Refugee Debt and Livelihoods in Northern Kenya

While humanitarian assistance to refugees has increasingly focused on fostering self-reliance, refugees are highly exposed to economic shocks that make self-reliance difficult to achieve. With limited access to employment and low wages, refugees are rarely able to put aside savings in case of emergency. Those who have recently fled their country of origin may have no assets to sell if needed. Informal social protection mechanisms may be unavailable or less effective in contexts of mass displacement where existing networks are disrupted and vulnerability becomes widespread. Given these constraints, borrowing is often the only coping strategy available to refugees.

Based on quantitative and qualitative data collected over a one-year period, this report studies how debt is used as a coping strategy by refugees living in Kakuma refugee camp and the Kalobeyei settlement in Kenya, which, together, constitute one of the largest refugee camps in Africa, hosting more than 270,000 refugees in October 2023 (UNHCR, 2023). In our analysis we find:

1. Refugees are highly dependent on humanitarian assistance.
2. Almost 9 in 10 refugees are indebted
3. Debt levels dramatically increased since 2019
4. Aid cards are used as a collateral to secure debt
5. Implicit interest rates push refugees into a debt trap.