Where to invest in Sh5.8b Kakuma camp economy

Kakuma refugee camp

In a remote area of northwest Kenya lies a sprawling mass of tents and shelters made of mud brick and cement blocks. It is Kakuma camp, one of the largest and longest-standing refugee camps in the world - but also where businesses thrive.

For 26 years, the camp has provided refuge to many of the 20 million displaced people in sub-Saharan Africa. But this is just one side of the story.

According to a study by International Finance Corporation (IFC), there are buzzing street shops, Internet cafés, restaurants and beauty salons pointing to potential of the private sector in excess of $56.2 million (Sh5.8 billion) per year.

And this could be conservative if in-kind aid or services were shifted to unconditional cash transfers, leading to increased demand for goods and services.

“The study indicates there is demand for access to finance and a willingness to pay for improved energy, housing and sanitation services,” says IFC.

“There are many income and business prospects for both local residents and refugees, as well as social enterprises and commercial firms.”

With 160,000 registered inhabitants at the time of the survey, IFC puts their spending within the camp at $16.5 million (Sh1.7 billion). The town population of about 60,000 spends about $39.7 million (Sh4.1 billion).

The study shows that within the camp, more businesses can be set up, leveraging on the consumption patterns.

“The camp’s informal economy is thriving, with more than 2,000 businesses, including 14 wholesalers,” says IFC in the study that says there are 10 major markets in the camp.

Growth potential

Kakuma camp and town present a market with the potential for growth. The study indicates there is demand for access to finance and a willingness to pay for improved energy, housing and sanitation services.

“There are many income and business prospects for both local residents and refugees, as well as social enterprises and commercial firms,” notes IFC.

And the political environment is favourable in that the Turkana County Government sees the refugees as an asset that welcomes private sector investments in the Kakuma area, according to the World Bank institution.

Residents spend most of their money on consumer goods (46 per cent), and the camp makes up 29 per cent of total consumption of Sh1.7 billion.

The study values the consumer goods market at Sh2.7 billion ($26.2 million), with rice and pasta, maize flour and milk powder making up the three largest components (each worth more than Sh300 million).

Fruit and vegetables sold in Kakuma are procured in Kitale, more than 400 kilometres away, and mostly produced in the western regions of Kenya. According to IFC, there is potential to make more money in this.

“There is a lack of supply of fresh fruit and vegetables from September to January, with prices being higher from September through December and lower from January to February,” says IFC.

The demand for meat is also high – 92 per cent of those surveyed had purchased meat in the four weeks preceding the interviews, with 29 per cent of respondents spending more than Sh1,000 in two months.

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