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Refugees can do more than wallow in camps – Business Daily

Refugees queue for food rations at the Dadaab refugee camp in northern Kenya. FILE PHOTO | NMG
A person’s home is their castle, but this is not the case for Africa’s almost eight million refugees. Instead, with many living in camps for decades, a refugee’s home reminds them of their loss and fills them with a sense of impermanence.
While aid agencies provide essential services, food and shelter, refugee camps remain bereft of jobs and opportunities. This creates a cycle of poverty and limits social mobility.
It is estimated that about 76 percent of refugees have been living in exile for more than five years, up 12 percent from a year ago. For many, returning home is a pipe dream.
This situation poses a new challenge to humanitarian actors: how do you turn an unsustainable temporary habitat into a sustainable permanent one when return is no longer an immediate option? Refugee camps are created for acute, short-term crises.
Maintaining them is estimated to cost $15.5 billion annually worldwide. Under a backdrop of shifting priorities and global economic decline, there is no appetite for funding long-term refugee camps into perpetuity.
So what is the solution? In one word: self-reliance. Refugees must graduate from humanitarian aid to carve out a place for themselves. But the journey is long, and gains are hard won.
Contrary to popular opinion, refugee camps are not entirely reliant on aid. Instead, private markets have developed to address the insufficiency of humanitarian aid and the slow realisation of displacement’s long-term nature.
We must find alternatives that present economic opportunities to refugees, sustainably. Private sector-led development helps market systems work for the marginalised – providing quality economic opportunities (in the form of jobs and livelihoods) at scale.
A recent report by the International Finance Corporation (IFC) in 2018 estimated the market size of the Kakuma refugee camp in Kenya and its immediate surroundings at $56 million. The market supported over 2,000 informal retail businesses that contributed to refugees’ needs and local employment.
Kakuma is not unique; refugee camps worldwide are emerging as newly christened urban environments, complete with commercial and economic dynamics that respond to the needs of their populace.
So, with already demonstrable markets, why are camps not already self-reliant?
The answer lies in the high barriers to accessing capital for local businesses. Locally-owned businesses have an intrinsic connection to local communities and socio-cultural contexts, enabling them to bring in the appropriate products and manage risks, but they cannot grow without finance.
Neither can they meet the funding requirements of banks and other lenders. On the other hand, larger businesses from outside the camps lack on-the-ground experience to penetrate successfully and the level of risk is beyond their fiduciary mandate.
So while the private sector has the potential to thrive, camp economies remain constrained. Development actors understanding this are testing new methods to advance self-reliance. A promising approach is the challenge fund model that prioritises market-led solutions to support businesses both in the community and from outside.
A market-led approach to investing in refugee camps pays
A market-based model identifies nascent and hidden markets by incentivising high-potential private sector businesses to enter markets that have played host and became home for refugees.
The performance-based grants AECF provides, through a competition approach and complemented with business advisory services, support an emergent private sector move from aid to more private capital.
One such initiative is the Kakuma Kalobeyei Challenge Fund (KKCF) that is supporting companies in the Kakuma-Kalobeyei refugee area to scale up their operations for the betterment of refugee and host communities.
We must find such alternative approaches that present economic opportunities to refugees, sustainably. Private sector-led development helps market systems work for the marginalised – providing quality economic opportunities (in the form of jobs and livelihoods) at scale.



Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.