Jobs and Livelihoods - International Development Contents


6  Improving livelihoods

85. DFID's Economic Development Strategic Framework does not have a pillar dedicated to those who are not in formal employment but are in desperate need for their livelihoods to be improved. Jim Tanburn of the Donor Committee for Enterprise Development notes that the concept of a 'job' is:

    more applicable in wealthy countries where employment is mostly formal; the poor in developing countries live in a very different setting. For example, their employment is typically informal rather than formal. They are 'below the radar' in terms of statistics, partly as a survival strategy against predatory officials, and partly because the costs of formalization are often high. Statistics that exist in more wealthy countries around formal employment do not have an equivalent in developing countries, relating to informal jobs.[140]

86. The informal economy is comprised of enterprises that are not registered with the state and workers who do not receive legal or social protection through their work; and the output from both. The majority of the working age population in developing countries earn their living through the informal economy for example through street hawking in cities or in agricultural work in rural areas. Informal employment comprises more than half of non-agricultural employment in most regions of the developing world: for example 84% in India and 66% in sub Saharan Africa. On average in the informal economy, incomes are low and costs plus risks are high.[141] Mike Bird of WIEGO told us:

    There was a notion in the late 1950s that it was a stage we would go through, and then we would get past it, and formal jobs would be created for the people who needed them. It just has not happened.[142]

    He said that 'informal was now normal' and that there was a need to extend:

    the benefits of work, and the protections that come with work, and the dignity that comes with work as well, into an informal economy, and just accepting that it is always going to be with us.[143]

In Tanzania the National Social Security Fund has been extended to those in informal employment who can also now pay into the national insurance scheme.

87. Mike Bird recommended that DFID support workers' education programmes so they could create representative associations of workers. These associations could then have a dialogue with their government and explain what it was that they needed in order to see their livelihoods improve. He said "the world's working poor, without being organised, are not going to see benefits accrued to them."[144] He explained that his organisation, WIEGO, which had been set up as a small organisation by self­employed women in India in the 1970s now had 1.9 million members, and was part of the International Trade Union Confederation. The women's motto had been, "We are poor but we are many" and as a result of their organisation the women had won many benefits for their members.[145]

88. We asked Stefan Dercon what DFID was doing to help those in informal employment. He said DFID had been carrying out research:

    trying to understand what stops firms from formalising. Why do small informal sector firms not enter into the formal economy? […] Some of the answers are tax regimes are actually quite unfavourable. Sometimes it is a little bit of worry about becoming easy targets for corruption in some places, because they become more visible while, in other places, it has much more to do with financial markets and if they have the ability to start growing.[146]

Agricultural livelihoods

89. Nearly 60% of Africa's working population are employed in agriculture. On average the sector accounts for 25% of the continent's economic growth. Sir Gordon Conway said:

    agriculture is crucial to reducing poverty in rural areas and to increasing rural economies[147]

Luqman Ahmad of Adam Smith International agreed saying:

    Where do we see the greatest opportunity for income change growth? We do see it in agriculture. That is where a lot of the different programmes have gravitated towards, not only because there are great incomes for income change growth, but a lot of poor people also reside in rural areas. You have agriculture as being a strong sector where there are opportunities to impact on livelihoods and incomes. Trying to improve the productivity within agricultural sectors can also contribute to jobs.[148]

Farm Africa and Self Help Africa in their submission argued that:

    The multiplier effect of growth in the agriculture sector is 11 times greater in reducing poverty than other sectors.[149]

90. However Professor Gollin warned that it was not clear whether investment in agriculture had a higher return in terms of growth and poverty reduction than any other investment:

    it is not obvious that a dollar invested in agricultural development achieves growth more easily, partly because the sector is big and it is a little unwieldy. […] it is not necessarily the case that the things that will benefit the agricultural sector most are necessarily agriculture­specific investments. They may be investments in infrastructure, education and other sectors of the economy.[150]

PROBLEMS FOR SUB SAHARAN AGRICULTURE

91. The Foreign Policy Centre said:

    the sector is failing to meet its full potential. Less than 5% of cultivated land is irrigated across Africa. Post-harvest loss ranges from 15-20% and universally there is low use of quality inputs. On average 13 kilograms of fertiliser per hectare is used across Africa south of the Sahara compared to 73 kilograms across the Middle East and North Africa.[151]

Small Foundation said that productivity of smallholder farmers in rural sub Saharan Africa was 75% lower than that of farmers elsewhere. In 2011 Africa spent $35 billion on food imports. Sir Gordon Conway said:

    average cereal yields in Africa, like maize, are a bit over 1 tonne per hectare. In India, they are 2.5 tonnes. In China, they are 3.5 tonnes. Here it is six, seven or eight tonnes or more, and they have places where they could easily produce European level yields. That is not the issue. They can do it; it is a question of how they can do it.[152]

92. In a similar way that economic development has come in and out of fashion with development practitioners so has agriculture-it was a focus of policy in the 1970s and 1980s, then basically ignored in the1990s and 2000s. A Report by the African Smallholders Farmers Group said that although development aid to Africa increased by 250% since the early 1980s the allocation to agriculture had halved. [153]

93. We asked witnesses why there had not been the 'Green Revolution' in Africa as there had been in Asia and Latin America. Professor Gollin thought it was that Asia had had different macroeconomic policies, a greater emphasis on education, better developed markets which he compared to Africa's unstable macroeconomic policies and institutions at the time.[154] Sir Gordon Conway thought it was due to strong political leadership in the countries where there had been a Green Revolution such as the Philippines and Mexico.[155]

94. We also wanted to find out why African Agriculture was still failing. Professor Gollin thought it was because there was a disconnect between the cities and the rural areas-for examples cities in West African find it easier to import food than to procure it from the interior. He blamed bad transport links, lack of processing, distribution, storage and warehousing.[156] Dr Keith Palmer of AgDevCo said:

    one of the biggest barriers of all is the fact that we are coming out of a period of 30 years of failure. There has been essentially no progress and, relative to most of Asia and Latin America, there has been regression over this period.[157]

He thought the three main problems to overcome were:

·  policies which he believed had been "terribly wrong in the 1980s and 1990s";

·  huge under­investment in public infrastructure by which he meant both what he called 'hard infrastructure' such as electricity connections to farms, roads with 24/7 weather capacity to transport goods and 'soft infrastructure' for example the ability to have effective trading relationships so that people could buy from farmers in an efficient way for sensible prices. He said "the whole thing has been broken and needs to be fixed"; and

·  farmers who do not really believe it can work. He described them as older people who had "spent their whole lives bashing their heads against a brick wall, not succeeding in commercial agriculture and falling back on these dismally low incomes that small farmers have been earning." He believed this required taking a "patient view and show people things are working, and then they will see it is working and see an opportunity to do things on a more productive basis."[158]

95. Tim Brosnan of the Small Foundation said the main problems for smallholder farmers were:

·  access to knowledge,

·  access to finance,

·  access to technology; and

·  access to markets.

He believed that all of these had be addressed together and at once if any progress was to be made:

    Make progress in a few areas and one of the other things will block you.[159]

OPPORTUNITIES

96. There is renewed interest in agriculture by donors and world leaders. Sir Gordon Conway believed this was partly due to the food crisis in 2008 and the realisation of leaders that much more needed to be done to improve agriculture.[160] Professor Gollin thought it was due to the advocacy work being done in donor countries.[161] He also believed that with a growing urban middle class demanding more processed food in African cities there were real opportunities for African agriculture by creating a food sector-that was not there thirty years ago.[162] Agriculture was now being seen as having commercial potential for investors including foreign investors.[163]

97. Our predecessor Committee's 2006 report on private sector development recommended:

    If a series of key constraints can be addressed, there is no reason that Africa cannot emulate Asia's successes in achieving agricultural growth. A lack of agriculture-supporting infrastructure is the primary barrier, and increases in infrastructure funding must be targeted towards this sector. Irrigation is a particular concern. DFID must work with other donors to achieve the Commission for Africa-recommended 50% increase in funding for irrigation before 2010. Another priority is re-building the seed industry within Africa. This package of measures should be closely linked into other investment climate improvements such as addressing property rights and land tenure.[164]

98. Sir Gordon Conway said for food security to be achieved in Africa, there was a need for:

·  farmers who had some rights to land;

·  farmers who were part of farmer associations;

·  farmers with access to seed and fertiliser, micro­credit and micro­insurance locally, through agro­dealers;

·  links to markets, through for example warehousing;

·  efficient and transparent markets;

·  value chains where entrepreneurs could become engaged;

·  links into local and regional markets in Africa, and international markets; and

·  political leadership.[165]

DFID'S ROLE

99. Many of the submissions we have received have called for donors to become more involved in the agricultural sector. Self Help Africa and Farm Africa said:

    Along with other donors, DFID's support for agriculture suffered from a near terminal decline for many years. However, over the past five years, its attention to the sector appears to have increased, linked to its growing emphasis on food security, nutrition and, more recently, economic development.[166]

However they have criticised DFID's Economic Development Strategic Framework for making "little reference to agriculture or smallholder farmers."[167] There is a call for DFID to have an agricultural strategy. We questioned the Secretary of State about this and she said that one was currently under consideration.[168]

100. DFID said it has demonstrated a renewed interest in agriculture through its involvement in and support for a range of initiatives linked to agriculture, such as the Nutrition for Growth events held during the UK's G8 Presidency in 2013 and its involvement in other G8 initiatives, such as the New Alliance for Food Security and Nutrition.[169]

101. Dr Keith Palmer from AgDevCo said he 'applauded' DFID's approach:

    That fact is that these are very difficult problems. DFID has encountered a desire to get involved in economic and agricultural growth agendas and they are no better sighted on what are the solutions than many others … so what they have been doing is they have been seeing a number of organisations to explore models for smallholders and for the development of small and medium sized farms.[170]

Tim Brosnan argued that what was needed was an 'emergent strategy' which involved "trying things, experimenting and seeing what happens and then iterating."[171]

Conclusions and recommendations

102. The majority of people working in developing countries are not in formal waged employment but are eking out a living in the informal economy. As one of our witnesses told us 'informal is now normal'. We recommend that DFID make working with those in the informal economy a priority. Social security funding should be extended to those in the informal economy along the lines of the National Social Security Fund in Tanzania.

103. We support DFID's focus on agriculture as the most likely sector to help raise people out of extreme poverty. It is a job intensive industry and the sector that most poor people currently work in. Agricultural processing and the food industry has the greatest potential for many African countries as the raw materials and market are local. We look forward to the publication of DFID's agricultural strategy and recommend that our successor Committee inquire into this new agricultural strategy in the next Parliament.


140   Donor Committee for Enterprise Development Back

141   WIEGO's Approach to Economic Empowerment Back

142   Q115 Back

143   Q115 Back

144   Q124 Back

145   Q124 Back

146   Q210 Back

147   Q136 Back

148   Q4 Back

149   Farm Africa and Self Help Africa Back

150   Q140 Back

151   Foreign Policy Centre Back

152   Q135 Back

153   Africa's Smallholder Farmers Group Report, Executive Summary Back

154   Q137 Back

155   Q138 Back

156   Q144 Back

157   Q167 Back

158   Q167 Back

159   Q167 Back

160   Q150 Back

161   Q150 Back

162   Q148 Back

163   Q151 Back

164   International Development Committee Fourth Report of Session 2005-06 Private Sector Development HC 921, para 97 Back

165   Q141 Back

166   Farm Africa and Self Help Africa Back

167   Farm Africa and Self Help Africa Back

168   Farm Africa and Self Help Africa Back

169   Department for International Development Back

170   Q182 Back

171   Q182 Back


 
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Prepared 24 March 2015