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

NAIROBI, May 5 (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 evening.

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 items.

“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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