This paper analyzes the economic life of Congolese refugees within three camps in Rwanda and their interactions with surrounding local economies. The three camps were selected to represent distinct economic environments: Gihembe is situated near a major town and characterized by relatively urban, non-farm wage employment; Nyabiheke is in a predominantly agricultural area; and Kigeme falls between the two. The camps also differ in their aid delivery mechanisms, with Gihembe and Nyabiheke receiving cash transfers via mobile phones and Kigeme receiving in-kind food aid.
The study draws on original survey data collected in 2015 in collaboration with the United Nations World Food Programme (WFP). Surveys covered refugee households, host-country households, and businesses both inside the camps and within a 10-kilometer radius of each camp, capturing the primary markets where refugees transact, given poor transportation infrastructure. Random samples of 155–224 refugee households per camp were drawn from WFP registration lists, and random samples of 162–243 host-country households were drawn from household lists provided by district authorities. Household business samples were augmented with between 15–23 refugee businesses per camp and 63–100 host-country businesses per location.
The paper combines descriptive analysis of demographics and income sources with econometric measurement of welfare differences between camps receiving cash-based aid and those receiving in-kind food assistance. They use the Alkire and Foster (2011) method to estimate a multi-dimensional poverty index based on the weighted deprivations that households face.
Main findings:
- Refugees engage in wage employment, operate small businesses, and receive remittances, such that total household income exceeds aid transfers for most households. WFP aid represents 76–78% of refugee households’ total income at the three camps. Wages add another 14–16%; non-farm business profits, 2–4%; and remittances, 5–6%. Average monthly wage income for refugees ranges from 20,466 RWF in Kigeme, 24,386 RWF in Nyabiheke, and 24,830 RWF in Gihembe.
- Participation in wage labor markets is lower for refugees than host-country households, but it is significant nonetheless, with the type of work strongly reflecting the host-country economy. Wage labor participation among refugees ranges from 34 percent in Gihembe to 47 percent in Nyabiheke. In Nyabiheke, nearly one-third of refugee wage workers hold agricultural jobs, whereas in Gihembe and Kigeme, over 80 percent of wage workers hold non-farm jobs. In all three camps, the share of male wage earners (23-41 percent) exceeds the share of females (7-17 percent).
- Between 8 and 17 percent of refugee households operate a non-farm business inside the camps, though refugee businesses are smaller and less profitable than host-country businesses. Monthly profits for refugee businesses average approximately 18,014 RWF in Gihembe and 22,242 RWF in Nyabiheke, compared to approximately 10,813 RWF in the in-kind camp of Kigeme. Rwandan nationals are restricted from entering the camps while refugees are free to leave, creating an asymmetric market separation that shapes how camp businesses develop.
- Goods sold inside the camps are priced above host-country market prices, reflecting the transaction costs refugees face when accessing outside markets. Because Rwandan nationals are restricted from entering the camps, refugee-run businesses face limited direct competition, allowing camp prices to exceed host-country prices by up to the cost of travel and time required to transact outside. This “price band” is consistent with the asymmetric access rules governing camp-host interactions.
- Monetary poverty headcount rates are higher inside the camps than in surrounding host communities, but the poverty gap is narrower within camps due to the income provided by WFP assistance. Headcount poverty rates range from 0.725 to 0.755 inside the camps, compared to 0.531 to 0.605 in surrounding host communities. WFP assistance reduces the depth of poverty in the camps.
- In the in-kind camp (Kigeme), approximately 80 percent of refugee households sell part of their food rations to obtain cash for other necessities, but do so at a significant loss. Sales of in-kind aid are highest in refugee households without other sources of income. On average, refugees at Kigeme receive only about 64 percent of the retail market value of their food allotments when selling them, with maize fetching just 57.1 percent of its retail price. This exchange economy imposes a substantial welfare cost on recipients of in-kind aid.
- In cash camps, refugees consume a more diverse diet and make a greater share of their food purchases from host-country vendors. Refugees in cash camps consume a wider variety of food items including fresh vegetables, rice and bananas, in addition to the standard food basket, while diets in the in-kind camp are largely limited to the provided maize, beans, oil, and salt. Nearly two-thirds of refugee food purchases in Gihembe camp are made from host-country vendors within the 10-kilometer radius.
- The multidimensional poverty index (MPI) is highest in the in-kind camp and lowest in the urban cash camp, where refugees are less deprived than the surrounding host population. Kigeme has an adjusted MPI headcount of 0.465, compared to 0.270 in its surrounding host community. Nyabiheke’s MPI of 0.342 compares to a host MPI of 0.270, while Gihembe’s MPI of 0.220 falls below that of its host community (0.249).
- Refugees in cash camps report higher food security and subjective wellbeing than those in the in-kind camp, and consumption is more stable over the course of the month. In the in-kind camp, food security drops from approximately 50 percent immediately after an aid delivery to below 10 percent by month’s end. In cash camps, food security and reported happiness are higher overall and remain relatively stable throughout the month, indicating greater ability to smooth consumption.
The authors conclude that refugee camps are settings in which economies emerge spontaneously and are shaped by refugees’ human capital and the economic structure of the surrounding host country, including the availability of agricultural versus non-farm wage employment and the rules governing movement and exchange. Interactions with host-country economies result in a divergence of household income from refugee assistance. They also find that the transition from in-kind to cash-based assistance is associated with higher welfare for refugees, including greater dietary diversity, more stable consumption, and lower multidimensional poverty, while also strengthening market linkages with host-country vendors.