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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