UN-backed study calls for private sector investments in refugee settings

NAIROBI (Xinhua) —
Private sector engagement in refugee settings can
promote self-reliance and socio-economic integration between
refugees and host communities, thus empowering them, according
to a UN refugee agency-backed study.

The study conducted
by International Finance Corporation (IFC) with the support of
UNHCR reveals that refugee communities represent a promising
opportunity for private investment in sub-Saharan Africa.

The study has also
identified a growing 56 million U.S. dollar consumer market in
just Kakuma refugee camp in northwestern Kenya.

Filippo Grandi, UN
High Commissioner for Refugees, said very often refugee camps
are associated with aid dependency but the 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 Grandi in a study released on Friday

The study examined
the Kakuma refugee camp and town through the lens of a private
sector firm looking to enter a new market. The camp mainly hosts
refugees from neighboring South Sudan.

The study argues
that private investment could be stirred 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 IFC study found
that household spending in the 25-year-old camp and the
neighboring town totals at least 56 million dollars—half of
which is spent on consumer goods such as food and personal-care

“The camp, home to
180,000 refugees as of March also has a vibrant, informal
private sector including more than 2,000 shops run by refugees
and local Kenyans,” says the study.

Nearly seven out of
10 residents own a mobile phone, making it a potentially
attractive market for mobile banking, according to a report.

Philippe Le Houerou,
IFC Chief Executive Officer,said conflict, violence, and
persecutions are driving more people from their homes than at
any time since World War Two.

“Government aid to
tackle the challenge is limited. Private sector investment could
make an important difference—by creating jobs and opportunities
for refugees,” Le Houerou. 

But, said the IFC
CEO, 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.

The study notes that
although many refugees in the camp still rely primarily on
humanitarian aid, 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 and also reduce prices, provide more choices
and strengthen self-reliance among refugees,” it says.

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.

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