The Hurdle of Debt on Returnees’ Journey to Sustainable Reintegration

Geneva – A few years ago, 28-year-old Peace* worked in a small shop in Ghana, facilitating credit transfers and phone recharge. She recalls being free-spirited and happy until she was compelled to travel to Egypt to help her mother pay off her debt.

The chain of debt continued as her father borrowed from her uncle to facilitate the journey. She started working as a housekeeper, and a nanny in Egypt, but not too long after she lost her job when her employer relocated. Unable to pay her rent, she was compelled to borrow from a friend but soon she hardly had any resources left and had to return home to Ghana.

Peace now owes money to her friend who has turned hostile towards her. Her father owes money to her uncle, with whom the family's relationships have soured. Peace's bond with her father is also under strain. Being unable to pay her rent, she is also facing eviction.  With this mountain of debt over her, any phone call from her father makes  her jitter and cringe.  

Peace's story, along with those of the over 500 returnees interviewed last year for a study, confirm that debt plays a significant role in all phases of the migration cycle. Yet, while research evidence has primarily focused only on the financial lives of migrants in host countries, its exploration post-return remains limited, especially in the context of debt.

To better inform policy and programming, the study conducted by the International Organization for Migration (IOM) and Samuel Hall aims to better understand returnees' experience of coping with debt and how debt impacts their reintegration experiences.

While the practice and definition of debt differ from region to region, debt can determine vulnerabilities, increase protection risks, cause mental health issues such as anxiety and depression and may force people into exploitative work. All these factors will hamper the returnee's economic, social, and psychological reintegration into society  – the three tenets integral to sustainable reintegration. 

The study confirmed that returnees’ debt practices and reintegration are embedded in households and communities. Thus, structural changes are required to ease the burden of indebtedness on migrants. The study shed light on returnees' experience of coping with debt and how debt impacts their reintegration experiences. 

Being indebted is common for migrants and may lead to involuntary re-migration

Debt is most often incurred to finance migration journeys that include visas, airfare, or sometimes, fees paid to migration brokers or agents. Regardless of country of origin or gender, the majority (72 per cent) of returnees surveyed reported having borrowed money from a person, their community, or an institution, either personally or through someone else, with 92 per cent of them still having to repay all or some of that debt.

Some returnees saw no realistic prospect of paying off their debts without re-migrating or a family member re-migrating. This was particularly the case when the debts were very large, as seen in Iraq and El Salvador, or where income inequalities between the country of origin and destination were pronounced. 

Debt leads to 'Stress, Stigma and Shame' – barriers to sustainable reintegration

Debt is not inherently negative. In fact, access to credit is a marker of financial inclusion – and the ability to borrow money – especially from formal institutions, can be considered a sign of decent financial status in society, at least before migration. 

Nevertheless, as the experiences of most of the respondents show, debt can be damaging. For instance, when debts are too high and have predatory or coercive conditions such as high interest rates, and inflexible terms of repayment attached – it will limit the capacity of returnees to address economic challenges and secure a sustainable livelihood – hampering returnees' economic integration.

Returnees often reported stress, stigma, and shame because of indebtedness. Further, the debt severely impacted returnees' social networks, constraining their support systems – often leading to worsening mental health – an indicator of worsened social and psychological reintegration.

For instance, when Eugène* from Cameroon migrated after being unable to repay a loan he had taken to expand his cocoa business, he decided to travel first to Algeria and then to Morocco. He took out multiple debts from his family to do so. Furthermore, he took out more loans upon his return to cover his daily needs and to start a small business. The debts created tensions in his household. He was indebted and struggling to secure a livelihood, so his wife abandoned him and took his daughter with her. 

Moreover, the financial difficulties that some returnees experienced while migrating (especially those detained and/or threatened with deportation) occasionally had adverse spillover effects on household members. For example, when returnees' debt prevents them from sending remittances while they are overseas, it might sometimes drive entire homes into debt – limiting their financial access to essential services like children's education and health care. 

As Towfur* from Ghana says, paying the debt he owes would mean not being able to cater for his father’s medical expenses.

The experience of debt is gendered and intergenerational

The effects of debt are intergenerational and gendered. For example, the care burden often fell exclusively onto women while the husband was abroad. The migration of fathers and husbands pushed many female-headed households into debt as they had to borrow to feed their children and secure housing. Sheeba* from Ghana took care of her granddaughter while her son was away, as his wife had abandoned him in his absence – partly due to his indebtedness. However, intergenerational responsibilities also go both ways. One household in Bangladesh sent their eldest son abroad to help repay debts brought on by the father's migration.

Some returnees saw no realistic prospect of paying off their debts without re-migrating or a family member re-migrating. This was particularly the case when the debts were huge. In Bangladesh, some people also claimed that lenders were keener to invest in migration promises than in the hopes of reintegration. 

For returnees such as Sabrina* from Bangladesh – whose migration journey left her with physical disabilities and a stroke due to financial stresses – long-term indebtedness can eventually reach a tipping point where it permanently damages their physical health. Sabrina's sugar levels and blood pressure had both increased. As a result, she took out loans to seek health services and found herself in a vicious cycle of debt, which her poor health prevented her from escaping.

Such indebtedness, mainly when it is widespread, prolonged, and in high amounts, may impact the overall socioeconomic development of communities and subsequently the region. 

The way forward – recommendations for policy and programming

A reduction in the costs of migration could lead to better, more sustainable reintegration outcomes. This can be complemented by making legal migration more accessible and affordable to enhance the opportunities for safe and dignified migration through labour migration pathways, but also by providing access to positive loans to open opportunities for sustainable livelihoods. Legal migration policy measures, such as guest worker programmes, and implementation of bilateral labour agreements, can reduce the reliance on debt and formalize a more protected migration journey, which can lead to investment into return and reintegration when migrants choose to return to their home countries.

Debt programming needs to be part of counselling and case management training in all reintegration programmes. Debt management plans (DMPs) can play a central role as informal agreements between the returnee, the household, and the creditors for repaying debts with some acknowledged flexibility. Importantly, DMPs can provide returnees time to settle back into their communities before they begin payments on their debt.

Given that returnees struggled to maintain housing and address their indebtedness, programming should also help returnees bridge the gap until their debt has been repaid. This can be achieved through special rental agreements, housing stipends, or mediation between landowners. Again, the nature of the debt should guide the intervention required.

Importantly, beyond a focus on reintegration programming, there exists a need to acknowledge the importance of debt in financing migration. Targeted advocacy and outreach focusing on age, loan source, terms and conditions, and the migration stage can be a powerful tool for this. In addition, raising awareness about the practice of debt and building on existing community mediation structures can ensure that communities also play a role in planning debt restructuring and relief through community mediation.

*Names have been changed to protect identity.