Refugees are increasingly regarded as a development issue, rather than simply a focus for humanitarian aid. This reflects the fact that 84% of the world’s refugees are in low and middle-income countries, more than half live in urban areas alongside host country nationals, and that indefinite dependency on humanitarian aid is now regarded as undesirable and unsustainable.
Helping refugees to help themselves through jobs, education, and other forms of economic inclusion is now mainstream refugee policy. And development actors like the World Bank are part of the institutional landscape.
But this leads to an important question: how different are refugees and local host communities in development terms? To what extent do refugees require distinctive development policies or can they simply be included within existing national development plans? If indeed the objective of the Sustainable Development Goals is to “leave no one behind”, we need to understand whether refugees are being left behind – and if so, how.
This is the focus of a newly-published report, the first study to systematically compare socio-economic outcomes for refugees and local host communities. The research, by Oxford University’s Refugee Studies Centre, focuses on Kenya. It’s a country typical of many low-income host countries in that it formally limits refugees’ right to work and freedom of movement.
Kenya’s nearly 500,000 refugees are mainly distributed across three sites: the Dadaab and Kakuma camps, and the capital city Nairobi. The last two are the focus of the new report, which draws on research that will eventually form part of a broader multi-country, multi-year dataset. In addition to Kenya, the study will also focus on Uganda and Ethiopia, and will follow refugees and host communities over time.
Based on interviews with more than 4,300 refugees and host community members, our new report reveals a complex picture. Neither refugees nor hosts inevitably do better; the “development gap” and the reasons behind it are more nuanced. The report compares and explains refugees’ and host communities’ welfare outcomes in three areas: livelihoods, living standards, and subjective well-being.
Gaps between refugees and hosts
In Kakuma camp, refugees are actually better off than the surrounding host population. For example, even though they have comparable employment levels, working refugees’ self-reported median income is higher than for the local Turkana (around $55 per month compared to under $25 per month). Refugees also have better diets, higher consumption and more assets.
Despite the gap, the Turkana hosts benefit immensely from the refugee presence; they rely on refugees as customers for their meat, firewood, and charcoal and are sometimes offered work with relief organisations.
In Nairobi, although refugees are better off than they would be in camps, they are worse off than the local host population across almost all metrics. For example, comparing Somali refugees with local hosts, the employment levels are 44% and 60% and the income gap is $150 per month compared to $200 per month. Refugees do worse across all other living standards indicators.
The picture that emerges from Kenya is that in camps refugees may sometimes be better off than surrounding hosts. This is partly because of the socio-economic base offered by international support. In the city, refugees find informal economic activity and do better than they would in camps, but they are still likely to be worse off than local citizens.
Four sets of factors seem to explain these gaps between refugees and hosts: regulation (how you are governed), networks (who you know), capital (what you have), and identity (who you are). In some cases these factors may advantage refugees. In other cases they may disadvantage refugees relative to hosts. These are the factors that distinguish the socio-economic lives of refugees from those of host communities.
The four factors unpacked
Regulation: Refugees are often disadvantaged, and we show the cost to refugees of these restrictions. In Kakuma, refugee entrepreneurs are disproportionately likely to incur a formal “business tax”. This is paid by 30% of Somali businesses compared to 10% of local Turkana businesses. In addition, only 10% of the Turkana pay police bribes compared to 54% of South Sudanese, 43% of Congolese, and 23% of Somalis.
Networks: Having crossed borders, refugees often have better transnational links. Remittances are the most obvious manifestation. Although not all refugees benefit equally, Somalis receive the highest levels of remittances of any surveyed group in either Nairobi or Turkana County. At least 43% of Somali refugees in Nairobi receive remittances, at a level more than twice that of local hosts. These transfers are identified as an important source of start-up capital for businesses.
Capital: Refugees are often unable to access loans and bank accounts, making business start-up reliant upon informal sources. But on human and physical capital, education and health, outcomes are better in the camp context for refugees than local hosts. For example, in Kakuma, refugees have an average of 6.4 years of education compared to just 2.4 years for the Turkana. In the city, refugees generally face worse outcomes than hosts across all three forms of capital.
Identity. Refugees’ different ethnic and religious identities can be an economically mixed blessing. They can facilitate in-group trust. But the same differences may also lead to discrimination.
The key takeaway is that refugees are economically distinctive compared to host communities – but not always just in negative ways.
Improvements for both groups
Our research identifies the factors that may lead to development gaps between refugees and hosts. Expanding opportunities, reducing constraints, and levelling the playing field in these four areas may offer a way to make both groups better off, and improve relations between them.
Three practical insights stand out.
First, even in a country with restricted regulations, refugees are economically active. Second, an important and neglected source of social protection for refugees come from refugees’ own activities and networks. Third, refugees’ and hosts’ economic lives are interdependent: a good refugee policy must also be a good host community policy.
To ensure that no one is left behind, every major refugee-hosting context should have an economic policy and strategy specifically for refugees and the immediate host community, based on robust analysis and consultation. Refugee policy may well be a humanitarian issue but it is also a development issue.