By J. Edward Taylor
Helping refugees doesn’t cost as much as we think it does. And doing so can even benefit the local economy.
The University of California, Davis teamed up with the UN World Food Program (WFP) to assess three Congolese refugee camps in Rwanda. Refugees there generate considerably more income than the aid they receive. Two factors can help refugees and their hosts.
Give cash, not food
In two of the camps we studied, refugees receive WFP food aid in the form of cash, while in the third camp the refugees receive the same value of aid but in donated food. At all three camps, refugees can come and go at will, patronize local businesses or run their own, and work inside or outside the camps.
We found that the host country gets greater economic benefits when refugee food aid is in the form of cash rather than food. The WFP provides mobile phones linked to payment accounts to refugees, who can then buy food and other items at refugee and host-country shops. Refugees spent most of their cash on food, which raises incomes for local businesses and farms. In the third camp, much of the food is imported, cutting out local farmers and vendors. In Rwanda the food package only has four ingredients: beans, maize, salt and cooking oil—which helps explain why refugees often sell it. These sales add to the local food supply and put a slight downward pressure on prices, adversely affecting local farmers and other producers.
Promote long-term integration
Most refugees find themselves in countries with policies designed for the short term, but refugees tend to stay much longer. Integration with the host country not only creates benefits for refugees and locals but also recognizes that refugees are likely to remain in the host country for some time. In addition to supporting local farmers and vendors, refugees can be an important part of the labor force. Refugees made up approximately 6 percent of the hired workers (and 7 percent of hired farm workers) outside the camps we studied, and had only minimal impacts on wages for Rwandan workers. We also saw that refugees stimulated trade between the local economy and the rest of Rwanda by as much as $55 per refugee per year.
- Edward Taylor is a professor in the department of agricultural and resource economics at the University of California, Davis.