Africa's Refugee Crisis Is Reshaping Economies, but the Real Costs May Surprise You, IMF Finds

An IMF study finds that refugee inflows do not significantly harm economic growth or inflation in Sub-Saharan Africa, but they create uneven pressures on jobs, household spending and food prices. The research urges governments and development partners to strengthen economic integration, agricultural production and public services to turn displacement challenges into opportunities for sustainable growth.

Forced displacement across Sub-Saharan Africa has reached alarming levels, creating growing challenges for governments, local economies and vulnerable communities. However, a new study by researchers from the International Monetary Fund (IMF), particularly its African and Statistics Departments, reveals that large refugee inflows do not necessarily weaken national economic growth or trigger widespread inflation. Published in October 2026 as IMF Working Paper No. 228, Macroeconomic Effects of Forced Displacement in Sub-Saharan Africa, the research was conducted by Hany Abdel-Latif, Antonio David, Mouhamadou Moustapha Ly, Elisee Wendlassida Miningou, Masateru Okamoto and Alex Vaval Pierre-Charles. Drawing on economic data and case studies from Burkina Faso, South Sudan and Uganda, the researchers examine how displacement affects economic growth, public finances, employment, household consumption and food prices.

Africa's Displacement Crisis Is Growing Faster Than Ever

The scale of Africa's displacement crisis has expanded dramatically. Approximately 118 million people were forcibly displaced worldwide by the end of 2025, including 40.9 million in Sub-Saharan Africa, compared with just 8.7 million in 2010. The region accounted for approximately 35 percent of global displacement, driven mainly by armed conflicts, political instability and environmental disasters.

Around 30 million people were internally displaced, nearly three times the refugee population. Sudan recorded approximately 9.1 million internally displaced people, followed by the Democratic Republic of Congo with 5.7 million, Nigeria with 3.5 million, Somalia with 3.3 million and Ethiopia with 2.4 million.

Uganda hosted approximately 1.9 million refugees, followed by Chad with 1.5 million and Ethiopia with around 1 million. Nearly 92.5 percent of refugees and asylum seekers hosted in the region originated from neighboring countries, highlighting how humanitarian and economic pressures are concentrated within Africa.

These population movements increase demand for housing, healthcare, education, employment and essential goods, placing additional pressure on countries already facing financial and infrastructure constraints.

Refugee Inflows Do Not Automatically Damage Economic Growth

Using economic data covering 1970 to 2023, the researchers identified 54 major refugee-inflow episodes, with an average inflow equivalent to 2.28 percent of host-country populations. After applying additional statistical criteria, they analyzed 33 displacement shocks across 30 countries.

The findings show that large refugee arrivals did not produce statistically significant changes in real GDP, consumer inflation or current account balances over five years. This challenges the widespread assumption that refugee inflows automatically destabilize national economies.

Government finances revealed a more complicated picture. Public expenditure increased by approximately 1 percentage point of GDP immediately after major refugee inflows, peaking at 2.5 percentage points after two years.

However, government revenues also increased, rising by 1.37 percentage points initially and reaching 2.84 percentage points after five years. Tax revenues increased by approximately 1.91 percentage points over the same period, suggesting that additional consumption, humanitarian operations and economic transactions can partially offset refugee-related public spending.

The situation became more concerning when internally displaced populations were included. Countries where displaced people exceeded 5 percent of the population experienced significantly weaker GDP outcomes, with larger negative effects when displacement surpassed 7 percent. Researchers caution that these estimates also reflect economic destruction caused by conflicts, making it difficult to isolate displacement's direct impact.

Jobs, Household Spending and Food Prices Tell Different Stories

Country-level findings reveal that displacement affects communities differently, even when national economic indicators remain relatively stable.

In Burkina Faso, internal displacement reduced employment opportunities among host communities, particularly in urban areas. Service-sector wages faced downward pressure, while industrial wages increased. Household consumption declined among agricultural and service workers, although overall food inflation remained largely unchanged.

Uganda presented contrasting results. Refugee arrivals were associated with increased employment opportunities, particularly in rural communities benefiting from humanitarian operations and additional economic activity. However, average wages showed no significant improvement, while household consumption declined as demand placed pressure on housing, transport, healthcare and other essential services.

South Sudan demonstrated how displacement can reshape food markets. Following Sudan's conflict in April 2023, approximately 1.26 million refugees and returnees entered South Sudan by December 2025.

Researchers found that average food prices in affected counties declined by approximately 14.8 percent after twelve months. However, maize meal prices increased by 68 percent, wheat flour by 32 percent and imported brown sugar by 11 percent, while locally produced white millet declined by 19 percent.

These findings suggest that displaced populations can contribute to agricultural production and stabilize local food supplies, even as increased demand pushes up prices for imported and processed commodities.

Turning Displacement Challenges Into Economic Opportunities

The research highlights important lessons for governments, international development partners and private-sector stakeholders. Rather than treating displaced populations solely as recipients of humanitarian assistance, policymakers should recognize their potential contribution to local production, employment and economic activity.

Expanding access to farmland, agricultural inputs, employment opportunities and essential public services could strengthen livelihoods while reducing pressure on host communities.

Development partners can support these efforts through investments in infrastructure, food security, skills development and local economic opportunities. Businesses may also benefit from expanding consumer markets and growing demand for goods and services, provided that infrastructure and market access improve.

The study concludes that national economic stability can conceal serious local challenges. Effective policies must therefore address employment pressures, declining household consumption and uneven food-price changes while helping displaced populations participate productively in host economies.

Ultimately, the findings suggest that economic integration, targeted public investment and stronger local production can help countries manage displacement more effectively while building long-term economic resilience.