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Financing for solutions to displacement: Kenya country study - Executive summary, April 2021

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Kenya currently hosts just under half a million registered refugees and asylum seekers of whom 84% live in official camps and settlements. These are situated in remote, poor, and historically marginalised regions that have an arid climate and a history of frequent drought, food insecurity, and deteriorating environmental conditions. The approach of Kenya to refugee hosting has become increasingly restrictive over time, shifting towards a policy of encampment in the 1990s. During the last five years, Kenya has made a number of commitments – including the Comprehensive Refugee Response Framework (CRRF) and the Intergovernmental Authority for Development (IGAD) Nairobi and Djibouti Declarations – which have opened some opportunities for for longer-term approaches and refugee inclusion.

The Government of Kenya must balance the spirit of these international facing commitments with the realities of more limited domestic political support in government and potentially among the general public to implement supporting legislation and policies. This creates a situation whereby progress takes place within pockets of political space. While national-level processes have been slow – notably the passing of a new refugee bill – progress is being made at subnational and sectoral level such as the inclusion of refugees in the Huduma Bill.

Much of the donor engagement on policy and reform is at the technical rather than political level. There is also no national-level dialogue or settlement on burden sharing. Currently, there appears to be limited domestic political scope and limited appetite among international donors to use financing to negotiate a major shift in the highly restrictive legal and policy environment for refugees in Kenya. This is a key contributing factor to delays in government implementation of further policy reforms, with the government understandably reluctant to assume long-term financial liability for refugees integrated into national services in the absence of a clear commitment from donors to help meet the costs.

To date, progress in financing for programming for solutions to displacement in Kenya has been uneven. There is increased engagement from development partners and private sector actors, bringing new technical capabilities, networks, and resources to bear on the long-standing challenges of transforming the refugee response model in Kenya, and enabling inclusion and self-reliance.

There has been a hiatus, however, in national-level leadership on the CRRF process during this period of increased development investments. The legal and policy environment also limits the scope to invest in longer-term programming. Notably, continued restrictions on employment, access to financial services, and freedom of movement pose major challenges to efforts to pursue economic self-reliance. The CRRF roadmap was not approved until late 2020. In the absence of agreed priorities, sequencing, and theories of change, investments are piecemeal and ad hoc, and distributed unevenly across refugee-hosting regions.

At the same time, there are concerns that humanitarian funding is shrinking well before the impacts of development investments have been felt. In a challenging post COVID-19 funding environment, there are also concerns that the funding and programming gap will continue to widen. Moreover, without compelling evidence to demonstrate the impact of new approaches and investments, longer-term investments in transforming the refugee response model, particularly economic self-reliance (which has yet to demonstrate significant impact), may become increasingly difficult to justify.

There are, however, opportunities to make progress within the existing pockets of permissive policy space. This includes the potential to use a package of financing to nudge the draft Education Policy for the Inclusion of Refugees and Asylum Seeking Learners in the National Education System and supporting a costed plan over the line. This would require leadership from international partners to negotiate an acceptable financing settlement and the agreement of financing modalities that would meet government desire for support to national systems and donor concerns around traceability and accountability.

Despite these challenges, there is broad appetite for change in programming approaches towards economic inclusion and self-reliance. This is underpinned by frank acknowledgement that established approaches to livelihoods programming have not worked. The elephant in the room in discussions on economic selfreliance is the highly restrictive legal environment. Partners target progress in small pockets of possibility, but expect little change in the fundamental restrictions. As such, international actors have adopted a pragmatic approach to work informally around restrictions and/or to focus on pockets of possibility, tacitly accepting the restricted impact of economic self-reliance investments in the current environment. Efforts to advance economic inclusion are highly politically sensitive and are expected to become increasingly contentious in the context of an economic downturn. Funding is also anticipated to become more restricted overall and refocused towards urgent needs. The appetite for new private sector investment is also likely to be dampened by challenging national and global economic conditions. International efforts to advance economic inclusion and self-reliance have so far proceeded on a relatively ad hoc basis, with little strategic direction from government, and without reference to comprehensive analysis of opportunities or agreed priorities for investment and reform. In a much more challenging and resource limited environment, however, far greater clarity and focus are required to target investments.

The foundations for greater clarity and focus include having robust shared data, analysis on economic conditions and value chains, and based on this, agreement on high-level priorities and desired outcomes. Underneath these high-level priorities, prioritisation, and sequencing of key enabling conditions such as infrastructure investments, capacity strengthening needs, and policy and legislative reforms is required. The identification of responsibilities, timelines, and investment requirements are also needed to achieve greater clarity and focus. Agreements on how to measure impact and track investments to avoid duplication, and a commitment to learning and transparency in sharing evidence and data, are also required to ensure resources are targeted efficiently in what is a relatively experimental field. The assurance of multi-year and flexible finance is critical to underwrite this period of learning and adaptation.