The frustration stemmed from feelings of being voiceless and a lack of information about their status, Connect Settlement Services (CSS) housing officer Billal Soubjaki told Brisbane Coroners Court on Monday.
"You start to develop the frustrations of the refugees. You kind of start to demand answers from your superiors," said Mr Soubjaki, who was working on Nauru when Mr Masoumali self-harmed.
"It kind of got to a point where I would be instilling hope in refugees all over the island as much as I could.
"The ABF (Australian Border Force) wouldn't recommend that. They would be like, 'be honest with them and tell them that they're here because of a policy and we do not how long they're going to be here for'."
That refugees and asylum seekers had two options - "go home or stay here" - was a "definitely a key message", Mr Soubjaki claimed.
His testimony was supported by Wilson Security worker Russell Badley, who was also on Nauru when Mr Masoumali self-immolated.
"Certainly that was what asylum seekers believed was their choice," Mr Badley said.
The inquest into Mr Masoumali's death has heard the 24-year-old set himself on fire after his partner became frustrated with a conversation with United Nations representatives about their plight.
His partner, who cannot be named for legal reasons, testified becoming "upset and frustrated" when she believed the organisation approved of their treatment by the Australian government.
After the conversation, Mr Masoumali became "angry" when he saw the woman was upset and poured petrol onto his clothes and lit them in front of the UN refugee officials.
The pair had been on Nauru for almost three years.
CSS manager Alan Beattie said he was aware the refugees' sense of hopelessness could have been exacerbated by the UN's visit but admitted nothing was done to reduce risks of self harm.
"It certainly wasn't anticipated to have the impact it had," he said.
"But it was anticipated people would certainly have emotions and want to express them to the UNHCR."
Readers seeking support and information about suicide prevention can contact Lifeline on 13 11 14, Suicide Call Back Service on 1300 659 467 and Kids Helpline on 1800 55 1800 (for young people aged 5 to 25).
More information about mental health is available at Beyond Blue.