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Mastercard: Turning Refugee Camps Into Smart Cities

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On a dirt path that passes for a street in a Kenyan refugee camp, a merchant sells grains he bought from a local farmer outside the settlement. To call it an “economy” would be euphemistic, but it’s a living, and it’s enough to support his wife and two children — a family he’s built since arriving at the camp over a decade ago.

His story is not unique. On average, refugees spend 26 years in settlements that were built to be temporary.

Mastercard and Western Union have spent the past year studying the needs of these international camps-turned-cities. On World Refugee Day, the team announced news of its partnership, with the goal of developing a new model for creating sustainable and scalable refugee settlements.

“When we started looking at what our clients were doing on a day-to-day basis in these refugee communities, we realized they were cities,” said Paul Musser, vice president of International Development for Mastercard.

Kakuma in Kenya, one of the settlements studied, hosts over 150,000 people. The world’s largest refugee camp, Bidi Bidi in Uganda, has received almost twice as many, all hailing from South Sudan — where famine, economic collapse and years of fighting have driven residents out.

“It’s one of the biggest cities in Uganda, and it was created in the last 12 months,” said Musser.

Bidi Bidi has the advantage of being newer, but in Kakuma — and its offshoot in Kenya, Kalobeyei, as well as many other international settlements (some dating back as far as the 1960s) — the reality is setting in that these people are not “going home.” The camps have become their home. The processes that are in place now may work (mostly), but they were designed for somebody who’s only going to need them temporarily.

Now it’s up to hosts to convert those temporary shelters into something that is sustainable and symbiotic with the surrounding host community and to give residents some economic power and autonomy, rather than simply prescribing the food, healthcare and education that outsiders have determined are best.

“Our intent is to chip away at a plane that is flying and rebuild it,” Musser said by way of metaphor. “I can’t damage or in any way jeopardize the machinery that’s feeding people today or schooling children today, but I can start to make replacements.”

Digital is going to play a big role in that, according to Musser. Together, Mastercard and Western Union have developed Smart Communities: Using Digital Technology to Create Sustainable Refugee Economies, a blueprint that would combine digital access to remittances, banking, education, healthcare and other basic needs in a unified, trackable way for a developing economy.

Today, when refugees arrive at the camp, they receive a piece of paper denoting their identity and which children are theirs. They obtain meals — pre-constructed and pre-rationed based on the nutrients experts say they need — by punching a paper food card. There is not really a formal economy, though the entrepreneurial types (like the grain merchant) buy and sell with local hosts outside the camp.

Tomorrow, through efforts by Mastercard and Western Union, refugees could be registered using a digital tool instead. Doctors could then identify whether they’ve seen a patient before, and why, to address ongoing or developing medical issues, or to ensure that children receive the right vaccines.

The same platform could confirm children’s school attendance. Instead of a flimsy paper food voucher, a digital alternative could be substituted.

“This is stuff that we’ve tackled years ago and should not be a concern of somebody who’s still trying to figure out if they’re going home,” said Musser.

But the most important tool the partnership will give refugees isn’t the convenience and ease of digital technology. It’s autonomy.

“In so many cases, the refugee model has been, ‘We’ll put together a camp because there is an in-duress situation, either a natural or manmade disaster, but these people will go home,’” said Musser. “So we’re not going to make it permanent; we’re just going to make it survivable.”

That means people aren’t as likely to start farms or shops, a natural inclination in any developing economy. Instead, the host becomes responsible for fulfilling all of the refugee’s basic needs, from food to healthcare to education.

“It becomes very disempowering,” Musser said.

Real cities need real economies, and that’s what Mastercard and Western Union are trying to build — but it’s easier said than done. A healthy economy enables a mother to buy bread for her child, but it also has to enable the baker to bake the bread, which means paying for his electricity, which enables the electricity provider to keep producing … and so forth.

Participants in an economy are free to spend their earnings how and where they see fit, which might mean buying their food from a local Kenyan or another refugee who has set up a store, thus enabling someone else to participate in the economy.

Musser admits it sounds simple when you say it like that, but building an economy from the ground up takes a lot of work — not to mention getting people to buy in when they are already used to conducting business in a certain way. Refugees have already left security behind. The way things are in the settlement may be the only sense of normalcy they have.

Plus, an economy needs rules, and in this case, rules that help rather than hurt the hosting community. It can be an incredible burden to host a refugee settlement. Uganda is feeling the strain as Bidi Bidi just keeps getting bigger and bigger.

Kenya, said Musser, has been generous, but if Kakuma’s refugees start spending their money on transportation out of the community to resettle in Nairobi, the Kenyan government probably won’t be too happy about it. So maybe there needs to be rules about where money can be spent. Maybe refugees can only spend it elsewhere in the camp or community.

Musser is optimistic. Better than that, he’s energized, and he has a vision.

“If I can help the city of San Francisco figure out how to speed people along the BART,” he said, “or IBM can figure out how to manage traffic lights, or Western Union and the local banking community can figure out how to make money move within the community — why can’t we do it there?”

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