The peculiar economics of a refugee camp: “Yes in my backyard”

Have you ever been to “nowhere?” If not, then you haven’t been to Kakuma, Kenya, a town whose name means “nowhere” in Swahili. And how apt a description that is: Kakuma is far-flung, flat, and based in the scorching, arid, and pastoralist Turkana county. It sits in northwestern Kenya at the crossroads of Ethiopia, South Sudan and Uganda, and has the dubious distinction of hosting one of the largest and longest-lasting refugee camps in the world. Since 1991, Kakuma camp has hosted just under 180,000 refugees from over 15 countries—a whopping 15 percent of the county’s population.

At the invitation of the Turkana’s government, we visited Kakuma for a scoping exercise for a forthcoming World Bank and United Nations High Commissioner for Refugees (UNHCR) project that intends to assess the macro and micro economics of refugees: a complex and politically sensitive project. Visiting the Kakuma refugee camp in November 2014 gave us a better understanding of the economic interaction between refugees and their host community, and of the services provided to the refugees and host communities by various aid agencies. Prima facie, the economics of the camp seem rather unusual for the following three reasons:

  1.  The “Yes in my backyard” phenomena (YIMBY). One striking and immediate—observation was how vibrant the economy is in the camp. This included refugee-owned and operated electronic shops and restaurants that are serving not just refugees but also the host communities and even aid workers. For example, we saw host community traders selling firewood to refugees, and local Turkanas being employed as household help by refugees with means. One enterprising refugee whom we interviewed owned and operated two (hawala) banks. The situation is so lopsided that UNHCR informed us that when there was talk about closing Kakuma in the early 2000s as a result of the South Sudan peace agreement, there was an uproar among the host community, which saw the camp as its main source employment, business opportunities, and commercial goods. The decision to move thousands of refugees from Dadaab to Kakuma in 2009 therefore came to some as a relief. This is in sharp contrast to the “Not in my backyard”, or “NIMBY,” phenomena that is typically associated with hosting refugees, and raises a host of economic issues in the YIMBY context. Moreover, the interaction is not just economic; it is also social and cultural, including intermarriages between the host and refugee communities. How does one capitalize on these rich and diverse economic and social interactions for the betterment of both the host and refugee communities? Did I mention the project was complex?
  2.  The thin line between humanitarian and development assistance. Another striking observation was that it is hard to distinguish any longer between humanitarian vs. development assistance—at least in the context of Kakuma. Humanitarian aid is being used to build high quality schools and hospitals, at the periphery of the camp and the host community. This is deliberate so that the underprivileged host-community residents can take advantage of the relatively high-quality schools and hospitals ostensibly built for refugees. Investing in education and health goes beyond (strict) humanitarian assistance. And even the trademark humanitarian assistance provided by the U.N. and others—relief food aid—has been subjected to the law of economics: a thriving black market of selling and buying of food aid packages. Indeed, the line between humanitarian and development assistance is a thin one in Kakuma, and in refugee camps more generally. As much as some may desire to return refugees to their homeland, the reality and the evidence is that it is not easy to close refugee camps. And that leads to the blurring between so-called humanitarian aid that is meant to be short-term but then morphs into longer-term development assistance. Should humanitarian assistance build schools and hospitals for 3 months, 3 years, or 3 decades? Ought the purpose of humanitarian aid to change?
  3. The separation of church and state? It was impressive to see the power of the church on display in Kakuma and in Turkana more generally. The Roman Catholic Church is the most active, visible, and respected civil society actor in Turkana. As an aside, it has the potential to be quite active in conflict mitigation and resolution activities that the recent discovery of oil in Turkana could likely bring. Indeed, the Lodwar diocese already plays a mediating role in local conflict situations. In the camp itself, we visited a vocational training center managed by Don Bosco, which in addition to training refugees produces classroom furniture for elementary and secondary schools in the refugee camp. This and other examples highlight the stock of existing human capital and expertise that resides in the camp, that could potentially be put to use outside the camp (for example, local Turkanas could stand to benefit from commercial Somali pastoralists who reside in the camp as refugees). What are the constraints to the host population of benefitting from such expertise and leverage existing social institutions like the church?

The overarching takeaway from the visit to Kakuma was the need to do things differently. How can refugee assistance be provided differently in order to avoid the creation of an artificial and aid-driven economy that will disappear if and when the refugees return back to their countries of origin? Recent oil and ground water discoveries in Turkana, and windfall resources against the backdrop of Kenya’s big-bang devolution, offer a golden opportunity to create a sustainable local economy, though not without their macro-fiscal, social, and environmental pitfalls.

Watch this space as we begin our complex analyses by an interdisciplinary team of macroeconomists; anthropologists; agricultural professionals; education specialists; energy and environment experts; humanitarian workers; medical doctors; road engineers; social development specialists; and water and sanitation experts. Or better still, join us in our endeavor.