Over the last thirty years, Kakuma,
which hosts one of Africa’s largest refugee camps has grown from a tiny
settlement to a medium sized city. But the economy has not had a chance to
develop normally. This is because the economy has developed under the umbrella
of international aid while trying to satisfy an increasing labour force,
growing consumer market and growing productivity. Humanitarian and development
agencies have fuelled growth, but at the same time left the market
unpredictable and inorganic.
The humanitarian community first came
to Kakuma with the sole purpose of protecting the refugees. The mandate of
UNHCR, the agency leading and co-ordinating majority of the humanitarian
interventions in the region is still primarily considered a protection agency.
It is important to note that Kakuma is still rightly considered to be an
emergency context and in any such context, there are populations that require
protection first before any other form of integrated development.
However, while Kakuma finds itself in
an emergency context, it is also now a severely protracted displacement
situation. A while ago humanitarian agencies began planning for the people who
live in Kakuma to start living lives like everyone else around the world. That
is, assuming that if Kakuma is a vibrant town, then the living standards should
improve and grow in line with other urban settlements around the world.
In an open market, innovators try to
make lives better for everyone through their interventions and investments and generate
a range of rewards for themselves at the same time. In the last five years the
humanitarian community has begun to sell the idea on a global level that with
the right kind of investment, the private sector could improve the living
conditions in Kakuma through commercially viable enterprises. The basis for
this is that Kakuma and its environs are inhabited by around 300,000 people who
are either directly or indirectly engaged in its local economy. Most of the inhabitants
have a vested interest in the integrated development of the locality.
Recent studies on economic
opportunities available in Kakuma and Kalobeyei say that predictable and
organic economic growth in Kakuma will be based on the availability of natural
resources in combination with the huge potential in the labour force.
Agriculture and high labour intensity industries will leverage off these
factors. Successful enterprises will include a combination of both, such as
value-adding to agricultural products. Examples of this include tanneries using
livestock hides and designing leather products, or tinning locally grown
vegetables such as peas and tinned tomatoes. These enterprises will become opportunities
for refugees to increase their incomes and eventually become self-reliant and
contribute to the host country economy. There are already numerous examples of
refugees breaking through economic barriers, supporting themselves and their
families with home-grown businesses, and participating in the growth of the
local economy.
According to UNHCR and the academic
studies, the private sector should be ready and willing to invest in both the
consumer market as well as productivity in Kakuma and Kalobeyei. However, so
far, the private sector has not really taken up this call and almost no deeply
researched investment-ready business plans have been outlined that take into
account the distortions and challenges present within Kakuma’s economy as a
result of the town and camp’s inorganic, aid-dependent growth.
Kakuma’s story is being played out
around the region, such as in Uganda and Rwanda where refugees have freedom of
movement, freedom to work and in most cases have been provided with land that
offers more in the way of productivity than Kakuma’s. Yet private sector
investors have been slow to invest in refugee hosting areas and site numerous
barriers to doing business there. Firstly, distorted economies have led to
complicated power dynamics, with examples of local actors monopolising services
and setting up cartels. Local administrative leaders hold an unusual interest
in business going on in refugee settlements because of the power they hold over
physical access to the space, both of refugees and investors. Secondly, they
site need for large scale investments that will improve ease of doing business
in refugee hosting areas. Large scale irrigation schemes, access to power, and
improved roads are examples of this. Refugee hosting areas are generally very
remote and far from existing import/export hubs or major commercial centres.
Connected to this third reason sited is that while refugee hosting areas might be commercially viable, the
private sector looks at the most commercially
viable location for any given project when making investment decisions. On that
basis refugee hosting areas must put forth a comparative advantage over other
locations in the region and this is often difficult. A fourth reason is
connected with the workforce. After taking into account all of the above, the
private sector fear that refugee population does not have the requisite skill
levels to engage in business and more alarmingly, that after decades of a dependency
culture they will lack the motivation needed for successful enterprise.
To address these barriers the
humanitarian sector will continue to play a role, beyond that of providing
protection. While the national governments take on more responsibility for
refugee hosting areas, there is a need for streamlined lobbying for more
transparent power dynamics within refugee hosting areas. The humanitarian
community, using organic business growth success stories as examples, will be
the key player advocating for these large scale investments. Moreover, the
humanitarian community will still be relied on to educate and prepare the population
with skills that respond to the demands of the emerging organic economy.
Most importantly, thorough business
plans will have to be conducted taking into account these barriers not just
focusing on the opportunities. We have found that deeply researched business
plans bring out these barriers clearly without providing concrete answers to
how to reduce the barriers in the short term. The barriers are complex and so
instead these business plans must lay out a range of strategies that may or may
not be successful, and an approach of design, iteration and analysis.
In this context any company, implementer
or investor going into a refugee hosting area should have a long term view and an eye for blended
outcomes between pure market-based opportunities while still learning and playing
the role of protecting and building the capacity of the vulnerable population.
We have found that investors who support this approach exist, but to bring them
in the language has to change from diving straight in with the “commercial
viability” narrative. A community of actors who can build the dialogue between
the protection focused humanitarian sector and the commercially focused private
sector has been the missing piece until now. There is an emerging group of
agencies, companies and investors willing to play this role and I believe the
time has come to bring them together so that they can greater understand the
role they play and path to achieving success. This could possibly take the form
of a network or working group, a series of conferences or meet-ups, and
alliance of like-minded actors, or even a tightly-knit consortium. Any thoughts
welcome.
