Are Refugees an Economic Burden or Benefit?

Article excerpt

The notion of the 'refugee burden' has become firmly rooted in the policy vocabulary of governments and humanitarian actors. Understandably, governments emphasise the negative impacts and costs but these, although undeniable and well documented, are only part of the picture.

Thirty years ago ICARA 1 (International Conference on Assistance to Refugees in Africa, 1981) and ICARA 2 (1984) highlighted the 'burden' that refugees place on their hosts: imposing additional costs on already hard-pressed public and social welfare budgets, arresting economic growth, distorting markets, causing environmental degradation and putting political strains on already fragile and conflict-affected countries. On the other hand, refugees also bring economic benefits and development potential - for example, new skills and, above all, expanding consumption of food and commodities such as building materials, which stimulates growth of the host economy. At the same time, the host community may benefit from assistance programmes such as infrastructure and welfare services provided by agencies responding to refugees' needs.

Surprisingly, detailed assessment of the impacts and costs of refugees (or IDPs) is a major gap in the humanitarian toolkit. Donors rarely analyse the economic outcomes of their programme and project 'investment' which globally is worth about US$8.4bn per annum from OECD DAG countries alone. To the extent that any evaluation does take place - and this is rare, usually descriptive and always incomplete - governments tend to assess the impacts and costs for the host community, while donors and NGOs focus on the outcomes of their skills development and incomegenerating projects or cash and vouchers assistance for refugee livelihoods. Neither approach provides an aggregate account of the macro- and micro-economic and fiscal impacts and costs, and quantitative methods and hard empirical data are noticeable by their absence.

Curiously, economists have largely neglected these important policy and conceptual challenges, in contrast to the countless qualitative studies on refugee livelihoods by sociologists and anthropologists. Overall, it is usually contended that the 'costs' of refugees on their hosts - rising food and commodity prices, the depression of local wage rates, fiscal pressures, increasing environmental degradation - outweigh other micro- and macro-economic benefits. A significant exception to this analytical gap is a recent, largely micro-economic, study of Dadaab refugee camp2 which showed that the positive economic impact of the camps for the host community was US$14 million - about 25% of the per capita income of the province. Income benefits to the host community from the sale of livestock and milk alone were US$3 million, while over 1,200 local people benefited from refugee camp-related employment or trade-related work.

Studies such as this, though few and far between, introduce the complexity and diversity of typical impacts as well as their negative and positive characteristics. The problem to date has been the lack of a comprehensive framework with appropriate analytical tools and systematic methodologies to provide the evidence base by which to evaluate the 'winners' and 'losers', and to develop policies which respond to the actual or potential impacts.

Developing a new methodology

A recently completed study for the World Bank by the Refugee Studies Centre in Oxford, 'Guidelines for Assessing the Impacts and Costs of Forced Displacement',3 responds to these needs. The Guidelines aim to support both World Bank policymakers and humanitarian actors by providing appropriate and easy-to-use assessment tools for analysing the economic and financial consequences of development and humanitarian assistance.

The first stage in providing a comprehensive account is to ensure that, wherever possible, all four relevant 'stakeholder groups' are incorporated into the analysis, namely: refugees; host population and country; area and country of origin; and providers of assistance to the displaced. …