Refugees need not be a burden, if they are allowed to work

TWO years ago, a group of elders in this village in north-western Uganda agreed to lend their land to refugees from South Sudan. About 120,000 are now in the surrounding area. Here they live in tarpaulin shelters and mud-brick huts on a patch of scrub where cows once grazed. Kemis Butele, a gravel-voiced Ugandan elder, explains that hosting refugees is a way for a remote place, long neglected by the central government, to get noticed. He hopes for new schools, clinics and a decent road—and “that our children can get jobs”.

There are more than 20m refugees in the world today, more than at any time since the end of the second world war. Nearly 90% reside in poor countries. In many, to preserve jobs for natives, governments bar refugees from working in the formal economy. Uganda has shown how a different approach can reap dividends. The government gives refugees land plots and lets them work. In some places, the refugees boost local businesses and act as a magnet for foreign aid. Mr Butele and many other Ugandans see their new neighbours as a benefit, not a burden. Sadly, such attitudes are still the exception.

Uganda hosts more than 1m South Sudanese refugees, in unfenced “settlements” across hundreds of square miles in the north. Most came after the collapse of a peace deal in July 2016. Hilda walked for two weeks, carrying her four-year-old son. “If those Dinkas get you on the road, they will kill you,” she says, referring to the president’s ethnic group. This is the third time she has found refuge in Uganda.

Refugees are “brothers and sisters”, say many Ugandans. Mr Butele was once one himself. But the welcome is also a pragmatic one. Northern Uganda is so poor that some locals pose as refugees to receive food aid. Others see refugees as buyers for local goods. Elsewhere in Uganda has indeed seen such positive spillovers. One study from 2016 found that the presence of Congolese refugees in western Uganda had increased consumption per household. Another estimates that each new refugee household boosts total local income, including that of refugees, by $320-430 more than the cost of the aid the household is given. That rises to $560-670 when refugees are given cash instead of rations.

Uganda’s generous refugee policy also opens possibilities for skulduggery. In February the government suspended its senior refugee official and three colleagues, after the UN passed on reports of fraud. Allegations include extortion, the trafficking of women and girls, and the systematic inflation of refugee numbers, to skim off aid money for non-existent beneficiaries.

Such failures hold lessons for other countries, but so do Uganda’s successes, say some economists. Paul Collier and Alexander Betts, of Oxford University, argue that rich countries should pay other “havens” to open their labour markets, as Uganda has. The result, they say, is a triple win: for refugees; for host economies; and for rich countries to which the refugees otherwise might swarm chaotically.

But security and cultural concerns often trump potential economic benefits. In Jordan refugees make up 20% of the population. Only since 2016 has the government allowed them to work, in exchange for help from Britain, the World Bank and the European Union. The “Jordan Compact” has had mixed results. The government handed out work permits, but only for certain sectors. Some refugees found construction work, but many shunned low-paying factory jobs.

They will go far

Sending aid to the countries from which refugees come may actually encourage migration, as potential migrants gain the means to pay smugglers. This suggests that rather than sending aid, rich countries should lead by example and open their own labour markets (see article). In the short term, as Mr Collier and Mr Betts argue, it may be easier for refugees to find employment in nearby countries similar to their own. But in the long term, they will make more money in richer countries, and so send more remittances home.

Refugee influxes produce both winners and losers. In Tanzania, a surge of Burundian and Rwandan refugees from 1993 caused a sharp rise in food prices, helping local farmers but hurting town-dwellers. Even in northern Uganda, protesting locals blocked a road last year, complaining that their hopes for improved living conditions and abundant jobs had not been met.

Many refugees in the latest influx are also struggling. Settlements have restaurants, billiard halls, pharmacies and vegetable stalls, but business is sluggish. In one, Imvepi, Jeff Mambo, a refugee, recently opened the “Exile Salon”, offering “cute styles for mens” at 1,500 shillings ($0.41) per trim. But few refugees come for haircuts; they have little cash to spare. Next door, women sell their bland UN food rations for salt and soap.

One problem is that donors have given only a third of the funding needed in 2017—a shortfall of $443m. Health and education services are expanding too slowly: one school has 4,200 students and just 16 teachers. In the past, refugees in Uganda got one-hectare parcels of land. New arrivals get smaller, stony plots, big enough to grow household greens, but not a surplus. During a food shortage last year, some refugees ventured homeward to recover abandoned crops; a few got killed. The World Food Programme gave others half their rations in cash. But as yet the markets to supply grain quickly and in sufficient quantities did not exist—as hungry refugees were well aware.

Refugees are more likely to thrive and integrate if allowed to move freely and work legally. It helps, too, if they receive aid in cash rather than kind. However, in Uganda, which is also coping with a new influx from Congo, the welcome for refugees is wearing thin. And in South Sudan, the killing continues. Having returned and fled twice before, Hilda is not hopeful. “I will not go back,” she says.

See also: “European countries should make it easier for refugees to work”

Sources

“Their Suffering, Our Burden? How Congolese Refugees Affect the Ugandan Population”, by Merle Kreibaum, World Development, 2016, vol. 78, issue C

“Economic Impact of Refugees”, by J. Edward Taylor et al., PNAS—Proceedings of the National Academy of Sciences, 2016, vol. 113, issue 27

“Refugee Economies: Rethinking Popular Assumptions”, by Alexander Betts et al., Refugee Studies Centre, University of Oxford, 2014

“Yes in my backyard? The economics of refugees and their social dynamics in Kakuma, Kenya”, by Apurva Sanghi, Harun Onder and Varalakshmi Vemuru, World Bank Group, 2016

“Do refugee camps help or hurt hosts? The case of Kakuma, Kenya”, by Jennifer Alix-Garcia et al., Journal of Development Economics, 2018, vol. 130

“The Effect of Refugee Inflows on Host Communities: Evidence from Tanzania”, by Jennifer Alix-Garcia and David Saah, The World Bank Economic Review, 2010, vol. 24, issue 1

“Civil wars beyond their borders: The human capital and health consequences of hosting refugees”, by Javier E. Baez, Journal of Development Economics, 2011, vol. 96, issue 2