Traders in refugee camps mint millions by selling tax-free goods at cheap prices

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Traders in refugee camps mint millions by selling tax-free goods at cheap prices

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To most ordinary Kenyans, the mention of a refugee camp stirs thoughts of a place with miserable lifestyle and scarce basic necessities.

But at Ifo, Dagahaley and Hagadera refugee camps, the story is different, thanks to booming business mostly driven by smuggled goods from Somalia.

A new report details how wholesalers inside the camps located at Daadab near the Kenya-Somali border have become millionaires by importing basic commodities from Somalia tax-free.

There are around 5,000 businesses in the camps ranging from petty traders to large shops and trading in all kinds of goods, according to the report titled In Search of Protection and Livelihoods: Socio-Economic and Environmental Impacts of Daadab Refugee Camps on Host Communities.

“Annual turn-over of the camp businesses alone is estimated to be around US$25 million (Sh2 billion),” says the report.

The traders import sugar, powdered milk, pasta, fruit drinks, clothes, perfumes, cosmetics, electrical items and other consumer goods at extremely cheap rates.

These traders, some of whom live and trade right within the refugee camps, resell the goods to both the refugees and their non-refugee neighbours at very low prices, saving the communities an estimated Sh750 million every year, according to the report.

For instance, the price of a kilogramme of sugar bought from the wholesalers is as low as Sh60, the study found. This is about 40 per cent cheaper than the same quantity of locally produced sugar whose prices range from Sh90 to Sh105 in the supermarkets.

“Typically, a group of traders organises transport from the port of Kismayo and accesses the refugee camps using one of the well-established alternatives to the officially closed border crossing,” says the report.

“The imported goods are spread to consumers over a large area that includes not only the refugee camps, but also Garissa and beyond.”

And according to the report, the price of basic commodities such as maize, sugar, rice, wheat and cooking oil is at least 20 per cent lower in the camp than in other towns in arid and semi-arid parts of Kenya.

However, it is not only the cheap imports from the war-torn Somalia that is minting these communities millions. Other wily traders — who are not refugees — are also reselling food rations distributed in the camps.

And to access this food, they first register as refugees and obtain ration cards.

Quoted from Daily Nation