Nigel Wilson reports on the phenomenon of trade and finance among refugee camps and the entrepreneurial spirit of the world’s displaced.
In the Zaatari refugee camp in Jordan’s northern desert, thousands of Syrians stroll up and down the Champs Elysée each day. The bustling market street, whose ironic moniker was bestowed by the camp’s early residents, was the first commercial centre in Zaatari.
The Elysée has hosted a diverse range of businesses since the camp opened in 2012. Hairdressers, coffee shops, pizza restaurants and even wedding dress rental businesses line the dusty street. Caravans, donated by various governments to provide shelter for refugees, have been modified and turned into retail spaces. Men stand by the side of the road, hawking Syrian cigarettes or calling out the latest exchange rate for Syrian pounds.
The population of Zaatari has fluctuated over the years, along with the rhythms of the Syrian civil war. When this reporter last visited the camp, during a bloody period in Syria in 2013, Zaatari was estimated to house more than 100,000 refugees. Nowadays it is home to around 80,000 displaced Syrians, according to the most recent figures from UNHCR, the United Nations’ refugee agency.
If Zaatari were classified as a city, it would be Jordan’s fourth-largest by population size. Its economy has developed accordingly, as refugees respond to the needs they see around them in the camp. “Markets develop relatively naturally in refugee camps. Often within the first weeks or even the first days of people arriving, some people think about entrepreneurial options,” says Marlen de la Chaux, PhD researcher at Cambridge University’s Judge Business School, who has co-authored a report on entrepreneurship and innovation in refugee camps. In the case of Syrian refugees in Zaatari, a number of factors contributed to the early development of trade at the camp. The majority of the refugees hailed from Daraa, a province in southern Syria, renowned for its merchants and trading culture, as well as its entrepreneurial spirit.
Many of the displaced who arrived through Zaatari’s gates came from middle income families. “If we look at the Syrian refugee crisis, people did bring savings with them,” de la Chaux tells GTR. “Syrian refugees are usually middle-class, they would have lived in houses, had a car, are very well educated and then were displaced. You also have a significant skill level and a very entrepreneurial culture.”
As the weeks turned to months and the population of the camp continued to grow, trade at the camp expanded. Refugees with the means would leave the camp and venture into Jordanian towns and cities to purchase goods that they could either sell on or use to start businesses in Zaatari. Others began to trade the products provided by aid agencies. By 2013, it was not uncommon to see UNHCR-branded tents being used by Jordanian Bedouins in surrounding villages.
“In a lot of cases refugees are really, really innovative and really good at transforming goods and services that are provided in the camp into actual business opportunities,” says de la Chaux. “For example, one interviewee told me that an organisation was handing out one size fits all raincoats for children. So immediately there were individuals who started altering the coats to fit different age groups, and made a business opportunity out of that. So people are often very good at taking what’s provided and figuring out how they can turn that into a business opportunity.”
It’s not easy
While the refugees at Zaatari have established and developed an economy in the Jordanian desert, it is worth noting the special restrictions that shape their ability to trade. Their status as refugees does not permit them to work in Jordan and once the sheer numbers of arriving refugees began to cause alarm in Amman, freedom of movement outside the camp was curtailed by the Jordanian government. In order to leave, a Syrian refugee must be sponsored by a local resident.
The geographic conditions of the camp also have an impact on the nature of the economy that has developed. Located in an arid stretch of desert, close to Jordan’s border with Syria, Zaatari’s climate is much too harsh for producing agricultural fare.
Indeed, the climate at a camp can radically shape the types of economy and trade that can flourish. In the Rwamwanja refugee settlement in Uganda, Congolese refugees were allocated plots of land and encouraged to develop crops by the Ugandan government. After a period of farming for themselves, some of the refugees began to grow for commercial purposes, according to Naohiko Omata, a senior researcher at the Refugee Studies Centre at the University of Oxford.
“Initially they received the land from the Ugandan government and they started with subsistence farming,” Omata tells GTR. “Later, their agricultural and farming skills improved and they gradually expanded the agricultural work into a commercial one. Ugandan crop traders would come to the camp and
buy from refugees.”
The example shows the way that the economies in refugee camps are linked to those of the local community. The crops grown by refugees to sell on were different to those already available at markets in nearby towns, meaning they were not competing with other local producers outside the camp. “Even though we say it’s a camp economy, it’s not a completely isolated economy. It’s interlinked with the surrounding area,” Omata explains.
This kind of trade requires a degree of goodwill among the local community and the host government, which is not always present. Restrictions on freedom of movement and the goods that can enter and leave a refugee camp are common, which in turn restrict trade flow. These kinds of restrictions can cause inefficiencies in the system such as corruption, or they can lead camp residents to find innovative responses. “There’s also a lot of smuggling going on. Usually entry and exit is regulated, so you can’t just bring goods and money into the camp. In theory that’s how it works. But in reality there’s a lot of smuggling, people digging tunnels to enter and exit unnoticed, so there are a lot of things that undermine that,” says Omata.
Cut off from the system
Within a refugee camp setting, trade and economic activity are restricted by refugees’ limited range of options to raise finance. Their status as refugees means that the displaced are not able to raise finance through official financial institutions in host countries. Usually, they are not able to open bank accounts in the host country.
However, informal financial networks have emerged within refugee camps along the lines of lending groups that also appear in informal economies outside of a camp setting. Citing the example of Somali refugees, Omata tells GTR that there are other systems that refugees can use to raise finance for trade. “If you look at the case of Somali refugees in Uganda, they have very strong Somali financial networks, based on the clan. They have a very independent system to get money. But this is a very Somali-specific system,” he says.
Somali refugees often gain access to finance in camps via the hawala financial system. An Arabic word which translates roughly as “transfer”, hawala is used to send sums of money across international borders without using a bank or money transfer service. The system has been around since the Middle Ages, having originated in South Asia, but is widely used across much of the Muslim world.
If someone places a deposit with a broker in one country, another broker will deliver an agreed sum to the recipient in the camp. The system is trust-based, with brokers relying on their reputation for business and customers using their existing community networks.
“The word, especially in trading communities, is everything,” says Faisal Khan, an independent money transfer expert and consultant. “It’s a matter of trust. And needless to say, you get a better rate. Because money doesn’t have to move, there are no intermediary banks involved, there are no transfer networks involved. Hence the transfer is more economical.”
What’s more, the brokers, or hawaladars, can act quickly and informally. “It’s an instant transfer. You can go to a shop in Delhi and say you want to transfer money to Milan. You won’t be able to finish your courtesy cup of tea and the money will be in Milan,” Khan tells GTR. Hawala fees rarely exceed 5% on transfers and the system has been a popular method for transferring remittances into refugee camps, often from family or friends working in developed, industrialised societies.
“Other refugees are involved in, for example, a rotational financial group,” says Omata. “Members put in small amounts of money, once it becomes a large amount of money they pass it on to another person. It rotates: if one person gets it this month, the next month it’s someone else. It’s not just a refugee case, it happens in many informal economies.”
While these systems can help increase trade in refugee camps and with the local community, they are not always easily available in camps. Savings or remittances from family or friends remain a likelier source of finance for refugees. Indeed, the lack of access to finance for refugees remains a significant barrier to trade and provides a significant challenge for humanitarian relief and development policymakers