International Development CommitteeWritten evidence submitted by International Development Enterprises (iDE)

EXECUTIVE SUMMARY AND BACKGROUND TO IDE IN ZAMBIA

We have deliberately kept our submission short, sharp and focused on answering as specifically as possible the questions posed in the terms of reference. We would be more than happy to supplement the information provided with examples from the field to demonstrate our points. Furthermore, we would be delighted to bring our Country Director from Zambia to speak to the Inquiry from a practical, field level perspective.

The iDE approach worldwide is to use market-based approaches to address the fundamental barriers to poverty reduction and livelihood improvement for the poorest. In our experience of over 30 years of work in Sub-Saharan Africa and Asia, agricultural growth does not come from aid but by enabling small farmers to produce and sell cash crops in the market place. A major iDE initiative is to support local businesses to deliver the products and services smallholder farmers need to haul themselves out of food insecurity and transform subsistence farming into production for the market at a profit.

iDE has been working in Zambia since 1997 and currently works with approximately 16,000 smallholder farming families across four provinces along the line of rail in Zambia. Our programme focuses on assisting poor smallholder farming households to move from subsistence farming to higher-value market oriented production, thereby increasing their incomes and providing a route out of poverty. To achieve this goal we work with local private sector enterprises to ensure that the services and products farmers need to grow high-value crops (agricultural inputs, equipment, agronomic advice and lines of credit) are available from the market place at affordable cost. iDE also then assists farmers access markets for their produce.

Assessments show small-holder farming households participating in iDE Zambia high-value irrigated crop production programmes achieved an annual household crop income increase of between £198 and £333 in 2011.

iDE is a global consortium of non-profit organisations with the mission to create income and livelihood opportunities for the rural poor. iDE UK is the British member of the global partnership and a UK registered charity. Our major partners in Zambia include: the Bill and Melinda Gates Foundation, AGRA, USAID and Comic Relief.

In this submission we approach key themes that have been highlighted as priority areas for DFID in its operational plan 2011–15, in which iDE has expertise and experience and make brief comments on each of these priority areas based upon our on the ground experience working with small scale farmers and ongoing research being undertaken.

1. Rural Wealth Creation

1.1 We very much welcome the increased focus on rural wealth creation in the DFID Zambia operational plan, and in particular the focus on assisting small-scale farmers to access improved agricultural inputs and advice. Increasing the incomes of small-scale farmers in Zambia is going to be critical to the achievement of MDG 1 (Poverty) which is seriously off-track. We encourage DFID to view small-scale farmers as business people rather than “beneficiaries of charity” only capable of receiving handouts and to promote the development of private sector service providers for small-scale farmers.

1.2 We encourage DFID to view the private sector as a key partner in the delivery of agricultural inputs and advice to small-scale farmers and to focus on delivery of these goods and services through the market without direct subsidy. We note that there is an increasing emphasis on encouraging small-scale service (including input) provision though strengthening the supply chains for goods and services. We welcome this. However, we are concerned that the emphasis risks sidelining the farmer as key to the agricultural value chain. We believe that to be most effective all parts of the value chain need to be strengthened, (including the farmers) if the entire value chain is to provide maximum benefit.

1.3 In recent years iDE has worked with others to strengthen the network of rural input dealers which has expanded significantly in recent years (eg through the ADAPT small-scale agro-dealer programme which iDE has implemented with CARE). This work has included a number of innovative ways to enable the poorest and most isolated farmers to access agricultural inputs, through mobile dealers, small farmer/dealers etc and pack sizes which are appropriate to their small farms. We would encourage DFID to build upon this work in the coming years. We contend, however, that there is still a challenge in achieving “last mile” distribution in many rural areas in Zambia. We are currently working with industry to see how this can be addressed through linking up the supply chain even closer to the farmer.

1.4 Rural agricultural extension provision remains a challenge in Zambia. While there is a certain amount of Government extension advice available for rain-fed crop production there is practically no uniform and widespread government extension system serving producers (or potential producers) of higher value crops. We would encourage DFID to look at initiatives which embed extension and training provision within these input and output value chains and in particular at the opportunities to provide cost-effective agricultural extension advice through rural entrepreneurs. iDE has pioneered the Farm Business Advisor model in Cambodia of individual rural entrepreneurs making a living selling inputs to farmers and also providing advice. iDE is currently piloting this approach in Zambia and sees good potential for sustainable scale-up. This model shows promise as a lower cost option than investment in government extension workers—especially in Zambia where there is a highly dispersed, and expensive to reach population.

1.5 The experience of iDE’s programmes on the ground point to a number of opportunities for small-scale farmers to utilise their assets effectively. Small-scale farmers in many areas of Zambia are particularly suited to production of high-value horticultural crops, and there are increasing market opportunities from the growing urban population and to neighbouring countries for fresh fruit and vegetables. We also note that a significant proportion of small-scale farmers specialising in horticultural production are women and that production of fruits and vegetables has a positive nutritional impact on the household from consumption of a more varied diet. Not only do farmers produce a wider range of crops for consumption but more cash available to the household allows the purchase of foodstuffs with a higher nutritional value.

1.6 Zambia has an abundance of available ground and surface water that can be easily accessed by small-scale farmers through low-cost water lifting technologies such as treadle and rope pumps for irrigating horticultural produce. For a relatively low level of upfront investment small-scale farmers can move to irrigated farming and see their productivity and incomes increase substantially.

1.7 There is good potential in Zambia to utilise Information and Communication Technologies effectively to reduce the costs of reaching the rural population with information and services. iDE is currently engaged in a project supported by the Gates Foundation to develop a mobile phone based market information system. Given the high penetration rates of mobile telephony—this intervention has the potential to create significant efficiencies improving market access to the small-scale farmers. These technologies offer particular benefits to small scale cross border traders where they allow barriers caused by the different ways market information is available to be overcome and seller linked to buyer before the transaction costs of export are incurred.

2. Access to Rural Finance

2.1 Lack of access to financial services for Zambian small-scale farmers is a major constraint in enabling these farming families to move from subsistence agriculture to higher-value market oriented production.

2.2 Micro-finance in Zambia has largely missed out the rural areas of the country and small farm businesses in particular. Most Micro Finance Institutions (MFIs) provide financial products which are more suited to urban business activities and not designed with the cashflow of the small-farmer in mind.

2.3 iDE, in partnership with the Zambian MFI CETZAM, has pioneered the development of credit products and services specifically designed for small-scale farmer business. Contrary to most expectations the results of this partnership have been impressive, with repayment rates of over 97% on a loan portfolio of $1.4 million and over 2,800 client farmers. This cooperation model has demonstrated that commercial agricultural credit provision to small scale farmers is possible. There are enormous opportunities further to scale credit products across the country with further inputs of capital and technical support.

3. Sanitation

3.1 The MDG on sanitation is seriously off track in Zambia and as the DFID operational plan points out there are 6.5 million Zambians without access to adequate sanitation, half the population of the country. We welcome the new focus in the DFID operational plan on sanitation. The DFID target of enabling three million people sustainably to access improved sanitation facilities by 2015 (just three years) is ambitious and is going to require new thinking and approaches to reaching scale in latrine take-up from the under-performing subsidy-based approaches, largely used in the past.

3.2 iDE’s award-winning work with marketing approaches to the provision of sanitation in Asia by stimulating the private sector to provide latrines to rural households on a profit-making basis may offer a mechanism by which large-scale sanitation uptake can be encouraged in Zambia. In a number of Asian countries (Vietnam, Cambodia, Laos, Timor Leste, Nepal) iDE has used Human Centred Design principles to develop latrine products acceptable to and affordable by poor rural communities. iDE has then encouraged existing market actors to provide these products on a for profit basis. The results of this approach have remarkable. In one pilot project in Cambodia this approach known as Sanitation Markets or SanMark delivered over 12,700 latrines manufactured and installed by small-scale private enterprises in just one year—dramatically increasing coverage rates in the target community. We are currently developing plans to take this approach to Zambia and would be pleased to share our Asian experience with DFID Zambia.

4. Climate Resilience

4.1 The key to promoting climate resilience among the rural population in Zambia is facilitating the small-scale farmers to diversify their production towards climate resilient farming systems. In particular a move away from dependence on rain-fed low-value stable crops such as maize—highly vulnerable to drought—towards production of high-value production such as horticulture using irrigation can promote far greater economic and climate resilience.

4.2 There are a number of technologies available on the market in Zambia now that promote greater climate resilience for small-scale farmers through highly efficient use of water for agriculture. Drip irrigation uses 50% less water than flood irrigation and increases crop yields by up to 20%. Micro-irrigation water lifting and storage technologies not only allow farmers to engage in dry season horticultural cropping but also, importantly, allow investments in rain-fed horticultural crops to be protected from the risks posed by irregular rainfall.

5. Gender

5.1 The promotion of women’s economic empowerment is key to sustainable poverty reduction and rural economic growth in Zambia. Evidence from iDE programmes in Zambia1 where small-scale farmers were introduced to micro-irrigation technologies demonstrates that women were very significant beneficiaries when irrigation technologies were adopted. While female- and male-headed households both had positive and robust impacts on crop incomes, female-headed household treatment effects were bigger. This suggests the potential for irrigation technologies to offset the difficulties faced by female-headed farmer households in Zambia.

6. Budget Support

6.1 We welcome a decreased emphasis on Budget Support in the new DFID operational plan. There is little empirical evidence to prove that budget support is a cost-effective way of reducing poverty. We believe that a greater return on investment can be obtained through measures to stimulate and encourage greater private sector participation in the economy. Given that Zambia has recently achieved lower middle income status and donors are planning medium term exit strategies we believe that a vibrant private sector serving all levels of society also offers the most sustainable route to sustainable poverty reduction.

7. Source Documentation

Documents referred to whilst preparing this submission include:

(a)iDE UK/Royal Agricultural College study sponsored by Comic Relief Identifying Market Opportunities for Small Scale Farmers in Zambia, 2011 (four reports unpublished).

Report 1: “Desk Review of the constraints faced by small scale farmers in transitional economies to access high value horticultural markets.”

Report 2: “An overview of the Zambian horticulture industry and constraints faced by small scale farmers to participate in high value domestic, regional and international markets.”

Report 3: “Agronomic review of fresh produce to be supplied to Shoprite Supermarkets and Mack Multiples UK by Zambian small scale farmers.”

Report 4: “Scoping study for the production and marketing of identified fresh produce to domestic and international markets by Zambian Small Scale Farmers.”

(b)International Development Enterprises (iDE), Dr Clifford Zinnes, University and Christopher Nicoletti Rural Prosperity Initiative Impact Study in Zambia 2011, Sponsored by the Bill and Melinda Gates Foundation (unpublished).

(c)International Development Enterprises (iDE), Creating Impact through Irrigation Solutions for Family Farmers: Learning from the iDE Rural Prosperity Initiative, 2011 (unpublished).

March 2012