Refugee Economies in Addis Ababa – Towards Sustainable Opportunities for Urban Communities

Alexander Betts, Leon Fryszer, Naohiko Omata, Olivier Sterck

Refugee Studies Centre, ODID, University of Oxford, July 2019


There are 22,000 registered refugees in Addis Ababa, Ethiopia, including: 17,000 Eritrean refugees under the Out-of-Camp Policy (OCP) based on their capacity to be self-reliant; and 5,000 Somali refugees mostly under the Urban Assistance Programme (UAP) because of specific vulnerabilities that cannot be met in camps. UAP refugees receive financial assistance but OCP refugees do not. This report examines the economic lives of refugees in Addis Ababa, their interactions with the host community, and prospects for a sustainable urban response. The analysis draws on qualitative research and a survey of 2,441 refugees and members of the proximate host community, prior to the implementation of the 2019 Refugee Proclamation.

Key findings:

  • Refugees face extreme precariousness, partly due to restrictions on the right to work, which leaves them dependent on the informal sector and vulnerable to exploitation. Prior to the 2019 Refugee Proclamation, refugees were not permitted to work or register businesses. 79 percent of Eritrean refugees and 93 percent of Somali refugees were unemployed (compared to 43 percent of the proximate host community). Among those who work, average income levels are significantly lower than that of the proximate host community. Refugees have much poorer welfare outcomes than hosts, for example in terms of mental and physical health, and child school enrollment.
  • Of the tiny minority who work, 86 percent of Eritreans are employees and 14 percent are self-employed, while 57 percent of Somalis are employees and 43 percent are self-employed. Where refugee businesses do exist, they are usually unregistered, do not pay tax, were created without significant start-up capital, and rarely employ staff.
  • Refugees rely on three sets of social networks: with hosts, among refugees, and transnational networks. Hosts are generally sympathetic to refugees and some self-identify as having the same ethnic background as refugees. Ethiopians often register businesses on behalf of refugees in return for a share of profits. Ethiopians also act as citizen ‘guarantors’, vouching for the ability of refugees to support themselves, a condition for OCP status. Other refugees provide forms of mutual self-help, and those with limited means often pool resources, including by living together. In the absence of work, many refugees are dependent upon remittances. While these connections probably do not significantly raise overall welfare outcomes, they provide a crucial social safety net.
  • Refugee communities feel a sense of boredom, idleness, and hopelessness. They regard the lack of economic opportunity as having a detrimental effect on their physical and mental health. Over 90 percent of refugees aspire to migrate to Europe, North America, or Australia, although only 60 percent believe this is realistic, and an overwhelming majority would prefer to take legal rather than illegal migration routes.

The authors argue that creating sustainable socio-economic opportunities for refugees will be crucial to improving welfare outcomes and offering alternatives to onward migration. They recommend the following:

  • Provide opportunities as well as rights. This requires investments by international donors and the private sector in job creation for refugees and host communities.
  • Build on existing networks and social capital. Communities’ current socio-economic situation and livelihood strategies should be the starting point for designing urban interventions.
  • Create an area-based urban program. The refugee population in Addis is likely to grow due to general urbanization trends, government’s commitment to expand OCP numbers, and the 2019 Refugee Proclamation’s expansion of socio-economic freedoms. Urban programs should include both refugees and the host community, working with municipal authorities to focus on areas, such as Bole Mikael and Gofa, with large refugee communities.
  • Invest in urban job creation. Interventions to support job creation might include: provision of start-up finance for small enterprises; governance and anti-corruption measures to lower investment risk; vocational training to increase the competitiveness of refugee and host community labor; infrastructure improvements to catalyze investment and economic activity; and integrated training, grants, and mentorship schemes. The Bank’s Economic Opportunities Programme (EOP), which aims to support refugees and host communities in Ethiopia, and similar programs could be extended from the camp setting to the urban environment.
  • Strengthening socio-economic opportunities outside of Addis. This could be supported by: focusing the CRRF on employment creation in the refugee-hosting border regions (Dollo Ado, Shire, Gambella, Jijiga); integrating refugees into the development strategies of secondary cities in other regions; and strengthening the industrial zones model envisaged by the Ethiopia ‘Jobs Compact’.
  • Consider alternative migration pathways. Expanding opportunities for resettlement and alternative migration pathways could complement a primary focus on solutions within Ethiopia.