Syrian Refugees in Jordan: Economic risks and Opportunities
Despite the economic hardships and security concerns imposed on Jordan by the influx of hundreds of thousands of Syrian refugees, the impact of the crisis are not all been negative.
Large segments of the national economy in the kingdom benefited directly or indirectly from the increasing demand for goods and services, as well as the unprecedended flow of foreign aid from donor countries.
Jordan is now host to more than 1.5 million Syrians, less than half of whom are registered as UN refugees living in a number of refugee camps in the northern provinces subsidised by United Nations agencies and donor countries, while the rest are living off their own resources and contributing the national economic cycle.
From the government’s point of view, the refugees are considered a “burden” on economic resources, increasing on the country’s infrastructure and scarce natural resources such as water. However, many representatives of Jordanian commercial and industrial sectors regard them as the main cause of new opportunities that benefit the economy in their local communities.
Who is a refugee?
Ali Bibi, The director of international relations and cooperation in the UN High Commissioner for Refugees (UNHCR), says the number of Syrian refugees registered with UNHCR amounted to about 600,000 refugees since the beginning of the Syrian crisis in mid-March of 2011, and until the end of 2013.
The official counts, issued by the Ministry of the Interior, showed that the number of Syrians in Jordan before and after the crisis had reached approximately 1.7 million, 750,000 of whom were in the Kingdom before the crisis erupted in the spring of 2011.
These numbers include registered refugees in the Zaatari, Mrigab Al-Fouhoud and Ramtha camps. According to Bibi, the refugee status applies to each UNHCR refugee card-carrying person.
The UNHCR card holders are provided with their basic human needs until they voluntarily return homes from which they left seeking asylum because of the war and the inhuman treatment they have been subjected to.
“The definition of a refugee falls under the 1951 Convention relating to the status of a refugee, which is the main document that defines the refugee’s rights and duties and the obligations of the hosting state,” says Bibi, explaining that “a refugee is someone who is being persecuted for reasons of race, religion, political or social affiliation or because of his or her political views, in addition to wars and the fear of staying in the country and/or the desire of willful displacement to another country.”
The Commission in Jordan established only 3 centers to register Syrian refugees in the cities of Amman, Irbid and in Zaatari camp. These accredited centers supervise the issuing of the refugee cards, which enable refugees to benefit from the services of the UNHCR. It also ensures the refugees civil protection and human rights in the hosting country and protects them against legal liabilities except in cases of violation of applicable Jordanian laws and regulations.
According to independent studies, the annual cost of hosting the refugees is about JD 2,500 per refugee. the UN and donor countries bear most of this burden. One Jordan Dinar (JD) equals $1.41.
Industrial Available Opportunities
Raed Samara, president of the Chamber of Industry in the Jordanian northern city of Irbid, spoke of the need to “take advantage of the opportunities presented by the presence of Syrian refugees in Jordan, through attracting investors among them, and promoting small and medium-sized industries, which Syrian industrialists are known for, especially in the food industry.”
The city of Irbid “currently embraces 12 factories specialized in food manufacturing that have relocated from Syria since the crisis,” says Samara, adding that “these plants have been in constant contact with [local] farmers in order to cultivate Jordanian products viable for processing and export, which reflected positively on the agricultural and industrial sectors in the Kingdom.”
Samara noted that “the effects of Syrian manufactures on the Jordanian work force is overall positive. While experienced Syrians are currently working in these factories, “but in the medium term they will be replaced by Jordanian workers.”
He stressed that the Syrian investments in factories in the Kingdom, will boost Jordan’s exports of food products, and will cater to the needs of the local market, especially after the cessation of imports from Syria.
The presence of Syrian refugees revived the commercial traffic in the northern governorates of Irbid and Mafraq, especially the border city of Ramtha, where the demand for food commodities in general, not to mention the quality of services and goods and commodities in those provinces, has been increased, according to Samara.The competition in the local market also raised the standards of commercial and industrial sectors .
According to the Jordanian response plan to the Syrian refugee crisis, the government calculated that it needed $850 million in support to sustain some of the needs of the refugee camps and to pay for the subsidized essential services and materials provided for refugees in Jordanian towns and villages. Jordan allocated $371.8 million to enable the Syrian refugees to benefit from the subsidized commodities alone, including energy and the cost of health services, security, education, water and municipal services.
Booming Commerce in Mafraq
The Irbid province witnessed an active commercial movement since the first quarter of 2011, according to many merchants in the city. Many shops have been opened and the demand for housing and the purchase of various commodities has increased due to refugees increasing demand for goods and services in these communities, according to Abdullah Shdeifat, the president of Al-Mafraq Chamber of Commerce.
Mafraq Governorate has become one of the most economically booming provinces in Jordan due to the 170,000 refugees living there, he explained.
There are Syrian merchants registered in the Mafraq Chamber of Commerce as foreign investors, which “raised the rates of commercial rent in the area and benefited the citizens and shopkeepers in Mafraq,” said Shdeifat.
The number of newly registered commercial stores in Mafraq topped 160, mostly managed by Syrians practicing various professions.
Shdeifat stated that Jordanians merchants in Mafraq “benefited since the start of the Syrian crisis, where the World Food Program mandated the purchase of goods directly from shops in Mafraq, and the Syrian refugees purchase goods with coupons distributed to them every month, which contributed to the improvement of the economic situation in the governorate where markets are closing late due to increased demand.”
He added that despite its effect on stimulating the economy, the presence of Syrian refugees in Mafraq caused a strain on some natural resources, not to mention the higher wages for housing for Jordanians, the worsening youth unemployment rate and the increase in demand for water, health and education, in addition to the increased amount of waste.
Hundreds of Syrian mushroomed in a number of neighborhoods and markets in the city of Mafraq, mostly specialised in confectionery, food, drink and clothing. The residents of Mafraq, gave some stores names based on the origins of their Syrian owners. Some of the stores open until 2.00am, due to the high demand.
Syrian Workforce in Jordan
In a formal study, the Refugees, Displaced Persons and Forced Migration Studies Center, based at Yarmouk University in Irbid, revealed that Syrian refugees took 38,000 jobs since March 2011, which account for 40% of jobs created annually for Jordanian labor in the Mafraq governorate.
Abdelhamid Harahsheh, the director of the Mafraq Directorate of Labour, said that the main problem caused by refugees and their increasing numbers in the city of Mafraq lies in the growing number of the undocumented Syrian workers who work without permits.
He said 30 institutions were forced to close since the beginning of the Syrian crisis because they were employing undocumented Syrians workers, in violation of the applicable laws and regulations, especially that some Syrian labor replaced Jordanian workers, which prompted the government to take a decision to resort to enforcing the laws.
Harahsheh added that 5500 Syrians were forced to pay fines for working without permits and some have been returned to the Zaatari refugee camp where they were originally hosted.
According to the Companies Control Department website, the gross capital of companies registered in Jordan with Syrian owners, reached JD 39.6 million ($55 million) during the period between March 2011 and August 2013, while 499 Jordanian companies now have Syrian shareholders.
Official figures show that Syrians ranked third in property and land purchases in 2012 among non-Jordanians, with JD19.6 million, and fourth for the first 7 months of 2013, with purchases of real estate and land amounted to JD13.6 million.
A 22 year-old Syrian refugee, who spoke on condition of anonymity, was displaced from his Syrian home town in Daraa province since the beginning of the Syrian crisis. He said he never imagined he would a job in the already congested city of Mafraq, especially with the influx of tens of thousands of fellow Syrians. He said he was now working in a restaurant owned by his father in the city of Daraa, but because of the bombing and the destructions of homes and shops, he and his three brothers had to take refuge in Jordan.
He said he earned a monthly salary of JD 200, in addition to his employer providing free accommodation. Another Refugee, who also spoke on condition of anonymity, chose Zaatari camp to open a shop. He said: “I came from Homs, where I owned a textiles shop, and now I have a small clothing shop on the so-called “Champs Elysees” street in Zaatari, a cynical reference to the famous Paris shopping avenue. “I can hardly meet the needs of my family that consists of 7 members.”
He pointed out that many Jordanians come to Zaatari camp for shopping and buying goods because of the (subsidised) low prices compared with other local markets.
According to the Jordanian government, the value of grants and loans received by Jordan to help it carry the burden of hosting Syrian refugees, reached $234.8 million, and the support provided through non-government organizations reached $66.2 million.
A document issued by the Ministry of Planning and International Cooperation showed that the size of direct Arab,foreign and domestic aid that have been donated to the Syrian refugees in kind and cash amounted to about $187.5 million, while the total assistance provided to the government directly was around $24 million to support the health, education and water sectors.
Overall foreign aid
According to official numbers, the aid (grants and soft loans ) obtained by the Kingdom between 2011 and 2013 amounted to JD 6.9 billion, which is the equivalent of three times what the Kingdom was receiving before the Syrian refugees crisis. But the government does not make a connection between the tripling of foreign aid to the kingdom and the international community’s growing interest in backing Jordan’s economy.
In 2011, Jordan received JD 733.3 million of foreign aid. In 2012 the kingdom experience a jump in aid of 316% and received JD 3.05 billion, reaching the highest level in 2013, withJD 3.2 billion.
The value of grants during 2013 was about $2.1 billion. In mid-September, the government signed on JD1.5 billion, of which JD1.3 billion were allocated by Kuwait and Saudi Arabia and distributed to implement projects in the energy, industry, investment commerce, transport, education and higher education, health, roads, water and sanitation sectors.
The value of soft loans committed by donor countries for 2013, whether directed to finance development projects or in direct support of the treasury, reached a total of about $1billion. So far, loans and agreements with a total of $347 million, has been signed, and the money was allocated to bolster the budget and to boost the energy, small and medium enterprises and water sectors.
In 2012, grants provided to Jordan amounted to JD 2.1 billion, compared with JD 704.9 in 2011, while the total amount of loans reached about JD 942.3 billion in 2012, compared with JD 28.3 billion in 2011 .
The figures of the Ministry of Planning and International Cooperation reveal that the amount of aid received by Jordan during the past 13 years was $16.4 billion, of which $11.2 billion was in grants, and about $5 billion in soft loans .
These figures and numbers, contradict what the Jordanian Interior Minister Hussain Hazza Majali said when he pointed out that more than 600,000 Syrian refugees live in Jordan “at the expense of the state and the citizens,” adding that what Jordan receives in aid for the Syrian refugee crisis “does not exceed 30% of the cost incurred for hosting them on Jordanian territory.”
In a lecture at Yarmouk University in the northern city of Irbid, Majali said the Kingdom’s economy, tourism and security were affected. He added that the security bill was too high to bear and the Jordanian army bore sole responsibility for controlling and protecting the borders and preventing smuggling. However, he made no mention of the grants and economic and military aid received by Jordan during the past three years from Western and Arab Gulf countries.
However, Majali told U.S. Assistant Secretary of State for Population, Refugees and Migration Anne Richard, that Jordan “will not close the border [with Syria] on the refugees, for humane reasons and to comply with principles stemming from its national obligations.”
Majali told the American official that the Syrian refugees have become a heavy burden on major sectors like education, health, infrastructure and the labor market, and they attribute to an added load on the country’s limited resources. He urged the donor countries to support the Kingdom to be able to play its role in this crisis, pointing out that the two sides “agreed to continue coordinating and consulting on the issues of common interest.”
Jawad Abbassi, founder and general manager of Arab Advisors Group, challenged the government’s narrative, saying there was “a need to study the economic and social impact of the Syrian refugees in Jordan, in an objective, scientific and methodological clear manner.”
He said such a study should identify the costs and revenues of refugees, and calculate both the pros and cons to the economy, adding that “for instance, rising rents reflects negatively on Jordanian tenants but positively affect landlords and the government’s revenues.
“Crowded hospitals and schools is endured mainly by Jordanian citizens not the state treasury. The increase in population and cars mean more sales and fuel taxes for [the treasury].”
In his article published in January 2014, Abbassi concluded that such an objective study would be “the first step to maximise the positives and to think of solutions to mitigate the negatives.”
This story was produced as part of the Governance project, a reporting program in Jordan organised by the Thomson Reuters Foundation in partnership with Arab Reporters for Investigative Journalism”ARIJ”.