House of Commons - International Development

Select Committee on International Development Fourth Report

7 Rural livelihoods

141. Kabul is a thriving, bustling city—we saw for ourselves that the markets are busy and stalls are filled with goods; traffic is congested, especially at peak hours; schools are open; wedding halls, bathhouses and mosques line the roadsides and the streets are full of men, women and children going about their daily business. Mazar-e-Sharif is an equally busy city with all the normal evidence of flourishing trade and economic activity. In many rural areas of Afghanistan, however, economic activity is not as apparent. On our visit we drove around and outside Lashkar Gah—there were few cars on the roads, instead there were tractors, donkeys and camels; crops were growing in the fields but irrigation and drainage were lacking.

142. Promoting rural development should be a key part of alternative livelihoods programmes. Yet NGOs have expressed strong concerns that support for state building has meant that rural development, and in particular agriculture, has been neglected.[175] Oxfam told us that:

"While aid has undoubtedly contributed to progress in Afghanistan, especially in social and economic infrastructure, the development process has not sufficiently benefited the majority of the population who live in rural areas, where essential services, such as water or electricity, remain scarce or insufficient."[176]

143. In part this is related to the failure of central government adequately to devolve resources and decision-making powers down to provincial structures, and insufficient and insecure funding for those sub-national structures which have been most effective—namely the Community Development Councils (discussed in chapter 5). It is also the case that donor support to the agricultural sector has been modest. Oxfam estimate that donors have spent only US$270 million directly on agricultural projects over the last six years.[177]

DFID's livelihoods programme

144. One of DFID's core areas of activity is improving the livelihoods of local people. DFID's funding in this area supports Government of Afghanistan programmes including:

The National Solidarity Programme (discussed in chapter 5)

The Microfinance Investment and Support Facility for Afghanistan

The National Rural Access Programme which mainly funds road-building

The Horticulture and Livelihoods Programme to improve incentives for private investment, and strengthen institutional capacity, in key agricultural sectors.[178]

In addition to funding these programmes at a national level, DFID funds the Helmand elements of these programmes and the Helmand Agriculture and Rural Development Programme which has financed the construction of over 550 wells, and the rehabilitation of 40 kilometres of rural roads.[179]

Priority areas

145. The DFID-World Bank study identifies four areas which have the most potential to shift economic incentives away from opium and toward the legal economy: agriculture, irrigation and livestock; rural enterprise development; rural infrastructure; and local governance.[180]This section provides some evidence of the relevance of the first two of these in particular.

146. BAAG supports the Government of Afghanistan livelihoods programmes but expresses strong concern that there is not enough donor focus on agriculture:

"support for the backbone of the rural economy (agriculture) is covered in a very piecemeal and inadequate fashion because the Ministry of Agriculture, Irrigation and Livestock (MAIL) currently has very little capacity to provide the outreach and extension needed. As a percentage of DFID's portfolio, support to agriculture features hardly at all. That is regrettable, since support in that sector (and related off-farm enterprise development) is essential for helping rural communities meet basic needs, and thus become more stable and less prone to succumb to illicit activities. Sufficient support for a range of social protection and safety net measures is also necessary to alleviate wide-spread food insecurity that is still very prevalent, particularly in more remote and inaccessible areas." [181]

147. We were told that the Ministry of Agriculture was not as effective as it should be.[182] Oxfam reports that in Daikundi province the Department of Agriculture has a staff of 16, only two of whom have relevant qualifications, and no funding for projects.[183] Most of DFID's programmes are in fact channelled through the Ministry of Rural Rehabilitation and Development which we were told had greater capacity than the Ministry of Agriculture.

148. In Balkh province we learned about some of the problems facing farmers trying to grow melons. These had been suggested as an alternative crop but farmers were not sure how to grow them. In addition the melons were becoming infected with fleas which they did not know how to treat. The same village was also seeking investment in irrigation for its livestock. Balkh is one of the provinces which has been declared poppy-free in 2007 (see paragraph 121). In Helmand we talked with some farmers who were grateful for wells provided under the Helmand Agriculture and Rural Development programme but they said that they also needed drainage and irrigation for their fields in order to increase their yields. Such suggestions have also been made in the study on economic alternatives to opium poppy.[184] Afghanaid told us that they employed the only Afghan vet in Ghowr province which was one of the most significant provinces for livestock.[185] The new Horticulture and Livelihoods Programme which DFID is contributing to is at an early stage although DFID expect it to deliver increased outputs from the horticulture, poultry and dairy sectors.[186]

149. There has been insufficient attention to and funding for the agricultural and livestock sectors which could provide a range of alternatives to poppy cultivation. Improved irrigation would help to increase yields and thus income from agriculture. We would welcome an update on the possibilities of restoring and improving irrigation and drainage systems. The provision of relevant agricultural extension services to farmers could help to reduce poppy cultivation. The UK has long experience of working on agriculture. We recommend that DFID establish a programme to offer technical advice and training in agricultural extension services.

150. Whilst we support DFID's work with the Ministry of Rural Rehabilitation and Development, ways must be found to support and build capacity in the Ministry of Agriculture so that appropriate programmes in this sector can be developed. In addition, programmes must be devised to ensure that a range of social protection and safety measures are in place. In order to achieve these two goals, donors will need to allocate more funds to this sector—most effectively in partnership with the Ministry of Agriculture.

Microfinance

151. The provision of microfinance has been identified as an important mechanism for providing social protection and promoting employment in post-conflict environments.[187] The interim-Afghanistan National Development Strategy included microfinance as a priority and in 2003 the Microfinance Investment and Support Facility for Afghanistan (MISFA) was established. MISFA's objective is to help establish a healthy microfinance sector. Since 2004, credit has been provided to 375,000 clients in 23 provinces, of whom around 70% are women.[188] DFID has provided £20 million to MISFA.

152. Microfinance has been found to be an important way of bringing women into the workforce and giving them greater voice within their households and the community. In Kabul we visited the Ariana microfinance project, supported by MISFA, which loaned small amounts of funds—on average $233—over a two-year period. Of their 8,432 clients, 6,362 were women. They had a 99% repayment rate. We met some of these women who explained the economic benefits of the loans for them. Most of the women had no business qualifications. We also visited the Finca microfinance project in Mazar-e-Sharif which funded existing small businesses.

153. The potential benefits of microfinance could be extended if MISFA was encouraged to scale up its activities in rural areas. The success of microfinance initiatives in more urban areas can provide a base from which lessons can be learned. The development of rural enterprises would provide an alternative income stream to poppy production. In addition, since poppy traders offer credit facilities to farmers, microfinance could become a means of displacing these traders and providing an alternative means of assistance for the large numbers of rural poor who are indebted to poppy dealers.[189]

154. The report on economic incentives and development to reduce opium poppy cultivation states that "the greatest counter-narcotics impact is likely to result from interventions which reach the largest number of rural households, particularly the poor, and bring the most income and employment."[190] We agree that counter-narcotics strategies need to reach as many poor people as possible and offer income and employment opportunities. We recommend that the UK Government gives greater priority to a multifaceted rural livelihoods approach.

155. Microfinance initiatives are an important way of bringing women into the workforce. They may also act as a vehicle for women's empowerment in Afghanistan. We support attempts to scale up microfinance initiatives under the Government of Afghanistan's Microfinance Investment and Support Facility. We recommend extending the outreach of microfinance to rural areas to encourage the growth of rural enterprises and the displacement of the role of poppy traders in providing credit.

175 Ev 81 [BAAG] Back

176 Ev 118 [Oxfam] Back

177 Ev 120 [Oxfam] Back

178 Ev 58 [DFID] Back

179 Ev 58 [DFID] Back

180 Ward, Mansfield, Oldham, Byrd, Afghanistan: Economic incentives and development initiatives to reduce opium production, 20 December 2007 pii. Back

181 Ev 81 [BAAG] Back

182 Q 109 [Mr Page] Back

183 Ev 120 [Oxfam] Back

184 Ward, Mansfield, Oldham, Byrd, Afghanistan: Economic incentives and development initiatives to reduce opium production, 20 December 2007 Back

185 Q 109 [Afghan aid] Back

186 Ev 58 [DFID] Back