Doing Business in Kakuma: Refugees, Entrepreneurship, and the Food Market

Publication

The report draws upon a business survey with food retailers to assess the impact of the 'Bamba Chakula' model of electronic food transfers and business contracts.

Doing Business in Kakuma: Refugees, Entrepreneurship, and the Food Market

The Kakuma refugee camps have become popularly associated with entrepreneurship. In 2016, the Kalobeyei settlement was opened 3.5 kms away from the Kakuma camps, with the intention of promoting the self-reliance of refugees and the host population, and delivering integrated services to both. Its development is guided by the Kalobeyei Integrated Social and Economic Development Programme (KISEDP), which offers a range of innovative, market-based approaches to refugee protection that diverge from the conventional aid model implemented in Kakuma.

There have been few studies that examine the emergence of refugee-led markets at the business level, whether in the Kakuma camps, in the Kalobeyei settlement, or elsewhere. In order to address this gap, our research aimed to study one particular sector: the food market. This sector is of particular interest because it is such a significant part of economic life in refugee camps, and because it is heavily shaped by the modalities of food assistance provided by the international community. Kakuma is currently undergoing a gradual transition from in-kind food assistance to cash-based assistance, and as an interim step, it has introduced a food provision model called Bamba Chakula.

The Bamba Chakula (‘get your food’ in Swahili) programme is a cash-based intervention designed by World Food Programme (WFP) as an alternative to in-kind food assistance. It represents a transitional arrangement between in-kind and full-cash assistance. It began in 2015. By providing refugees with mobile currency supplied through Safaricom, it allows recipients to choose the food items that suit their preferences, with some restrictions relating to commodities like alcohol and tobacco, while supporting the growth of local markets. The currency is only redeemable from contracted traders, who have been able to apply for a Bamba Chakula (BC) contract during a series of competitive application processes. In Kalobeyei, refugees receive nearly all food assistance through BC, while in Kakuma, about 70% of food assistance is in-kind and the rest is through BC. In this report, we focus particularly on the role that BC has played in shaping the food market.

 Our study is based mainly on a business survey of three groups of food retailers: successful BC applicants, unsuccessful BC applicants, and food retailers who have not applied to be BC traders (with a total of 730 respondents). We find that having a BC contract gives a huge advantage. This is unsurprising given that it gives selected traders exclusive access to the purchasing power provided to refugees through all cash-based assistance. Having a BC contract is correlated with differences in operational competence and better business outcomes. BC shops generally have better outcomes in terms of profits, sales, stock levels, the variety of goods they offer, and the estimated current value of the business and its assets. It is, however, important to highlight that these differences cannot solely be attributed to the BC contract itself, as the groups are inherently different in some aspects such as nationality, gender, family background, education, training and prior (shop) experience. BC traders also invested more start-up capital in their businesses to begin with.

Overall, understanding the BC experience in Kakuma offers insights of wider relevance into how markets emerge and develop in refugee camps and settlements, the process of transition from in-kind to cash-based assistance, and what determines entrepreneurial success in a refugee camp. It also poses challenging questions about the appropriate rolefor humanitarian organisations in regulating markets. We offer a series of practical recommendations relating to the transition to cash assistance, the potential of Bamba Chakula to be replicated elsewhere, and the relationship between self-reliance, entrepreneurship, and food assistance.