Doing Business in Dadaab - Market Systems Analysis for Local Economic Development in Dadaab, Kenya

EXECUTIVE SUMMARY

Background and approach

Kenya has been hosting refugees and asylum-seekers for nearly three decades. The Dadaab refugee complex is home to 44 per cent of the 471 000 refugees and asylum-seekers (situation at end 2018). In October 2017 and in December 2018, the Global Compact on Refugees (GCR), Kenya adopted the Comprehensive Refugee Response Framework (CRRF), signaling a future change in the refugee response characterized by encampment that has severely limited the movement of refugees and asylum seekers within the country. There is optimism about the potential of the CRRF/GCR process to contribute to a vibrant and economically strong “Dadaab city” which would benefit both refugees and host communities, linking Dadaab town and camp with Garissa county, Nairobi and other parts of the country. In parallel to these developments, the International Labour Organization (ILO) and the UN Refugee Agency (UNHCR) developed the Approach to Inclusive Market Systems (AIMS) to facilitate the development of market-based interventions for the economic inclusion of refugees and other forcibly displaced.

Focusing on Dadaab, this study provides a market system analysis for interventions aimed at enabling the self-reliance of refugees and host communities, and thereby contributing to a broader local economic development (LED) agenda.

Two complementary pieces form the basis of this report:

1. A socio-economic assessment and context analysis that seeks to lay out the challenges and opportunities that Dadaab offers

2. A rapid value chain analysis that aims to identify sub-sectors and value chains that have the potential for inclusive growth.

Stakeholders recognize the importance of investing in local economic development and livelihood interventions in refugee hosting settings, which are often the most marginalized, semi or semi-arid lands in Kenya where livelihoods are scarce for refugees and hosts alike. However, so far, key partnerships on local economic development for refugee and host communities in Kenya have primarily focused on Kakuma and Kalobeyei11. In Dadaab, stakeholders report mostly a vulnerability-based approach to livelihood interventions. The starting point of this assessment is therefore to find sustainable market-based approaches to local economic development for refugees and host communities.

Market analysis and selection of two value chains for Dadaab

At its height, Dadaab was composed of five camps: Hagadera, Dagahaley, Ifo 1, Ifo 2, and Kambioos, looming large around Dadaab town, which act-ed as a center of operations for agencies and other implementing partners working in the area. In March 2017, in response to declining population numbers and funding cuts, Kambioos Camp was shut down; in 2018, Ifo 2 followed. In spite of these cuts, Dadaab remains a vibrant community. Resourceful host community members continue to make use of boreholes and infrastructure in the now ghost camps. Each of the Dadaab camps has its own market and market characteristics; together these form a vibrant and diverse market where both host and refugee community members provide and purchase a diversity of goods and services.

Refugees and host community members in Dadaab share a common language, religion, and culture, and there is a sense of kinship and homogeneity between the two groups. A symbiotic relationship exists between the two communities. Garissa has long been one of Kenya’s marginalized counties. Coming on the heels of the 2010 constitution and the policy of devolution, which involved the decentralization of executive and legislative power in Kenya, the country’s first marginalization policy sought to allocate over 11 billion KSH to provide basic services to marginalized counties under an equalization fund. The effects of this policy remain to be seen, and while a new marginalization policy was launched in 2018, it is the presence of refugees in Garissa that has largely had a significant impact on the economy and the development of the county.

Market exchanges between refugees and host communities are common, and some refugees are informally employed by host community members to look after their livestock, as restrictions on mobility severely limit refugees’ ability to effectively run their own businesses in cost effective ways. In spite of these limitations, Dadaab community members have managed to build fledgling and established livelihood opportunities in a diversity of sub-sectors.

Initial sub-sectors for value chains to be supported and strengthened were identified through both desk review, initial KIIs, and empirical observations. Four essential value chains were initially identified as primary value chains in Dadaab. These consisted of:

• Waste management and recycling

• Livestock: small (sheep and goats) and large ruminant fattening and trade

• Commodity trade and services

• Vegetable and fruit production, including ten specific and varied crops.

Once these four initial and primary value chains were identified, the value chains were presented to livelihood partners and rated according to a series of indicators adapted from the ILO/UNHCR model. Based on the scoring presented in the report, the highest ratings led to the selection of two existing sub-sectors for further exploration, one low risk and one high risk:

1. The Agriculture sub-sector, with a focus on a diverse fruit and vegetable value chain; this sub-sector presents a strong potential in job creation across all demographic segments, a strong demand for multiple products, local stakeholder buy-in and the fact that land, water and soil are available locally. If implemented at scale, it has the potential to fulfill a real market demand and minimize reliance on imported greens as well as to create jobs for local farmers along with promoting a diverse and cooperative farming model.

2. The Waste and Recycling sub-sector, honing in on waste processing and transformation, with a positive impact on health and the environment, buy-in from local authorities, a strong need and demand confirmed by households and the private sector, and building on lessons learned from past experiences in Dadaab and elsewhere. Private actors in Nairobi have expressed interest in purchasing waste, in particular scrap metal and plastic, from Dadaab if circumstances are made amenable. While currently a basic waste collection and incineration two-step chain, the sub-sector has the potential to turn into a real transformational value chain.