New Ruling Allows Bank Credit for Refugees in Costa Rica
By Giovanni Monge, UNHCR Costa Rica

For two years, Ricardo Angel tried to get a bank loan to start up his furniture workshop, but was told that as a Colombian refugee in Costa Rica, he lacked the necessary residence identity card to qualify.

Now, thanks to his perseverance, many other refugees will have access to credit to facilitate their integration in the country. On Friday, the Sala Constitutional (Sala IV)- Constitutional Court -  ruled that the rejection of Angel's 2003 loan application was discriminatory and violated his rights. The Court further declared that refugees are entitled to receive credits from national banks, noting that they are considered temporary residents in Costa Rica under the country's migration law.

"I am glad to wake up today and hear this positive news," said Angel. "Living in a state that respects the law gives me hope for the future. My rights have been respected. I will no longer feel discriminated against when requesting a bank credit. I can now go on with my furniture workshop."

Angel has come along a long way from Colombia. He arrived in Costa Rica about five years ago with his wife and daughter, armed with nothing but years of experience working with wood, metal and glass. They did not know what to expect in exile, but knew they could not stay amid the violence of their homeland.

"I remember when the plane started to descend on San José's airport, when the whiteness of the clouds started to disappear and the first view of what would be our new home suddenly appeared in front of our eyes," Angel recalled. "There were tears in my wife's eyes. I was afraid too, but the fear I felt this time was not like the fear we used to have in our country. Many thoughts crossed my mind while we were approaching that unknown land. I held my wife's hand as we prepared to land."

Like the Angel family, most of the 8,000 Colombian refugees in Costa Rica arrived between 2000 and 2002, although the influx continues today. Costa Rica hosts the second-largest concentration of Colombian refugees in Latin America, after Ecuador.

"The fact that most of the Colombian refugees have been here for almost five years has created various challenges for the authorities, the host community, UNHCR, its counterparts and on the refugees themselves," said UNHCR Representative in Costa Rica James Kovar. "This sort of protracted refugee situation has posed a tremendous challenge in the local integration of the refugees in Costa Rica, where the few options available, together with the lack of information in key services on refugee rights, have created barriers to durable solutions for some refugees."

Angel remembered the problems he faced in the beginning. "It was hard to start up. Nobody wanted to employ a 50-year-old Colombian refugee. Unfortunately, there is a tremendous misconception of Colombians in this country. We only want to live in peace and raise our family. We don't want to hurt anyone here, we ourselves were harmed before coming, so why would we want to continue the violence?"

Unable to find a job, he tried to make a living doing what he knew best – making furniture – but didn't have the seed money to start. All the credit institutions he approached turned him down with the same excuse: "Refugees are not residents, you are not entitled to credits."

Indeed, one of the biggest problems faced by refugees in Costa Rica is the lack of knowledge among key service providers. "Hardly anyone in this country knows what being a refugee means," said Carmen, another Colombian refugee. "I have shown my refugee ID card in some banks, I have tried to access some public services and nobody knows that it is a legal document issued by the government's migration office."

Last week's ruling that refugees can apply for loans with their refugee ID card will hopefully put an end to such problems.

"This ruling is a step towards the local integration of the refugee population in Costa Rica," said UNHCR's Kovar. "We now have an extraordinary precedent that opens wider possibilities to the refugee community in the country."

The UN refugee agency itself has been running a micro-credit programme in Costa Rica since 2002. To receive a loan, the refugee must demonstrate a strong business plan, client base and guarantees. A site visit is then conducted by project staff to further determine project feasibility.

Some 150 families have benefited from the UNHCR programme, starting businesses like bakeries, restaurants, beauty salons, crafts workshops, candy production, music groups and a recording studio, among others.

A recent socio-economic impact study of the project showed that many families have been able to move from single rooms to apartments, and then to houses as a result of their new economic self-sufficiency. The average number of employees per business doubles six months after receiving a loan.

An initiative is currently underway to increase programme depth and breadth by including more vulnerable refugees as beneficiaries and off-setting increased risk with a group lending methodology and a business community mentor network.