Refugee-Host Proximity and Market Creation in Uganda

Marco d’Errico, Rama Dasi Mariani, Rebecca Pietrelli, and Furio Camillo Rosati

Journal of Development Studies, Volume 58, Issue 2 (2022), Pages 213-233  


This paper analyses how proximity to refugees affects the welfare and economic activity of host communities in Uganda. Uganda hosts more than 1.4 million refugees, living across 31 settlements in 13 districts. Despite their freedom of movement, most refugees remain in official settlements to access assistance from national and international agencies.  

The analysis relies on data from a 2017/8 survey carried by the Food and Agriculture Organization of the United Nations (FAO) in Northern and Southwestern Uganda. The sample consists of 3,799 households, including both refugees (2,170 households) and hosts in the proximity of the refugee settlements (1,632 households). The survey captured geo-referenced information on the socio-demographic characteristics of the households, food security, shocks, assistance, perceived resilience capacity, coping strategies and aspirations, access to basic services, employment, and agricultural and livestock production.  

The authors use the distance between host and refugee households as a proxy for the potential economic interaction among them. On average, host households have at least one refugee household at 1.7 kilometers, with a range from immediate proximity to about 11 kilometers. More than 70 percent of host households’ heads never moved from their current residence and about 95 percent did not move within the two years preceding the survey. 

Main results: 

  • Proximity to refugees increased hosts’ consumption of food, while non-food expenditure was not affected. On average, the reduction of the distance to refugee households by about one kilometer led to about a 5 percent increase in food expenditures.  
  • Transfers from government and international agencies do not appear to depend on the proximity between hosts and refugees and, therefore, are not associated with the observed increase in expenditure. 
  • Proximity to refugee households increased a host household’s total labor income, mainly due to an increase in wage income. On average, the reduction of the distance to refugee households by about one kilometer generated an increase in host households’ wage income of about 6 percent.  
  • The observed increase in consumption appears to be due mainly to the increase in wage income. Proximity to refugees did not appear to have affected host households’ self-employment income both in agricultural and non-agricultural activities. Also, the value of sales of crops and livestock products was not affected by the distance between refugee and host households.  
  • The observed increase in household income appears to have been generated by an increase in waged employment coupled with a reduction in casual employment. Host households in proximity of refugees were more likely to work as employees and less likely to be involved in casual work. On average, a reduction of one kilometer in the distance to refugees decreased the probability of casual work by about 1 percent and increased the probability of wage employment by 1 percent. 
  • Wage employment increased mainly in agricultural and non-agricultural private sectors. The effect on public employment was not significant, indicating that the increase in wage employment was not due to demand from camp activities. 
  • Additional wage employment may be generated by small enterprises run by refugee households and proximity increased the probability of being employed in them. Proximity did not affect the probability that hosts ran a non-agricultural enterprise, but it was positively correlated with the probability that refugees had an enterprise.  
  • The effects of market creation were very localized. Effects on food expenditures dissipated beyond six kilometers and effects on wage income dissipated beyond four kilometers. 

Overall, results indicate that one of the channels through which the refugee presence increases hosts’ welfare is the direct interaction between the two communities. This increase is in both the level and the characteristics of the economic activity conducted by the hosts. However, the effects tend to be very localized.