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Add to Preferred SourcesRefugee communities represent a promising opportunity for private investment in sub-Saharan Africa, according to a groundbreaking study that has identified a growing $56 million consumer market in just one location—Kakuma Refugee Camp in northwestern Kenya.
The study—conducted by IFC, a member of the World Bank Group, with the support of UNHCR—is the first to assess an African refugee camp as a marketplace. It indicates that private sector engagement in refugee settings can promote self-reliance and socio-economic integration between refugees and host communities, thus empowering them both.
Among the study’s key findings: household spending in the 25-year-old camp and the neighboring town totals at least 6 billion Kenyan shillings ($56 million) —half of which is spent on consumer goods such as food and personal-care items. The camp, home to 180,000 refugees as of March 2018, also has a vibrant, informal private sector including more than 2,000 shops run by refugees and local Kenyans. Nearly seven out of 10 residents own a cell phone, making it a potentially attractive market for mobile banking.
Although many refugees in the camp still rely primarily on humanitarian aid, the study says that attracting new private investors could provide long-term solutions for refugees by supporting local businesses and thus increasing work opportunities. Engagement of the private sector could further expand the prospects for providing sustainable improved services in the areas of healthcare, energy, education, also reduce prices, provide more choices and strengthen self-reliance among refugees.
“Conflict, violence, and persecution are driving more people from their homes than at any time since World War Two,” said IFC Chief Executive Officer Philippe Le Houérou. “Government aid to tackle the challenge is limited. Private sector investment could make an important difference—by creating jobs and opportunities for refugees. But investors often lack the critical information they need to venture into these markets. This study is a key first step to boost private investment into an untapped market.”
“Too often refugee camps are associated with aid dependency. This ground-breaking IFC study reveals Kakuma’s vibrant economic and commercial life offering opportunities for both refugees and local communities. I am confident that this cooperation with IFC will stimulate additional private sector interest,” said Filippo Grandi, United Nations High Commissioner for Refugees.
The IFC study examined the Kakuma refugee camp and town through the lens of a private sector firm looking to enter a new market. Researchers surveyed 1,400 refugee and host-community households to collect data on consumption levels, consumer preferences, financial literacy, access to finance, telecommunications, and business ownership. The study argues that private investment could be stimulated by introducing new models of financing—including co-financing that uses matching funds to enable a combination of interest-free loans and grants to benefit both refugees and local host communities.
The study received funding and support from Ireland, the Netherlands, and Norway, through IFC’s Conflict-Affected Situations in Africa Initiative.
Read the “Kakuma as a marketplace” study here.
Original source: IFC
Published on 4 May 2018