Kenya could lose up to Sh10 billion in annual foreign currency inflows if the Dadaab refugee camp is closed down in the next three months as directed by the Uhuru Kenyatta government.
Dadaab, which is home to nearly half a million people, has over the 20 years of its existence grown into a well-oiled business hub that takes in large amounts of foreign aid from more than 30 agencies and governments, including the United Nations as well as the United States, Germany and United Kingdom.
The large number of refugees living in the five separate camps that make Dadaab has also created a dynamic economic hub with billions of shillings worth of security, transport, retail, education and engineering services.
The camp has also created more than 10,000 jobs, held mostly by Kenyans.
Concern has been rising that Deputy President William Ruto’s directive that the camp be closed in three months will not only put Kenya at odds with international law but also exact direct economic costs, including the destruction of thousands livelihoods.
“Dadaab is not an ordinary refugee camp but a big business centre that supports varied needs of the thousands of people who live there as refugees, workers or natives,” the Department of Refugee Affairs (DAF) said, adding that Dadaab’s economy is worth billions of shillings.
Kenya reckons that the camp has become a home for the Somalia terrorist group Al-Shabaab’s sleeper cells and, therefore, a big security threat that must be immediately removed.
Top aid agencies operating in Dadaab include the United Nations High Commission for Refugees (UNHCR), the World Food Programme (WFP), the United States Agency for International Development (USAid) and the International Organisation for Migration (IOM).
Others are the Kenya Red Cross, the Norwegian Refugee Council, the International Rescue Committee, Oxfam, Islamic Relief Worldwide and the Catholic Relief Services.
The WFP, which is a UN agency, operates a monthly budget of about Sh1 billion to buy, ship in and distribute more than 10,000 metric tonnes of food to the refugees.
The US government, which is WFP’s main financier, last year spent Sh10 billion on refugee operations in Kenya besides the huge amounts that came from Australia and Denmark in aid, according to DAF.
The UNHCR spends an estimated Sh4 billion on the Dadaab refugee camp every year, highlighting the large amounts of money that will cease flowing into Kenya once the camp is closed.
The UNHCR also supports Kakuma refugee camp situated near the Kenya South Sudan border and which, like Dadaab, is overpopulated with refugees from South Sudan, Burundi, Ethiopia and Congo.
Treasury secretary Henry Rotich has in the past sought to downplay the possible economic costs of closing Dadaab and Kakuma camps terming it “very negligible.”
“There will be no major impact on our foreign exchange accumulation because, unlike in the 1990s and early 2000s, the NGOs and multilateral refugee operations are no longer a major source of our foreign exchange,” he said.
Closing down the camp would, however, mean money that the Geneva-based commission planned to spend there this year will be redirected towards repatriating the refugees.
Aid organisations at Dadaab buy most of their supplies locally, providing a ready market for thousands of producers who help tap the donor billions into the Kenyan economy.
The UNHCR, for instance, buys most of its non-food products from Nairobi and Mombasa, and only turning to international suppliers if the goods are not available locally.
More than 50 trucks enter Dadaab every week, carrying supplies from Nairobi and the port of Mombasa, earning the truck owners millions of shillings besides providing employment to hundreds of people.
A UNHCR-commissioned study in 2013 found that business owners in and around the camp mainly do business with the thousands of resident aid workers.
“Although their customers are not refugees, they attract people who travel to Dadaab – whether for business or relief work,” the report says.
The UNHCR report gives the example of Hanshi Palace, a business that is located opposite the Dadaab refugee camp’s main office, which earns millions of shillings every year leasing out Toyota Land Cruisers to a number of NGOs besides winning numerous construction tenders.
Dadaab refugees buy food, cosmetics and other consumables such as miraa from Somalia, where it is sourced illegally and tax-free, making them cheaper and more affordable.
Closing Dadaab is also expected to hit nearby towns such as Garissa hard. It is estimated that Garissa derives a third of its income from Dadaab, highlighting the possible ripple effects of moving the camp to Somalia.
Mr Ruto, however, insisted that the government was ready to pay any cost to secure the country.
“We must secure our country at whatever cost, even at the risk of losing business with Somalia,” he said.
Abdullah Mohamed, a resident of Garissa who works with one of the aid agencies in Dadaab, said closing the camp would severely affect the livelihoods of thousands of people employed there.
Provision of social services such as education and health in the semi-arid North Eastern part of Kenya is also expected to suffer a huge setback with the closure of the camp, which has seven secondary schools and 20 primary schools.
Cab hire services also make a huge segment of the Dadaab economy, supporting more than 100 households in the region. Hiring a taxi for movement between the five camps costs between Sh1,000 and Sh3,500.
“There are thousands of young people whose only source of income is supplying the aid agencies,” Mr Mohamed said, even as he urged the government to rescind the decision.
This is not the first time that the Kenyan government has attempted to close the Dadaab camp.
In 2013, Mr Ruto said the camp needed to be closed as it had become a financial burden to the country besides being a security threat.
The announcement elicited a diplomatic backlash that only ended when the government signed a tripartite agreement with the UN, allowing the refuges to voluntarily opt to go back home over a three-year period.
The latest attempt, coming soon after an Al-Shabaab attack at Moi University's Garissa campus left 148 people, mostly students, dead, is already facing stiff opposition from agencies such as the UNHCR.