Humanitarian assistance for refugees has a positive impact on the economies of surrounding host communities, with greater impact when refugees receive cash transfers rather than food rations to meet their monthly food needs, a new study conducted in Rwanda has found.

The study was conducted by a team of researchers from the United Nations World Food Programme (WFP) and the University of California, Davis.

The comparative study was conducted in refugee camps in Rwanda, where monthly cash payments are made to refugees and those where the refugees receive food and other groceries.

Their findings have been published in the Proceedings of the National Academy of Sciences, one of the world’s leading scientific journals.

The study measured the local-community impact of food assistance provided by WFP to Congolese refugees living in three camps in the country.

Using hundreds of interviews with Rwandan community members, Congolese refugees and local businesses, researchers created a model of the economies within a 10-kilometre radius of each camp, and then compared the data between camps where refugees received monthly cash allocations, and a camp where refugees continued – at the time – to receive monthly distributions of food.

"Our research found that local communities see very real economic benefits from hosting refugee camps, regardless of the type of food assistance refugees received, but it was clear that cash-based food assistance for refugees translates into a larger boost for the people who live near the camps,” said the study’s lead author, J. Edward Taylor, Professor of Agricultural and Resource Economics at UC Davis.

Currently three out of the six refugee camps in the country receive cash; they are Kigeme in Nyamagabe, Gihembe in Gicumbi and Nyabiheke in Gatisbo district.

"Each refugee generates real income for the surrounding community that is larger than the sum of the humanitarian assistance the refugee receives – and if the refugee is receiving cash, the impact of that assistance can nearly double,” Taylor added in a statement.

In two camps – Gihembe and Nyabiheke – where refugees receive cash transfers each month instead of food, each dollar they received translated into $1.51 to $1.95 in the local economy, according to the findings.

Where cash is distributed, each person in the family is allocated Rwf6,500 a month irrespective of age.

The study also found a significant increase in the trade between the local 10-kilometre area and the rest of the country.

"When refugees receive a monthly ration of food supplies, they often sell part of it at below-market prices so they can have little cash to buy other goods in the market, like fresh fruits or vegetables,” said Ernesto Gonzalez, a co-author of the study who works on cash-related assistance in WFP’s regional bureau in Nairobi.

In general, communities with a more developed agricultural sector benefitted more because farmers were more easily able to sell their produce to meet market demand. After the survey was conducted last year, WFP switched to providing cash instead of food for refugees in Kigeme camp, and the researchers plan to conduct a follow-up study to measure the impact of that change.

"This research is vital because it is the first time we’ve been able to quantify the degree to which assistance for refugees also equals economic support and development for the communities and nations who host them,” said WFP executive director Ertharin Cousin.

"Too often, people talk about refugees as a burden or a threat, but this study indicates that hosting refugees can economically benefit a community, and that assistance for refugees makes a concrete difference in peoples’ lives – including those who aren’t directly receiving that assistance.”

Rwanda currently hosts more than 162, 000 refugees in six refugee camps, most of them Congolese and Burundians.

The innovative cash-based transfers – which in different contexts can include physical cash, mobile money, SMS payments or food vouchers – enable WFP to respond faster to the needs of the people it serves, according to the statement.

The study focused in particular on how refugee camp economies interact with surrounding host-country economies and what are the local economic impacts of alternative food aid delivery mechanisms, specifically in-kind versus cash aid distribution.

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