DREAMS program reduces extreme poverty among East Africa refugees
New evidence from randomized controlled trials shows that the DREAMS program significantly reduces extreme poverty among refugees and host communities in East Africa. The IKEA Foundation committed $7.4 million for the program's next stage in Ethiopia, while the Conrad N. Hilton Foundation granted $3.5 million for its continuation in Uganda.
*this image is generated using AI for illustrative purposes only.
New evidence released today demonstrates that a combined approach of entrepreneurship support and market access can significantly reduce extreme poverty among refugees and host communities in East Africa. Two randomized controlled trials (RCTs) of the DREAMS (Delivering Resilient Enterprises and Market Systems) program found that participating households saw meaningful economic gains within a year. The studies, conducted by independent evaluator IDinsight, indicate that the model offers a cost-effective solution for humanitarian aid at a time of unprecedented budget cuts.
Impact on Household Economics
The DREAMS program, implemented by Village Enterprise and Mercy Corps, reached more than 22,000 households across major refugee settlements in Uganda and Ethiopia. Compared to control groups, participants experienced substantial improvements in financial stability and asset accumulation.
| Metric | Uganda | Ethiopia |
|---|---|---|
| Monthly household consumption increase | 17% | 9% |
| Savings increase | Over 90% | Over 90% |
| Household assets increase | 20% | 24% |
The boost in household assets included the acquisition of livestock, agricultural tools, housing improvements, solar panels, and furniture. The RCTs found that DREAMS is projected to yield twice the value of its costs through increased household consumption and asset accumulation if effects are sustained for five years.
Program Implementation and Funding
DREAMS combines Village Enterprise's 12-month poverty graduation program with market systems development delivered by Mercy Corps. The poverty graduation model equips ultra-poor households with skills, financial capital, and mentoring to start businesses, while market systems development promotes connections with local private sector actors.
Recognizing the program's success, significant funding has been committed for its next stages:
- Ethiopia: The IKEA Foundation has committed $7.4 million to fund the next stage of DREAMS and embed the program into local government systems.
- Uganda: The Conrad N. Hilton Foundation has granted $3.5 million for the next stage of DREAMS through March 2029.
Trial Details and Future Potential
In Uganda, the RCT involved 6,560 households and was conducted between 2022 and 2025. Participants received business training and $204 in seed capital. In Ethiopia, the RCT evaluated 6,151 households, with 2,050 receiving the full DREAMS program, including $500 in seed capital. The results are based on endline surveys conducted in 2025, capturing outcomes six to 18 months after program completion.
Sazini Mojapelo, CEO of Village Enterprise, stated that the findings show refugees can build businesses and grow incomes with the right support. Tjada McKenna, CEO of Mercy Corps, emphasized that lasting change comes from access to opportunity and functioning markets. The evidence suggests the model holds potential for the 8.7 million people living in refugee settlements globally.
How will the DREAMS model adapt to varying economic conditions and inflation rates as it scales to other regions?
What specific challenges might arise when integrating this program into local government systems in Ethiopia?
Can the cost-benefit ratio be maintained if the program is expanded to refugee settlements with less established market infrastructure?
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