What a refugee camp reveals about economics

Photograph: Álvaro Bernis

It is Malawi’s rainy season and smartly dressed worshippers are spilling out from church. Couples, arm-in-arm, dodge potholes as they progress down the street. The migration moves past clothes shops and bars, losing stragglers to afternoon drinking, until it meets a plane of dirt, where thousands await a football match. A thin film of dust kicked up by the players settles on the churchgoers’ pale dress shirts and floral skirts. The scene looks like a typical Sunday. But in Dzaleka, a camp that has held refugees from central African wars since 1994, there is a difference: people are not resting after a hard week of work.

The camp is a consequence of Malawi’s peculiar refugee policies, which, although welcoming to those in need of sanctuary, do not offer a path to legal settlement and ban paid work. In theory, at least, Dzaleka’s 52,000 residents, some of whom were born in the camp, are banned from leaving. Each receives $9 a month from the UN on which to get by. Some things remain the same as in more conventional economies, yet the logic that guides everyday decisions, and thus the camp’s economy, is turned upside-down. Students pursue education without hope of a pay-off; a day is reserved for leisure despite the lack of toil.

Economists typically think of an economy’s workers as its consumers. In Dzaleka, however, few produce anything worth trading. Although there are sometimes a few dollars to be had for patching walls, unloading supplies or minding the stalls of local farmers who sell at the market, such opportunities represent an infrequent top-up of UN hand-outs. Residents do not confront the usual dilemma of whether to sacrifice pay for a little more leisure time.

Instead, the main economic activity is a relentless exchange of goods and services, which is ultimately based on differences between residents’ wants, rather than the means available to them. After all, pretty much everyone has $9 a month to spend—a sum sufficient to buy food, but also a little of something else. What, exactly, this “something else” is differs wildly from person to person. Dzaleka’s strange economy exposes the variety of ways humans go about spending even very modest endowments.

It is partly for this reason that confined economies fascinate researchers. The most famous is Stalag VII-A. The Nazi prisoner-of-war camp, in modern-day Poland, was home to Richard Radford, a British army officer. After the war, on returning to Cambridge University, Radford wrote a paper describing how the camp’s rudimentary cigarette trade evolved into a specialised economy that used cigarettes as the currency by which the value of every other available good was expressed. Much as in Dzaleka, work was scarce and everyone’s endowments—packages sent by the Red Cross, a charity—were pretty much equal.

The camp’s economy allowed Radford to challenge an old economic assumption. The “labour theory of value” is most commonly associated with Karl Marx, but classical liberal economists such as Adam Smith and David Ricardo also believed that the price of a good mostly reflected how much work it had taken to produce it, or the perception of that work among buyers and sellers. In Stalag VII-A nobody worked, and everything still had value. The price of butter came from its scarcity relative to how much was sought, not the number of hours a milkmaid had spent churning.

Although Dzaleka’s residents collect cash, the camp’s lack of labour leads to other economic lessons. In the absence of companies and with an abundance of time, leisure is big business. The camp’s main throughway is filled with churches, sports bars and theatres. The Mennonite church competes for visitors with a Presbyterian chapel run by Canadian missionaries, but it is the Baptists who are having most luck. All three offer salvation in the next life—Baptists add the extra inducement of material wealth in this one. Self-improvement, networking and education are all popular pastimes in Dzaleka. Even in the absence of opportunities to use such skills, there is hope that conditions will change.

Around the corner from a Baptist church advertising a personal-finance workshop, a woman who prints wedding invitations shares space with a hairdresser: “We try not to get ink in the hair and hair in the paper.” Weddings happen non-stop in Dzaleka, and enterprising residents have built a sprawling infrastructure to throw big events. Every day thousands attend organised spectacles, mainly concerts and football matches, around which a constellation of athletic trainers, bookmakers and food-sellers rotate. Residents form committees to provide one another with security patrols, offer schooling and even regulate gambling on sports.

Camp out

Some residents view Sunday as a welcome day off from such fun; a time when churches take over from exhausted DJs. The trick, it seems, to a good life in the camp is to find gaps in the severe restrictions that make normal rites of passage supremely difficult. Throughout her life, the average female resident will have two children more than her average Malawian counterpart. At a clinic just across the street from the camp’s arrival point, nurses have tried everything they can to bring down the birth rate. People have gladly taken contraception since a promotional campaign in 2022. Still, birth rates once again rose last year. Very few pregnancies were truly accidental in the first place, reckons a doctor.

In the clinic’s waiting-room, Hope and Mariam laugh when they hear this judgment. With next to no economic opportunity, parenting is a rare chance to make life a little better. Indeed, your columnist has heard similar stories from poor Americans. Dzaleka enlarges by 300 people a month owing to a combination of new refugees and new babies. The sophistication of the camp’s makeshift economy is only going to grow. But so, too, is the anger of the rising number denied economic opportunities outside. 

This article, "What a refugee camp reveals about economics," was first published by The Economist on April 3, 2025.