From Displacement to Development: How Kenya Can Create Shared Growth by Facilitating Economic Inclusion for Refugees - November 2021



As one of the world’s largest refugee-hosting countries, Kenya has the potential to lead on the economic inclusion of refugees. The recent passage of the new Refugees Act could provide new opportunities for this. Yet, refugees in Kenya continue to face many obstacles to economic inclusion.

These include policy barriers, which limit their right to work, move freely, and access financial services; political barriers, such as negative perceptions of refugees that limit the political will for change; and economic barriers, such as limited job opportunities and a difficult climate for private sector investment in host areas.

Perhaps the most severe restriction is the encampment policy, which requires all refugees to live in camps in one of two designated areas in the country. In practice, many refugees live outside of camps in urban areas like Nairobi, but they face a precarious legal situation that likewise hinders their economic inclusion. Other major barriers include a lack of work permits and identification, which forces most refugees to work informally (in or outside camps) and restricts their access to services. As a means to bypass the administrative difficulties of obtaining work permits for refugees, many nongovernmental organizations (NGOs) hire refugees as “incentive workers.” The practice is legal, but the government mandates that incentive workers be paid very little, even below minimum wage.

These policy barriers are perpetuated by political factors, including perceptions of refugees as security threats, scapegoating rhetoric by politicians, and fears of competition over land, resources, and jobs.
Refugees also face economic barriers to inclusion, including limited job opportunities in host areas, a lack of education and skills, and limited access to financial capital.

As a result of such barriers, refugees earn lower incomes and face much higher rates of poverty and much lower rates of employment than the average Kenyan. These challenges, in turn, translate into food insecurity and a range of protection concerns. At the same time, some groups in refugee host communities face similarly high rates of poverty. This underscores the need to facilitate economic progress for hosts as well as refugees.

Overcoming such barriers could generate many benefits for refugees and host communities alike.
With greater economic inclusion, refugees could earn far greater incomes, which would in turn alleviate many of their protection needs. Greater inclusion and fewer regulatory restrictions could also lead to an expansion of economic activity in host areas, greater private-sector investment, and an increase in job opportunities. To ensure that benefits are maximized, NGOs and international organizations providing humanitarian and development aid must increase support for hosts, as well.

Recently, some progress has been made to facilitate greater economic inclusion for refugees. In 2016, the government allowed for the creation of a refugee settlement (also known as an integrated settlement), Kalobeyei, that provided a more enabling environment for refugee and host community livelihoods, resilience, and self-reliance by setting aside land for agricultural use, facilitating a more cash-based economy, and establishing designated areas for businesses. In some areas, investors are prioritizing host communities to improve economic opportunities; development organizations are building markets and teaching marketable skills to refugees and Kenyan citizens; and the private sector is becoming more involved around the camps. However, despite these initiatives, there is still a long way to go to achieve economic inclusion.