Studying the impact that a refugee population has on its host country's economy is important when assessing and developing government refugee strategies, particularly in protracted refugee situations.
Between 1993 and 2000, Tanzania was host to almost 1.5 million refugees. Since the late 1990s, greater efforts have been made to repatriate refugees but even today there remain some 320,000 refugees and asylum seekers in Tanzania. Even with the presence of international agencies supporting the assistance efforts, such a high volume of refugees has inevitably had an impact on Tanzania's domestic economic situation. The government has publicly announced its displeasure with the stretching of resources caused by the refugee presence as well as with the threats that they are thought to pose to domestic stability.1 However, some counter these claims by outlining benefits that otherwise would not have occurred were it not for the presence of refugees. It is important to understand both claims and to use such knowledge to ensure that refugee policies support national economic growth.
The Tanzanian government attests that the refugee population it hosts has become a burden to the nation's development by exacerbating, if not creating, a scarcity of resources. They assert that the quality of national programmes such as welfare and the national poverty reduction strategy has been compromised by the reallocation of funds from government resources to refugee programmes. It is also argued that the sharing of common goods and infrastructure has strained not only resources but also relations between refugees and citizens who find themselves competing for those goods. This is most often seen in the use of grazing land, water sources and transport routes.
Contrary to the government's position, some researchers have claimed that the activity ensuing from the refugee population has stimulated the national economy. International organisations are said to have increased national financial capacity by providing funds to refugee projects as well as injecting much needed revenue via the tax and customs payments made for the aid and supplies brought into the country. Additionally, they have also invested in significant amounts of infrastructure development to enable efficient operations on the ground, thus further strengthening the sevices and infrastructure that are available to locals as well as refugees.2
Debate on this topic is further stimulated by the effect that refugees have shown on the labour sector and the pricing market. Refugees have provided a supply of cheap labour which can crowd out their Tanzanian counterparts from the employment market.3 Yet this has had a positive effect on opportunities for capacity building in communities, with a larger supply of workers for labourintensive industries such as mining and agriculture.4 Such a dichotomous effect is also evident in the prices of goods and services. The arrival of the refugees and the ensuing international relief agency workers caused an increase in the prices of staple foods and real estate, thus reducing the purchasing power of both refugees and locals. However, even with the rise in prices, the quality of social welfare also rose, thus allowing a relative improvement in the standard of living.5
A balance sheet
Despite the limited quantifiable evidence available and the difficulty in determining exact costs and benefits of the refugees' presence, it is possible to understand their relative impact through the use of a balance sheet. By summarising the evidence for benefits and costs, then weighing the arguments against each other, a positive or negative score on the economic impact can be hypothesised. Using this approach, a balance sheet emerges suggesting that the refugee population in Tanzania creates a negative economic effect on domestic security as well as access to food and shelter, a positive effect on government finances and business, and a neutral effect on labour, common resources and infrastructure. …