A randomized evaluation conducted through research-policy partnership with Ethiopia's Refugees and Returnees Service.

Key Takeaways

• From dependence to self-reliance. Globally, most refugees remain displaced for years with limited access to formal labor markets, leaving them dependent on shrinking humanitarian budgets. Work permits and business licenses offer a pathway to economic self-reliance-but evidence on their effects remains scarce
• Legal framework in place, access gap persists. Ethiopia grants refugees the right to wage employment and self-employment under its 2019 Refugee Proclamation and subsequent directives. Yet baseline data show few refugees currently hold work permits or business licenses, and most employment remains informal.
• Refugees want to work, but access remains limited. Baseline data shows overwhelming demand for work permits and business licenses, suggesting the access gap reflects implementation barriers, not lack of demand.
• Research through government partnership. Through a large-scale RCT and close partnership with government, the project is implementing a pilot at scale, testing what works, building delivery systems, and generating evidence to scale economic inclusion for refugees across Ethiopia and beyond.

Why This Matters Now

Over 43 million people were living as refugees at the end of 2024, according to UNHCR. Nearly three quarters reside in low‑ and middle‑income countries, and the majority remain displaced for a decade or longer. In that time, many are legally barred from working. Yet refugees who cannot work remain dependent on shrinking humanitarian budgets, while host economies forgo potential gains from their labor, entrepreneurship, and tax contributions.

Ethiopia hosts over one million refugees, primarily from South Sudan, Somalia, Eritrea, and Sudan: among the largest populations globally and the second largest in Africa. The Government of Ethiopia has committed to a model that turns legal reform into real livelihoods by expanding refugees’ right to work. This project generates experimental evidence on the effects of this policy while strengthening delivery systems in partnership with government.

Ethiopia's Legal Framework for Refugee Employment

Since 2017, Ethiopia has implemented the UN‑backed Comprehensive Refugee Response Framework (CRRF) and introduced a legal framework that recognises refugees’ right to work, most recently in Directive No. 1019/2024.  The legal framework provides for three pathways to economic integration: wage employment, self‑employment, and joint programmes (with development partners).

Operationalising this legal framework requires a complex delivery chain with coordination across various government entities: residence permits from the Refugees and Returnees Service (RRS), work permits via RRS and the Ministry of Labor and Skills (MoLS), and business licenses with local Bureaus of Trade and Regional Integration. Respective Woreda offices are many times at considerable distances from the camps.

Awareness among refugees of their rights is uneven, documentation can be difficult to obtain, and procedures remain unfamiliar for local offices and refugees. Our project works with the involved government agencies to streamline administrative processes, fix bottlenecks, and support refugees in obtaining necessary documentation.

In parallel, refugees are now integrated into Ethiopia’s new national digital ID system Fayda. We study the effects of digital ID on refugee’s in related work with the Oxford Digital Public Infrastructure Research Lab (OxDPI). 

Research Design

Our international research team led by academics at the University of Oxford’s Oxford Martin School and the London School of Economics and Political Science (LSE) and in collaboration with the World Bank, is evaluating the effects of work permits and business licenses on refugee economic outcomes. We ask: How do work permits and business licenses affect employment, earnings, and wellbeing? For whom do they work best, and why?

To answer these questions, we are running a large multi site randomised controlled trial (RCT) in four refugee camps: Bambasi, Sherkole, Tsore (Benishangul Gumuz) and Sheder (Somali Region). Eligible refugee households can participate in a lottery that offers a support package that helps them obtain work permits and business licenses. 

The package includes: 

• Information on rights and obligations
• Direct assistance to secure required documents
• Support navigating application procedures
• Coverage of administrative fees

The intervention is co designed with RRS so that the issuance of permit remains under RRS’ supervision and ownership, while protocols, forms, and training can be adopted nationwide. The study complements existing RRS outreach and builds local administrative capacity. Research protocols were reviewed by academic institutional ethics boards and a local ad hoc expert committee.

“We deeply appreciate the partnership we have and would like to take this opportunity to sincerely thank the study team for your unwavering support”. RRS Deputy Director General Mulualem Desta

Early Insights 

Our baseline data collection and qualitative fieldwork yielded several observations:

• High demand for permits: Our baseline survey indicates that 99% of refugees in Benishangul Gumuz and 90% in the Somali Region want both work permits and business licenses.
• Information gaps persist: Many refugees confuse residence IDs with work permits, some appear unsure about tax obligations, or express concern about unintended consequences.
• Formalisation protects livelihoods: As one refugee entrepreneur in Sheder told us:
  “Before obtaining my licence, I was fined thirty thousand birr for selling cement without permission. After getting my licence with RRS’s help, I’m now running my business legally without problems."
• Host community perspectives vary. A local administrator noted:

“Allowing refugees to work outside the camp could create substantial advantages for the local economy, more trade and more jobs.” 

Others raised questions about fairness and whether formalised refugee businesses would be subject to the same tax and regulatory requirements as local enterprises.

Implementation

Data collection began with a census across the four camps to establish the sampling frame. This was followed by in-person baseline surveys of eligible refugee households covering employment history, skills, sector preferences, mobility, aspirations, and psychosocial wellbeing. We complemented the household surveys with focus groups, key informant interviews, and an establishment survey of firms near the camps to assess local labour demand and employer perceptions of refugee work permits.

To support effective implementation of the study and strengthen administrative systems, the project facilitated the procurement of essential equipment for the Refugees and Returnees Service (RRS), including laptops, ID printers, and registration kits, enabling digital processing of applications. In Benishangul-Gumuz, the project also supported the establishment of a local tax office so that Tax Identification Numbers could be issued closer to the camps, reducing travel costs and processing times for applicants.

The project further supported RRS through targeted training on data collection, data management, and impact evaluation methods. In partnership with RRS and local leaders, information campaigns on the right to work were conducted for both refugee and host communities. 

Looking Ahead

With baseline data collection complete, the RCT is now in implementation. The study will provide some of the first experimental evidence on the economic effects of work permits and business licenses for refugees-evidence relevant both to Ethiopia's ongoing policy efforts and to the broader international debate on refugee self-reliance.

Acknowledgements

We gratefully acknowledge funding from the Kingdom of the Netherlands through the PROSPECTS Partnership at the World Bank, the IKEA Foundation through the J-PAL/IPA Displaced Livelihoods Initiative, and the International Growth Centre.

This opinion piece reflects the views of the author, and does not necessarily reflect the position of the Oxford Martin School or the University of Oxford. Any errors or omissions are those of the author.