Inside Story

Dispelling the myth of dependency

Can the Kakuma refugee camp — former home to many Australian Sudanese — complete the transition to a thriving economy?

Xan Rice 24 May 2018 2054 words

Thriving: tailor and shopkeeper Alex Elisaba in Kakuma in 2008. Xan Rice

Some towns sprang up in favourable locations, beside great rivers, bays or expanses of fertile land. Others developed along trade routes, offering travellers a place to rest and sell their wares. And a few exist simply because a government decided it needed somewhere to house a rapid influx of desperate people. Kakuma (or “nowhere”), in the remote, arid northwestern corner of Kenya, is one of those towns.

In 1991, it was little more than a trading post, with around 7000 of the pastoral Turkana people living nearby. Twelve months later, its population had more than tripled with the arrival of 16,000 Sudanese children — the “Lost Boys” as they became known — and 200 adults. They were soon joined by thousands of people from Ethiopia, following the collapse of the government there.

Over the next decade, tens of thousands more refugees from the two countries arrived, along with people fleeing conflicts in the Democratic Republic of Congo, Rwanda, Somalia and elsewhere in Africa. By 2006, the camp housed 90,000 people; even one poor soul from Namibia, thousands of kilometres away, had ended up there. Kakuma town, separated from the camp by a wide, dry riverbed, had grown too, and now had 65,000 residents.

When I visited two years later, on assignment for Inside Story, the refugee population had fallen to 50,000. Some camp inhabitants had been resettled in the West, including in Australia. And around 35,000 South Sudanese had returned home to Sudan, where the decades-long war with the north was finally over and an independence vote had been promised.

Long emergency: Kakuma town and camp, in remote northwest Kenya. Google Maps

The camp still covered a vast thirty-six square kilometres, and the easiest way to see it was by bicycle. My guide was a South Sudanese refugee named Philip Ngor Bol, one of the camp “mobilisers” whose job was to ride around encouraging their compatriots to return home. I followed him on the back of a “boda-boda” bicycle taxi ridden by a young Turkana man who made his living transporting refugees and their goods.

I soon realised the camp was unlike others I’d visited in East Africa. Instead of row upon row of white tents, most of the refugees lived in small mudbrick houses. And while they were plainly extremely poor, Kakuma seemed less like a place of waiting — for handouts, or to go home — and more like a town. On the dusty streets, Turkana women hawked charcoal and meat and firewood, using their takings to buy surplus rations from the residents.

The refugees, who had typically been small-scale farmers or herders before fleeing their countries, were also striving to earn a living. One area of the camp was called Hong Kong because there were so many small businesses and traders: clothing stores, video parlours, money transfer shops, bakeries and restaurants. Most ubiquitous were the “dukas,” tiny general stores providing basic goods, and occasionally a laugh too. One, which sold powdered juice, sweets, short-cake biscuits and single cigarettes, had a sign above that read: “No credit until all the donkeys grow horns.”

I thought of that duka the other day when reading about a new study, Kakuma as a Marketplace, conducted in Kakuma by the International Finance Corporation, or IFC. The IFC is the member of the World Bank group that focuses on the private sector in developing countries, and has previously had little to do with humanitarian affairs. It was invited to do research in Kakuma by the UN refugee agency, UNHCR, which is exploring new ways of helping people displaced for long periods.

And so, unlike the aid and donor groups that have published countless studies of malnutrition or violence or education in refugee camps, the IFC set out to study the economy of Kakuma, where the population has swelled again in recent years to almost a quarter of a million people, making it Kenya’s tenth-biggest urban area.

Looking at the camp and neighbouring town “through the lens of a private firm looking to enter a new market,” the IFC team surveyed 1400 households, collecting data on consumption patterns and preferences, financial literacy, access to banking and telecommunications, and employment and business ownership. It found that the refugee settlement’s thriving informal economy includes around 2000 businesses — half of all the businesses across the entire Turkana region — including fourteen wholesalers and ten big markets. Despite the practical and legal limitations faced by refugees, who cannot be formally employed, own property or move, some 12 per cent of them identify as business owners or self-employed. The town, meanwhile, has 232 shops along or near the main road.

Annual household consumption in the camp and town is conservatively estimated at $56.2 million. This, the IFC concludes, demonstrates that while Kakuma’s refugees are still dependent on aid, they have sufficient economic clout to interest the private sector. Until now, commercial firms have largely ignored refugee settings — at least partly because of a lack of information about the markets there, the IFC believes. Investment by companies and social enterprises has the potential to “expand job opportunities for refugees and the host community, improve services, provide more choice, reduce prices, and contribute to self-reliance,” the report says.

Given the vulnerability of refugees, some people will be wary of private-sector involvement, especially if it comes at the expense of traditional donor services. But Michel Botzung, the IFC’s manager for fragile and conflict situations in Africa, says it is in no way suggesting replacing the “care and maintenance” function of agencies like UNHCR, but rather wants to boost the local economy for the benefit of all. “Refugees operate and grow enterprises in a very constrained environment,” he says in a telephone interview. “If you give them more support and flexibility, how far can they go?”

Nor is the IFC proposing that the private sector be encouraged to look for opportunities in emergency situations, says Botzung. The focus would be on long-established refugee camps where the residents have few prospects of obtaining citizenship in the host country or of going home in the near future.

Kakuma wasn’t meant to be one of those places, of course. When I was there in 2008, the town residents’ biggest fear was that the camp would soon close, destroying the local economy. But since South Sudan achieved its dream of independence in 2011 it has been riven by internal conflict. Around 80,000 South Sudanese have fled to Kakuma since the end of 2013, necessitating the opening of a new settlement, known as Kalobeyei, nearby. In May — more than twenty-five years after Kakuma was opened — the number of registered refugees in the two camps was 185,624, some 107,000 of those from South Sudan. Meanwhile, the town’s numbers have held steady. As in Dadaab, the vast camp that houses 235,000 Somalis in northeast Kenya, some adults in Kakuma have spent their entire lives in a refugee camp.

What the IFC study highlights is that many of those refugees have a measure of economic independence, even if humanitarian assistance remains their main source of income and work opportunities. In fact, nearly three-quarters of camp residents surveyed claim to have a regular income. This comes mainly in the form of bamba chakula (“get your food”) vouchers issued by the World Food Programme, which allow refugees to use their mobile phones to purchase selected food items from shops rather than receive a standard food package. But Kakuma residents also draw modest salaries from NGOs, earn income from their businesses or by reselling rations, and receive cash from relatives abroad.

Around half of the refugees’ expenditure goes towards consumer goods, particularly rice, pasta, flour and milk powder, which are typically purchased from dukas. The IFC says the demand is sufficiently large to support one or even two supermarkets that could serve the camp and town, bringing down prices.

Besides food and personal care items, the most popular purchases in Kakuma are television sets, motorbikes, and solar panels and power generators, since the camp is not connected to the grid and UNHCR does not provide electricity. With money also going towards cooking fuel and charcoal, the IFC says there is a market for “a commercial solution that provides energy and lighting at a lower cost.” Social enterprises already offer such services in other parts of East Africa, especially the informal settlements in big cities.

Banking is another area with potential, the researchers found. Most people in the camp and town already own mobile phones. But fewer than a third of the camp residents use their phones for banking or money transfer services, despite the ubiquity of the practice in other parts of Kenya. And even with Kakuma’s large population, only a single bank has a branch there — Equity Bank, which targets low-income customers who are ignored by most other financial institutions. Just one in ten camp residents have a bank account, and only half of the people who live in the town.

Among Kakuma residents keen to start a business, 99 per cent of those in the town and 95 per cent of those in the camp lack the necessary capital. Only 11 per cent of business owners in the camp borrowed money to start their business. Lending to poor people is not nearly as risky as one may think, though, as Equity Bank’s experience in other parts of Kenya shows. During my visit to Kakuma in 2008 I met a man named Alex Elisaba, who wore a tape measure around his neck and doubled as a tailor and a shopkeeper. Two years earlier, he had received a small loan via an aid organisation working in Kakuma. He repaid the loan in six months, and his business was thriving.

Opportunities also exist in the education sector, the IFC says. Ten years ago, the lack of school places was one reason that so many South Sudanese were willing to go back home. The situation is little better today. Kakuma has just twenty-two primary schools and five secondary schools. At least 26,000 school-age kids are not enrolled in school, mainly because of a lack of places. Some communities in the camp have responded by starting their own schools, with better student–teacher ratios than the free ones; the IFC estimates that refugees in Kakuma spend more than $1 million a year on education. “The future school system in Kakuma might be a hybrid — a mix of public and private,” the report says.

Refugees are also willing to pay for improved sanitation, it seems. Nearly half of Kakuma camp residents surveyed say they would pay for better latrines. Sanivation, a Kenyan social enterprise that installs toilets in private homes for a small fee and then collects the waste to create briquettes for heating, has already completed a pilot program in Kakuma.

The IFC’s plan is not without its critics. Jeff Crisp, research fellow at Oxford University’s Refugee Studies Centre and a former head of policy development at UNHCR, says the new study is useful in dispelling the myth of the “dependency syndrome” — the idea that refugees merely sit around waiting for the next food distribution. But he questions the merit of exploring opportunities for the private sector when the day-to-day needs of the refugees are still so profound.

“I’m much more interested in opportunities for refugees,” he tells me. “There are still big challenges when it comes to freedom of movement, registration of businesses, and access to capital.” He also questions whether Kenyan firms — who are very good at sniffing out opportunities for profit across the country — would have ignored Kakuma until now if the strong business case was there.

Indeed, the IFC notes in its report that there are still many challenges to investing in new or existing businesses in Kakuma. As many as half of the camp residents have had no schooling; three-quarters say they have no knowledge of financial matters. Regulations prohibiting formal work — refugees employed by charities are classified as “incentive workers” and paid at lower-than-market rates — make it hard for businesses to employ the best candidates. The remote location of the camp and poor quality of the roads are other disincentives for investors.

Whatever the fate of the report’s recommendations, the resilient refugees of Kakuma won’t be holding their breath. As I observed a decade ago, most of them are too busy making the best of a very bad situation, carving out a new life in “nowhere,” to worry about matters beyond their control. ●