Building Refugee Economies: An Evaluation of the IKEA Foundation’s Programme in Dollo Ado

Alexander Betts, Andonis Marden, Raphael Bradenbrink, Jonas Kaufmann

Refugee Studies Centre, May 2020


This report presents a detailed evaluation of the IKEA Foundation’s livelihood programs in Dollo Ado refugee camps in the remote Somali region of Ethiopia. The Dollo Ado camp complex accommodates around 160,000 refugees. Working through UNHCR, the IKEA Foundation has invested around US$100 million in Dollo Ado—the largest private sector investment ever made in a refugee setting. The IKEA Foundation initially funded emergency relief and infrastructure, but since 2016 has increasingly supported livelihoods programs for refugees and host communities. Interventions have focused on agriculture, livestock, energy, environment, and microfinance, through a cooperative model facilitated by implementing partners (IPs).

Key findings of the evaluation:

  • Overall, livelihoods programs had positive impacts on welfare outcomes for refugees and the host community. By the end of 2018, livelihoods programs had benefited more than 2,050 cooperative members, and had provided loans to 525 people. However, some cooperatives (e.g. livestock) have been more successful than others (e.g. prosopis firewood), related to the degree of market linkages. Many of the cooperatives are at an early stage, and their potential is yet to be realized.
  • Positive impacts to date include: (i) self-reported increases in income and consumption among cooperative members; (ii) improved refugee-host community relations; (iii) contribution to public goods, e.g. public health, access to electricity, and the environment; (iv) creation of gender-sensitive livelihoods opportunities; (v) constructive collaboration with local partners; (vi) expansion of markets for agriculture, livestock, and retail commerce, with some evidence of export beyond the camps; and (vii) overall transition of projects from being reliant on grants towards being income-generating and business oriented.
  • Initial critiques include: (i) ongoing dependency of cooperatives on external inputs; (ii) frequently inadequate market linkages; (iii) challenging power dynamics around cooperative membership and internal decision-making; (iv) inconsistency in performance of cooperatives across camps; and (v) modest income levels, and schedules that limit the number of days that cooperative members can work.
  • Agriculture: There is significant scope for expanding agriculture in Dollo Ado, due to the presence of the Ganale River and strong household interest in agricultural livelihoods. Agricultural initiatives faced initial challenges due to IPs’ lack of relevant technical expertise, barriers to land access, and human resource challenges within UNHCR. Once these were addressed, rapid progress was made to construct 29 km of irrigation canals (irrigating 1,000 hectares of land) and establish nine cooperatives (1,000 refugees and 1,000 host members). Cooperatives targeted vulnerable refugees with agricultural backgrounds, but there is some evidence that advantageous social networks may have facilitated access to membership. Cooperatives led to improvements of members’ income, consumption, and other welfare indicators. However, cooperative members have had less lucrative options for crop varieties compared to farmers who are not cooperative members, suggesting weaknesses in market integration. There continues to be high levels of dependence on external inputs. There is some evidence that host community members may have greater decision-making influence within cooperatives.
  • Livestock: Livelihood opportunities for 500 refugees and host community members were created across the full value chain including livestock trading (wholesale), meat selling (retail) and milk selling (complementary retail) cooperatives, as well as community-based animal health workers (CAHWs) and slaughterhouses business groups. Additionally, shaded meat selling spaces and slaughterhouses were constructed in each of the five camps. Total revenue and profit across the entire value chain amounted to $260,000 and $31,000 respectively. Cooperatives have already developed effective market connections, mainly across the camps but also as far afield as Dollo Ado town and Mandera, Kenya. There is suggestive evidence that cooperatives have improved refugee-host relations. Overall, livestock cooperatives have been successful and are well placed to become self-sustaining. The most significant outcomes include: (i) incomes generated and associated improvements in quality of life for beneficiaries; (ii) creation of gender-sensitive livelihoods opportunities (e.g. milk selling cooperatives for women); (iii) improvements in public health due to slaughterhouses and CAHWs; (iv) more diversified food baskets; and (v) increased vibrancy of local, regional, and international livestock markets. The reasons for the relative success of livestock initiatives include: effective implementation by the IP; cultural familiarity of refugees and the host community with livestock-related practices; and market linkages, either pre-existing or created through the value chain approach of the program.
  • Energy: Cooperatives were established in each of the five camps, with 12 to 21 refugee and host community members in each group. Members were selected based on their vocational background and received training in basic electrical engineering and business practices. The functionality and profitability of the cooperatives varies significantly—those that profited from the installation of private, commercial mini-grids were the most successful. Overall benefits include: (i) creation of a community-based mechanism to support the maintenance of electricity provision as a public good; (ii) expanded access to electricity among refugee and host communities; and (iii) spillover benefit of an increase in solar home systems installed by independent individuals who are not cooperative members. However, energy cooperatives are yet to create sustainable revenue sources and are almost entirely dependent upon external inputs.
  • Prosopis firewood cooperatives aim to create alternative livelihood opportunities for firewood collectors (45 to 60 members in each of the camps) by turning wood from the invasive Prosopis juliflora tree into charcoal briquettes. The main benefit has been in terms of protection; female members feel much safer working within the cooperatives. However, income from cooperatives has been low and declining. Future performance will depend on the development of a customer base; the desirability of prosopis-based energy solutions has not yet been proven. While highly innovative in connecting protection, gender, environment, and livelihoods, the model is among the least commercially viable. It is almost entirely dependent on external support and inputs, with weak market linkages.
  • Microfinance: In 2017-18, the scheme received over 1,500 applications from which 525 loan recipients were selected (194 refugees and 331 hosts). Most loans supported the establishment of retail shops (217) or livestock-related activities (70). The initiative is generally working effectively and recipients have been able to develop profitable businesses. It is not yet clear what proportion of borrowers will default on loans.
  • Several factors have been crucial for enabling or inhibiting program efforts. These include: (1) the mindset and approach taken by the IKEA Foundation, e.g. inclusive of host communities and focused on sustainability, but which may overlook the importance of non-economic human development indicators and which lacked attention to data collection; (2) enabling funding structures, i.e. multi-year, multi-partner, project-based funds rather than annual project cycles; (3) appointment of ‘good-fit’ technical staff in UNHCR Dollo Ado Sub-Office; (4) collaboration with appropriate development-oriented IPs; and (5) securing the support of relevant government actors.
  • One of the biggest gaps has been the absence of a clear conceptual framework for how to build a sustainable economy in a remote refugee-hosting area. The authors identify five critical elements for building sustainable economies in remote regions: (1) politics and willingness (national, regional, local and traditional); (2) physical capital and public goods (electricity, roads, water); (3) adapting interventions to socio-cultural context (e.g. nomadic pastoralism, cross-border economic strategies); (4) comparative advantages of people and place; and (5) securing external investments (business, philanthropy and assistance).
  • The IKEA Foundation’s investment has helped to build trust between the international community and local authorities. The Administration for Refugee and Returnee Affairs (ARRA)’s experience of working with the IKEA Foundation contributed to the trajectory of refugee policy and practice in Ethiopia, giving ARRA and the Office of the Prime Minister confidence that Ethiopia could benefit from the economic inclusion of refugees. At the global level, IKEA Foundation’s role in Dollo Ado has demonstrated the potential contribution of the private sector/philanthropy in the international refugee system, especially within refugee-hosting low- and middle-income countries.
  • The authors identify five implications of the Dollo Ado experience for Ethiopia: (1) UNHCR and ARRA need to expand the Foundation’s investments in Dollo Ado in relation to agriculture, livestock, and retail commerce; (2) UNHCR, the IKEA Foundation, and government need to develop a clear strategic plan to build a sustainable economy for the Dollo Ado region; (3) all livelihood-oriented projects should have sustainability plans; (4) greater consideration should be given to the wider social function played by cooperatives beyond serving a livelihoods or income-generating role (e.g. protection, the provision of public goods, provision of training, and building esteem among members); and (5) a series of discussions should be conceived to identify ways in which the insights from Dollo Ado can inform Ethiopia’s refugee regime.
  • The authors also highlight several global implications, including: (1) the need for a clear conceptual framework for how to build refugee economies in remote border regions; (2) the IKEA Foundation and UNHCR should systematically identify situations in which insights from Dollo Ado can be applied, adapted, replicated, and scaled, based on a clear understanding of the conditions required for effective replication; (3) innovative approaches piloted successfully in Dollo Ado (e.g. cooperatives model; irrigation canals to support agricultural livelihoods; a microfinance initiative based on a rotating credit scheme; a whole-of-value-chain approach in the livestock sector; and systematic inclusion of the host community) could be adapted and built upon elsewhere—lessons should be shared widely; (4) future programming by UNHCR and the IKEA Foundation should be evidence-based or evidence-generating; (5) UNHCR requires a new approach to private sector partnership that is adaptable, can function in field-based contexts, and provides greater flexibility in terms of personnel, procurement, and IPs; and (6) insights from the evaluation have implications for traditional donor practices, in Dollo Ado and more generally (e.g. towards community engagement and a culture of greater tolerance of failure as a means to encourage iterative learning and innovation).


In conclusion, the authors note persistent constraints on productive economic life in Dollo Ado. Most refugees remain poor and dependent upon food aid. Only 21 percent of refugees and 29 percent of the host community have an income-generating activity, and the largest source of employment for both communities is with humanitarian organizations. Fewer than 10 percent of refugee households derive their primary income source from the three main areas on which the international community has focused its livelihoods development strategy: agriculture, livestock, and commerce.