Economic Integration between Refugee Settlements and Host Communities

With 1.5 million refugees and a refugee policy that promotes long-term settlement and self-sufficiency, understanding the impact of refugees on host communities in Uganda is a critical issue. Of particular concern – not only in Uganda, but all refugee-hosting countries – is the economic impact of refugees; while refugees attract aid money into the local economy, the mass distribution of in-kind goods can drive local prices and wages down. Moreover, little is known about the role of economic integration between refugees and hosts, especially in situations of protracted displacement. Using a mixed methods approach with panel survey data and semi-structured interviews, we show significant integration between refugees and hosts that is widely perceived as positive. Results indicate that refugees provide goods and services at lower costs to hosts and often of higher quality than found elsewhere. Yet, these interactions, especially through markets, create competition and may lower prices and wages since proximity to refugees is associated with lower host labor participation and earnings from crop production. The net welfare effect for hosts of being close to refugees are found to be ambiguous.