This paper estimates the causal effect of a refugee presence in Uganda on the material welfare of the host population between 2009 and 2012. Uganda’s refugee policies are among the most progressive in the world; refugees are accommodated in settlements, given plots of land and seeds to engage in farming, can access health and education, and have the right to work and move freely. Uganda’s approach has also involved providing support to refugee-hosting communities.
Most refugees who fled to Uganda between the years 2000 and 2016 were from Sudan, South Sudan, and the Democratic Republic of the Congo (DRC). During this time, refugees were distributed across 14 districts, with the largest numbers hosted in Adjumani (28 percent), Arua (13 percent), Kampala (13 percent) and Isingiro (13 percent).
The authors exploit the spatial and time variation in the presence of refugees and related changes in household welfare, proxied by the consumption aggregate adjusted for household demographic composition. To address endogeneity concerns—the possibility that the number of refugees in an area might be influenced by the attractiveness of the area—the authors employ an instrumental variable empirical approach.
The analysis is based on: (a) geo-referenced data on the number of refugees received per year from 2000 to 2016 in settlements in 14 districts from UNHCR (excluding self-settled refugees and refugees in Kampala); and (b) household data from the Living-Standards Measurement Study – Integrated Studies on Agriculture (LSMS-ISA) from 2009 to 2012 from the World Bank.
Main results:
- Refugees have a positive effect on the welfare of households living close to refugee settlements. Doubling the presence of refugees increases the consumption aggregate per adult equivalent by about 7 percent for host households within 50 km of a refugee settlement.
- Host households reliant on subsistence farming benefit from being near a refugee settlement. Households within 50 km of a refugee settlement and whose initial main source of income is subsistence farming experienced an increase in welfare of around 8 percent. There were no significant effects on welfare for households initially involved in commercial farming, wage employment, and non-agricultural employment.
- Education of the household head and land ownership do not seem to matter for refugee presence’s effects on household welfare.
- Host households that engage in commercial farming benefit most from the presence of refugees. The few host households who rely on commercial farming (less than 1 percent) seem to benefit more from the influx of refugees, and households that change from their initial main source of income to commercial farming also benefit more. Moreover, the market advantages may be more apparent for those farmers who engage in commercial vegetable production.
The authors conclude that refugees lead to significant welfare benefits for households living close to refugee settlements, particularly rural households engaging in subsistence agriculture. They also note that welfare improvements in refugee-hosting districts are associated with a switch to commercial agriculture or wage employment. The authors suggest that the channel through which households benefit from a refugee presence is agricultural production, and especially vegetable production, for households that switch to commercial farming.