Refugees in a tailoring class at Kakuma. FILE PHOTO | NMG
Summary
- When a cash assistance programme was introduced at the Kalobeyei refugee camp in Turkana County, it was hoped that refugees’ dependence on humanitarian aid would be solved.
- This was a departure from when aid agencies would procure and distribute foods and other products through non-monetary assistance.
- The programme was meant to enhance autonomy, reduce costs and boost local markets through food vouchers, mobile money and cash.
When a cash assistance programme was introduced at the Kalobeyei refugee camp in Turkana County, it was hoped that refugees’ dependence on humanitarian aid would be solved.
This was a departure from when aid agencies would procure and distribute foods and other products through non-monetary assistance.
The programme was meant to enhance autonomy, reduce costs and boost local markets through food vouchers, mobile money and cash.
But since its introduction in 2016, the system has been a source of debt to immigrants.
To determine this, the University of Oxford, Refugee Study Centre and the World Food Programme (WFP) conducted a joint research at the camp site.
The study found that cash-based assistance contributed to 89 percent debt at the settlement.
“Average debt levels among South Sudanese households are high–Sh15,313 ($414)–which is more than two months’ worth of distribution for a household of five people,” the Cash Transfer Models and Debt study shows.
“This is because the material technology required for receipt of cash assistance–SIM cards for Bamba Chakula and ATM cards for the Equity programme–provides a physical object that can be retained by shopkeepers as collateral.”
Indebtedness initially arose as a form of social support from credit-granting shopkeepers willing to assist customers in need, the study indicates.
Food insecurity, limited economic opportunities, physical or mental health problems as well as socio-economic shocks were some of the factors.
Food assistance to refugees was delivered through restricted cash transfers under the Bamba Chakula (which means ‘get your food’ in Swahili) programme, a form of mobile money transfer.
It restricts recipient spending on food items (excluding alcohol and tobacco) purchased from specific shops. Each household receives a monthly Sh1,400 (per person) through their Safaricom lines.
In June 2019, nonetheless, Bamba Chakula transfers were replaced with unrestricted cash transfers (Equity cash programme).
collateralising cash transfers
“However, because of indebtedness, many of the intended benefits of Bamba Chakula and of the later switch to unrestricted cash are yet to be realised,” the study shows.
As a result, 97 percent of indebted households handed over their Bamba Chakula SIM cards or ATM cards to creditors, the study shows.
“Shop owners can then make withdrawals on their customers’ behalf, without negotiating prices. But, the possibility to access food on credit by collateralising future cash transfers explains why most people in Kalobeyei prefer cash-based assistance to in-kind food aid, regardless of whether they are receiving restricted or unrestricted cash,” it adds.
For this reason, five percent of the households would prefer to receive food rations like residents of Kakuma.
The camp sits a few kilometres from the Kakuma refugee camp.
Its establishment was guided by the Kalobeyei Integrated Socio-Economic Development Programme whose aim was to strengthen local capacities, improve legal frameworks and policies, avail conducive environment for investment and promote job creation.
The encampment was hosting about 36,000 refugees from South Sudan (74 percent), Ethiopia (13 percent), and Burundi (seven percent) as at October last year.
Taking food on credit at the camp has become commonplace for a majority of households.
In 2018, a similar study showed that South Sudanese households were significantly more likely to use their Bamba Chakula SIM card as collateral in Kalobeyei (82 percent) compared to Kakuma (46 percent), where only about 21 percent of food assistance for households of two or more people was provided as cash.
“In fact, some refugees explained that shopkeepers collected the ATM cards of their indebted clients immediately after they were distributed,” the 2018 data reads.
The report also shows that households with an employed adult are eight percentage points less likely to be indebted than households where all adults are unemployed.
"If support from family and friends is unavailable, people facing economic hardship may request credit from a familiar shop owner,” it adds.
Coping strategy
Many refugees explained that the provision of credit was necessary for their survival and reflected an understanding of their predicament on the part of shopkeepers.
Shopkeepers too argued that they cannot deny credit to their customers, who– in the case of refugee shopkeepers–are also their neighbours.
"So long as the shopkeeper knows where the customer lives, there is a sense of assurance that they will not evade returning their debts," it adds.
For many refugees, however, indebtedness is a coping strategy against shocks or unanticipated expenses.
Major expenses incurred during weddings, funerals, and medical treatments can trigger periods of hardship that make it difficult for households to afford their basic monthly needs.
Bamba Chakula restrictions on the purchase of non-food items also contribute to precarity and hence indebtedness.
Recurrent delays in the transfer of food and non-food assistance also push people into debt.
Refugees in Kalobeyei expect to receive the cash transfers on the 10th of each month. WFP starts preparing the transfers on the first weekday of each month.
However, because of various processes between WFP and the United Nations Commissioner for Human Rights (UNCHR), it takes seven to 10 working days to process them.
"As a result, disbursements are often made between the 10th and 15th of each month and, because of technical and administrative issues, disbursements after the 15th of each month happen about 30 percent of the time,” it adds.
Moreover, it shows that indebtedness is distorting the markets and reducing competition between shops.
When people are in debt, they cannot shop around and compare prices, which is necessary for market competition. Instead, they remain committed to the shop that has provided their credit.
“To illustrate, the average price of one kilogramme of maize (the main staple) for an indebted household is Sh50, Sh2.45 higher than the average price faced by households who are not indebted,” it adds.
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