As of May 2021, there were 867,000 Rohingya refugees from Myanmar living in refugee settlements in Cox’s Bazar, Bangladesh (UNHCR, 2021). Only about 50,000 Rohingya refugees from earlier (pre-August 2017) caseloads have been granted refugee status, allowing them to leave the camps for employment or to buy goods and services. The vast majority of Rohingya refugees, however, are not officially recognized as refugees, prohibited from leaving the camps without permission, prohibited from working or owning property, and without access to land for farming. In mid-2018, when data was collected for this paper, the camps did not have fencing around them that would prevent refugees from coming and going.
This paper evaluates economic activities in and around the Rohingya refugee camps in Bangladesh. Specifically, the authors explore the following questions: (1) what types of business activities exist within and around the refugee camps; (2) whether and how Bangladeshis and Rohingya engage in economic interactions inside and outside of the camps; and (3) how different businesses operate and perform.
The analysis is based on data from a survey conducted in April and May 2018 of 326 enterprises in the two upazilas (sub-districts) where the camps are located: Ukhia upazila, which hosts the large Kutupalong refugee settlement, and Teknaf upazila, which hosts the Nayapara refugee settlement. Representative samples of enterprises were interviewed in three zones: inside camp limits; in the immediate camp vicinity; and elsewhere in the upazilas (‘away from camps’).
- The Rohingya settlements are sites of substantial economic activity and feature a number of businesses operating in and around them (even in the more recently established blocks), consistent with previous studies of economic life in refugee camps. Refugees have access to a diverse array of businesses inside the camps, including trade, services, and manufacturing enterprises, among others.
- Both Rohingya and Bangladeshis are engaged in business activities inside the camp. Bangladeshis run 32 percent of the businesses sampled inside the camps.
- Some Rohingya who have official refugee status and are legally allowed to work, run businesses outside of the camp. Rohingya-run businesses account for 10 percent of the sample in the vicinity of the camp, and only 1 percent (a single respondent) away from the camp. All but one of the Rohingya doing business outside the camp limits had arrived prior to the recent migration waves.
- Business owners across the two nationalities had similar age profiles, but they differed in gender, education, and language. Only five of the respondents were women, all of them Rohingya. Bangladeshi owners were on average more educated than Rohingya ones, with a higher proportion having completed primary school (57 percent), while the most common category for Rohingya was ‘no formal schooling’ (39 percent), with a further 27 percent having only partial primary schooling.
- A disproportionately small share of Rohingya business owners (35 percent) had migrated since the start of the recent violence in Myanmar (since August 2017). However, most businesses had been established since that wave (61 percent). This suggests that a number of previously established migrants responded to the influx of new people by starting businesses.
- The vast majority of sampled businesses were traders. Of the 336 sampled businesses, about half were in wholesale and retail trade, 13 percent were in accommodation and food services, 10 percent were in manufacturing, 10 percent were in transport services, and 8 percent were involved in financial and communications activities.
- Within the camps, the types of enterprises being run by Rohingya or Bangladeshis tend to differ. Rohingya are more likely to run wholesale and retail trade businesses, manufacturing businesses, and accommodation and food services. Bangladeshis are more likely to run transportation businesses, possibly because they can more easily afford the higher capital requirement to purchase or rent a vehicle.
- About 8 percent of the Bangladeshis running businesses in or around the camps reported having relocated into the area post-August 2017, which suggests that they were attracted by the business opportunities created by large refugee inflows.
- Business start-up costs varied significantly across locations and differed depending on the nationality of the respondent. Rohingya owners started businesses with an average of US$501 as start-up capital, compared to more than five times that amount for Bangladeshis (US$2,593). The sectors with the highest start-up costs were financial and communications services and transportation services, both of which have low Rohingya participation. Similar proportions of Rohingya and Bangladeshi owners relied on loans to start their business (about half). However, while Bangladeshis sometimes also relied on formal loans from banks or microcredit institutions (16 percent), only a single Rohingya respondent had taken a formal loan.
- Businesses inside the camp operate on a smaller scale than those in the vicinity or away from the camp, in terms of numbers of hired workers, monthly gross sales and monthly profits.
- There is evidence of frequent business-to-business and business-to-customer interactions between business owners, suppliers, workers, and clients from both Rohingya and Bangladeshi communities. Goods and services offered by camp businesses attract the patronage of some residents outside the camp (12 percent of customers of businesses inside the camp came from outside the camps). The camp economy does not offer many of the goods needed as inputs or merchandize; only 9 percent of all sampled enterprises purchased inputs inside of the camp. The vast majority (94 percent) of Rohingya business owners source inputs in secondary markets outside of the camp, highlighting the business-to-business interactions between the two communities. Inside the camp, 76 percent of hired workers are Rohingya, while the remaining 34 percent are Bangladeshi.
- Lending plays an important role in sustaining economic activity—approximately half of transactions are on credit. 46 percent of sampled businesses purchase inputs on credit and 52 percent of sampled businesses accepted payments on credit.
- Rohingya workers are systemically paid less than Bangladeshi workers, regardless of the nationality of the business owner or business type. Further analysis is required to determine whether these differences reflect skill levels, segmented labor markets, discrimination, or other factors.
- Rohingya-run businesses perform poorly compared to Bangladeshi-run businesses. Nationality of the business owner is strongly correlated with business revenue, productivity, and profits, even after controlling for a variety of characteristics including business scale and type.
- Start-up capital, scale, location, and education are key factors explaining the lower performance of Rohingya businesses. About a third of the explained difference between Rohingya and Bangladeshi business performance can be traced back to levels of start-up capital. Scale (number of workers) also explains some of the difference, as do location and education.
The authors note several limitations of their analysis including the small sample size, compromises made in the sampling strategy, and the dynamic nature of the refugee population in Cox’s Bazar. They emphasize that while their study highlights a budding business environment and deep economic interactions between hosts and refugees, it is likely that the overwhelming majority of migrants remains without gainful employment. Additionally, the end of 2019 saw a tightening of the policies regarding Rohingya participation in local economic life, both inside and outside of the camps.