Strengthening Livelihood Transition and Economic Resilience in Kyaka II Refugee Settlement (2026–2029)

Introduction

The world is witnessing unprecedented levels of forced displacement. According to UNHCR, more than 120 million people globally have been displaced due to conflict, violence, and human rights violations. Many refugees live in prolonged displacement, where access to sustainable livelihoods becomes the foundation for dignity, self-reliance, and peaceful coexistence with host communities.

In Kyaka II Refugee Settlement, reduced humanitarian assistance, limited access to financial services, and constrained livelihood opportunities have increased vulnerability especially among youth and women. In response, the Kyaka II Refugee-led Organization Network (KRLON) established the KRLON Financial Federation, a community-driven financial ecosystem designed to promote economic resilience and long-term livelihood transition.

The Challenge in Kyaka II

Kyaka II hosts over 136,000 refugees and asylum seekers, with 21% being young people. While the settlement is a place of safety, households face persistent economic challenges:

• Limited access to affordable credit and financial services
• Heavy dependence on informal money lenders with high interest rates
• Reduced food and cash assistance from humanitarian actors
• Weak saving culture due to survival pressures

By December 2025, KRLON had registered 167 Village Savings and Loan Associations (VSLAs) with 4,665 members—58% women, 34% men, and 8% elderly. Despite strong participation, existing VSLA structures can only offer loans of less than UGX 1,000,000 per member, restricting meaningful business growth. Nearly half of loans are used for food, while only 8% support income-generating activities.

Our Solution: The KRLON Financial Federation

The KRLON Financial Federation aims to strengthen community-based financial systems by pooling VSLA structures into a coordinated federation that offers affordable loans, digital monitoring, and entrepreneurship support.

The initiative combines:

• Low-interest revolving loans
• Capacity building for financial governance
• Digital systems for transparency and accountability
• Entrepreneurship mentorship and business development

Project Goal

To enhance financial stability and promote livelihood transition among refugee and host community households through sustainable, low-interest loan access and entrepreneurship capacity building.

Key Objectives

1. Strengthen VSLA registration, profiling, and financial governance
2. Build a strong and inclusive KRLON Financial Federation ecosystem
3. Create a digital VSLA record and tracking system
4. Provide revolving loans at 1% monthly interest
5. Establish an Entrepreneurship Hub for mentorship, coaching, and capacity sharing

Project Components

Component 1: System Strengthening (2026–2027)

• Registration and verification of all 167 VSLA groups
• Training on business skills, financial literacy, and record management
• Development of a digital VSLA monitoring and reporting platform

Component 2: Revolving Loan Fund (2027–2029)

• Establishment of a USD 1.5 million revolving loan fund
• Loan issuance at a 1% monthly return to ensure affordability
• Phased loan distribution to manage capacity and ensure inclusivity
• Interest income used to cover administrative costs from Year 3 onwards

Expected Outcomes

• Increased access to affordable and ethical financial services
• Fully operational digital VSLA record and tracking system
• 2,000 individuals trained annually through the Entrepreneurship Hub
• Improved savings behavior and business sustainability
• Reduced reliance on informal and exploitative lending systems

Monitoring and Evaluation

Progress will be tracked using clear indicators, including:

• Percentage increase in household income
• Number of businesses established or expanded
• Loan repayment rates and savings growth

Verification methods will include surveys, financial records, and digital system reports, supported by strong stakeholder collaboration.

Budget Overview

• Capacity strengthening, administration, system setup, monitoring and evaluation: USD 180,000
• Revolving loan fund: USD 1,500,000

Total budget required: USD 1,680,000

Call to Action

The KRLON Financial Federation represents a transformative opportunity to move refugee and host communities from dependency to self-reliance. By investing in inclusive financial access and entrepreneurship, partners and donors can help build a sustainable economic ecosystem in Kyaka II Refugee Settlement.

KRLON welcomes partnerships, collaborations and development actors to support the initiative to make this vision a reality.