diligence (14) Insecurity
(5) Low number of formal micro-financing schemes for customers to access energy products (15) Overdependence on grants
(6) Limited familiarity of private sector with activities in displacement settings (16) Language barrier
(7) Limited number of technical personnel (17) Resettlement plans and Psycho-social instability newly arriving refugees
(8) Low profitability resulting from logistical cost to avail products to the market (18) Uncertainty on government intention to close the refugee camp and settlement
(9) Lack of prevailing market information (19) Uncertainty around using refugee Identity Documents
(10) Low private sector involvement

Facilitators of Market-based Solutions

Factors and initiatives facilitating adoption of market-based solutions for energy products and services in displacement settings include:

(1) Kenyan government has provided favorable policies and regulations to market-based approaches (5) Acceptance of Market based solutions
(2) Demand for Clean Energy Services and Products is Growing (6) Increasing availability of financial institutions in the region
(3) High Mobile Phone Penetration (7) Growing channel and distribution network in camp and host areas
(4) Increased Collaborations among Players in Displacement Settings and Low-Income Communities

Ability and Willingness to Pay

5% of the respondents are not willing to pay for energy resources, while 8% are more willing to pay. Nonetheless, the majority (87%) of the respondents have not changed their willingness to pay. The highest willingness to pay was registered among respondents in Kalobeyei 2, while the highest un-willingness to pay was registered among respondents in Kakuma 1. There was no change in willingness to pay among respondents in Kalobeyei 1 & 3.

Ways to Overcome Existing Barriers to EUF and Payment Systems

A number of approaches by humanitarian agencies can be proposed to undertake in overcoming end user financing and payment system barriers in displacement settings:

(1) Grants to de-risk the businesses and provide subsidies to end users (8) Boost information within the displacement settings and low-income community
(2) Technology price reduction (9) Provide technical demonstration of concept
(3) Adoption of peer to peer electricity Framework (10) Improve networking between local players and experts
(4) Promotion of innovative and user-friendly payment modalities and financing model (11) Enhancing the network connectivity in areas with weak network
(5) Involvement of different partners (12) Engagement of private sector businesses in service delivery to refugees, otherwise undertaken by humanitarian agencies
(6) Stimulate and facilitate access to credit for suppliers and end-users of off-grid solar systems and clean cooking solutions (13) Provide psych-social support
(7) Create jobs along the energy access value chain (14) Enhance socio-economic integration between the local host community and refugees


  1. UNHCR and GoK (2021): Total Refugees and Asylum-seekers in Turkana; Refugees Operational Data Portal: 1-1. https://data2.unhcr.org/en/documents/details/89513

The report can be downloaded here:

ESDS Kenya Report on EUF and PS


GIZ's Energy Solutions for Displacement Settings (ESDS) project cooperate with UNHCR to enhance the access to sustainable energy in displacement contexts, and the Energypedia page has been created to share learnings across various practitioners to spur the development of clean energy solutions.

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