SAGA PROGRESS REPORT (12/04-12/05) &
UPCOMING WORKPLAN (11/05-11/06)

1. From the International Conference on Shared Growth in Africa
   sponsored by Cornell University, The Institute of Statistical, Social and Economic Research (ISSER-University of Ghana), and The Africa Region of the World Bank
   July 21-22, 2005
   Accra, Ghana
   
   
   • Unemployment in South Africa, 1995-2003: Causes, Problems and Policies
     January 2005
     Geeta Kingdon and John Knight
     It is our view that developments in the labour market hold the key to South African prosperity or penury. It is from the labour market that the income benefits from growing labour scarcity, or the threat to social and political stability from growing unemployment and underemployment, could emerge. The government response should be to keep this issue at the forefront and to pursue whatever policies will improve labour market outcomes. Our primary concern in this paper is with unemployment and the informal employment that often disguises unemployment. However, in order to understand these phenomena it is necessary to consider a range of related indicators such as the adult population, the labour force, labour force participation, employment, distinguishing here between formal and informal employment, or between wage- and self-employment, and real wages and incomes.
     
     
   • Analysis of farmers’ preferences for development intervention programs: A case study of subsistence farmers from Eastern Ethiopian Highlands
     July 2005
     Wagayehu Bekele
     The aim of this paper is to better understand farmers’ perception of the relevance of different development intervention programs. Farmers’ subjective ranking of agricultural problems and their preference for development intervention are elicited using a stated preference method. The factors influencing these preferences are determined using a random utility model. The study is based on a survey conducted in the Hunde-Lafto area of the Eastern Ethiopian Highlands. Individual interviews were conducted with 145 randomly selected farm households using semi-structured questionnaires. The study suggests that drought, soil erosion and, shortage of cultivable land are high priority agricultural production problems for farmers. Low market prices for farm products and high prices of purchased inputs also came out as major problems for the majority of farmers. Farmers’ preferences for development intervention fall into four major categories, market, irrigation, resettlement, and soil and water conservation. Multinomial logit analysis of the factors influencing these preferences revealed that farmer’s specific socio-economic circumstances, and subjective ranking of agricultural problems play a major role. It is also shown that preferences for some interventions are complimentary and need to be addressed simultaneously. Recognition and understanding of these factors, affecting the acceptability of development policies for micro level implementation, will have significant contribution to improve macro level policy formulation.
     
     
   • Socioeconomic Impact of Export Oriented Agricultural Production on Farmers, in Eastern Ethiopia
     July 2005
     Adem Kedir
     This study was undertaken to assess the socio-economic impact of producing export oriented agricultural crops on the livelihoods of the farmers in eastern Ethiopia. A random sample of 305 farmers was studied. Comparisons were made between producers and non-producers using the Z-test and regression analysis. It was found that producers of export oriented crops are better off than the non-producers in terms of sending their children to school, housing conditions and ability to finance their families’ food requirements. The impact of father’s education, number of children and livestock ownership on the improvements in the livelihoods of the farmers and the problems facing the farmers were also emphasized. The implications of the findings for the policy makers were also pointed out.
     
     
   • Is Sub-Saharan Africa a Convergence Club?
     July 2005
     Johnson P. Asiama and Maurice Kugler
     The African growth effect has been found to be significant in many empirical growth research papers — suggesting that even after controlling for a wide range of variables that potentially affect growth, the Sub-Saharan African dummy has an adverse impact on economic growth. This has thus remained one of the unexplained empirical puzzles in the growth literature. Earlier studies have attributed this growth tragedy to factors such as macroeconomic instability; external shocks; human capital inadequacies, institutional and political uncertainty, geography, ethnic fractionalisation, etc. Moreover, the recent perspective about the effect of colonial, geographical and disease factors in previously colonised regions such as Africa, also offers significant insights about the growth situation in Sub-Saharan Africa. On the other hand, some have suggested that Sub-Sahara Africa could simply be an example of club convergence from the lower end. We evaluate the latter view, and provide some new evidence on long run growth dynamics in Sub- Sahara Africa. We make use of the dynamic panel GMM methodology, which by construction controls for such country-specific and time-invariant effects due to history, disease or geographic factors. Our findings suggest that Sub-Saharan Africa is not an example of a convergence club. Rather, countries conditionally converge to their own steady states, and this could explain the increasing heterogeneity in economic conditions across the sub-region. In addition, we found openness, the extent of financial development, and foreign direct investment provide beneficial marginal effects on the steady state growth path of each country in the region. By contrast, government consumption, inflation, and excessive monetization have a negative effect on growth.
     
     
   • An Inquiry into the role of personal wealth in the pastoralist – agropastoralist conflict resolution in Yerer and Daketa Valleys, Eastern Ethiopia
     May 2005
     Ayalneh Bogale and Benedikt Korf
     Capitalizing on the mobility of livestock is one of the major ways in which pastoralists have managed ecological uncertainties and risks, as it enables them the opportunistic use of the resources. However, agricultural encroachment onto rangelands by nearby agro-pastoralists has led to a shortage in grazing area and threatened the mobility of the pastoralists. As this process leads to a significant disruption and weakening of the risk-management systems of pastoralists, they seek for various institutional arrangements with agropastoralists to enable them access to common grazing land. Based on an exploratory survey and data derived from interview of 146 households in eastern Ethiopia, this paper uses an adaptation of the sequential rationality game theoretical model and institutional analysis to discrete choice models. The analytical framework, in its entirety, presents a simple model of household and community level decision-making, in which they are concerned about their welfare along many different dimensions. Choice of institutional arrangement, namely no opinion, reciprocal, sharing milk and the right to use milk, is modelled using multinomial logit discrete choice procedure. The model chi-squared statistic is significant at the 1% level of probability. For all arrangements, there are three to five observable characteristics of household that provide statistically significant predictive power for practicing a given arrangement. The paper argues resource scarcity may enhance the bargaining position of asset-poor members of an agro-pastoral society and urges the wealthier agropastoralists to comply with a nonviolent resolution of competing claims towards a resource sharing arrangement.
     
     
   • Stochastic Technology and Crop Production Risk: The Case of Small- Scale Farmers in East Hararghe Zone of Oromiya Regional State in Ethiopia
     July 2005
     Bekabil Fufa and R. M. Hassan
     This study used the Just and Pope stochastic production technology specification to analyse the crop production and supply response behaviour of farmers in East Hararghe zone of Ethiopia under production risk. The results showed that improved seed, human labour, oxen labour and planting date were the most important determinants of yield levels of the crops grown in the area. On the other hand, the use of improved seed and fertilizer were yield risk increasing inputs in the production of maize and sorghum crops. However, early planting for all the annual crops grown, use of human labour for the package crops and oxen labour for all food crops grown in Faddis district were found to have yield risk reducing effects. The results have important implications for agricultural technology development and transfer in the study area. To reduce the yield risk increasing effect of fertilizer, the development and promotion of new crop varieties should consider fertilizer application trails for different levels across different agro-ecologies and farmers’ conditions. Also, farmers need to be provided with adequate advice and information on the use and application of fertilizer. Moreover, to overcome the yield risk increasing effect of improved seed, varieties should be tested for their suitability to varying agro-ecologies and management conditions of the farmers in the area. Extension advice and information on the management of the improved crop varieties need to be provided to the farmers to improve the yield stability of the crops. In addition, extension advice on early planting, provision of meteorological information to farmers to aid them in planting date decisions and development of short period maturing varieties could help to reduce variability in the yield levels of crops grown in the area. Finally, improving the small-scale farmers’ access to oxen would also enable the farmers to achieve stable yields from crop production.
     
     
   • Can Africa Reduce Poverty by Half by 2015? The Case for a Pro-Poor Growth Strategy
     June 2005
     Arne Bigsten and Abebe Shimeles
     This study uses simulations to explore the possibility of achieving the target of halving the percentage of people living in extreme poverty in Africa by 2015. A propoor growth scenario and a constant inequality scenario are compared. It is shown how initial levels of inequality and mean per capita income determine the cumulative growth and inequality reduction required to achieve the target. The simulations show that small changes in income distribution have a large impact on the possibility of halving poverty. It is shown that the trade-off between growth and inequality varies greatly among countries and that their policy choices thus are quite different. In some cases small changes in income distribution can have a large effect on poverty, while in others a strong focus on growth is the only viable option.
     
     
   • Shared Sectoral Growth: Evidence from Côte d’Ivoire, Ghana, and Zimbabwe
     June 2005
     Niels-Hugo Blunch and Dorte Verner
     This paper examines agriculture, industry and service sector growth in Côte d’Ivoire, Ghana, and Zimbabwe over more than three decades. The analyses find at least one long-run sectoral relationship in each country. This indicates the existence of a large degree of interdependence in long-run sectoral growth, implying that the sectors “grow together” or, similarly, that there are externalities or spillovers between sectors. This also provides evidence against the basic dual economy model, which implies that a long-run relation cannot exist between agricultural and industrial output. The impulse response and short-run sectoral growth analyses support these results, as both imply the existence of a positive link between growth in industry and growth in agriculture. Policy implications are also discussed; these include directing more attention towards the interdependencies in sectoral growth broadly defined. In particular, our findings have implications for the design of education and health programs, as well. This improved understanding of intersectoral dynamics at all levels may facilitate policy implementation aimed at increasing economic growth— and thereby ultimately improving peoples’ livelihoods—in Africa.
     
     
   • Why Has Burundi Grown So Slowly? The Political Economy of Redistribution
     June 2005
     Janvier D. Nkurunziza and Floribert Ngaruko
     This study analyses Burundi’s economic performance over the period 1960-2000 and finds that it has been catastrophic. The usual economic factors determining growth are endogenous to political objectives, suggesting that politics explains the dismal performance. This finding limits the relevance of textbook models of growth relying on the assumption of a competitive resource allocation environment. When cronies rather than qualified managers are running the economy, when priority is given to investment projects in function of their location rather than the objective needs of the economy, economic models lose their explanatory power. Economic performance has been shaped by the occurrence of violent conflicts caused by factions fighting for the control of the state and its rents. The capture of rents by a small group has become the overarching objective of the governments that have ruled the country since the mid- 1960s. In this regard, economic performance will not improve unless the political system is modernised from a dictatorial regime playing a zero-sum game to a more democratic and accountable regime. It would be naïve to advocate economic reforms as a way of boosting the country’s economy if they are not preceded or at least accompanied by political reforms. One central message of this study is that Burundi’s growth failure is the result of specific identifiable factors evolving around governance. There is nothing fundamentally wrong with Burundi: Development failure may be reversed if the problems identified in this study are properly addressed.
     
     
   • Organizational Culture, Performance and Public Sector Reforms in Africa: The Ghanaian Case
     July 2005
     Francis Owusu
     Public sector reform programs implemented across Africa, including the World Bank’s “first” and “second” generation reforms, are based on the assumption that all public organizations are inefficient. This paper argues that this assumption is problematic and has had significant implications for policy. By failing to recognize that not all public organizations perform poorly, we ignore any potential lessons that could have been learnt from the experiences of organizations that have managed to perform effectively under the same social, political, economic and institutional environment. The study is based on the premise that the performance of an organization is influenced by the culture within the organization—which results from the ways in which organizations adapts to the external environment and the ways they ensure internal integration. Some organizations develop cultures that support, encourage and reward high performance; whereas others adopt a culture that perpetuates poor performance. Thus, public-sector reforms must be viewed as changing, or in some cases sustaining, organizational culture. Using Ghana as a case study, the study highlights lessons that can be learnt from studying differences in the performances of public organizations. It focuses on three-related issues. First, it addresses one major flaw of past reform policies—the assumption that all public organizations are ineffective. Second, it explores the relationship between organizational culture and performance. Third, it provides broad outlines of a comprehensive public sector reform strategy, centered on changing organizational cultures.
     
     
   • Local Governance and Resource Allocation
     July 2005
     Sagre Bambangi and Al-hassan Seidu
     An important function of District Assemblies in Ghana is to ensure that the benefits of growth are shared equitably and fairly. One way of achieving this is to promote efficiency in resource allocation at both individual and community levels. This paper utilizes the case study approach to assess efficiency of resource distribution in four Districts in the Northern and Upper East regions of Ghana with emphasis on infrastructure, micro-credit, human and information resources. The conclusion is that the Medium Term Development plan prepared within the framework of the themes of the Ghana Poverty Reduction Strategy (GPRS) is an important guiding document in resource allocation. The allocation of community facilities such as schools, health and administrative infrastructure have been found generally to conform to the plan in spite of occasional erratic influences and decisions of some personalities. However, in terms of resources that are allocated to individuals such as the Poverty Alleviation Fund (PAF) the guidelines are often circumvented. It is recommended that Government policy of zero tolerance for corruption needs to be demonstrated at the local level in terms of the disbursement of the PAF. Priority must be given to development considerations instead of partisan party loyalty in appointing DCEs in order to check politicisation of resource allocation. A serious consideration must be given to the full implementation of the sub-district structures to facilitate information dissemination. For the people to “feel the growth in their pockets” resource allocation at the local level needs to be closely monitored to ensure compliance with guidelines.
     
     
   • An Analysis of the Impact of HIPC Initiative on Poverty Alleviation in Developing Countries: Evidence from Cameroon
     June 2005
     Arsene Honore Gideon Nkama
     After independence in 1960, Cameroon’s real economic growth was optimistic. Growth averaged 6 per cent during the 65-86 with agriculture being the main source of growth. When oil production started by the end of the 70s, Cameroon experienced a boom period. Its external resources balance that was negative in 1977 became positive. Gross domestic investment increased from 21% of GDP in 1977 to more than 30% in 1986. GDP per capita increased at about 4 percent during the 65-86. The boom period led to traditional growth sectors carelessness so their productivity declined. Public enterprises created during this period were highly inefficient. The banking system became very dependent on oil revenue as well as on government deposits.
     
     
   • Economic Success or Human Development Failure? Development Partners or Development Parasites? The truth behind the truth: Evidence from Uganda
     July 2005
     Diego Angemi
     During the 1990s, and especially over the second half of the decade, Uganda experienced high economic growth, falling income poverty, and relative political stability. In addition, while it’s still too early to assess properly the medium term impact of direct budget support (DBS) on the lives of poor people, Uganda features among the few countries where real gains have been made in terms of scaling up the delivery of basic health and education services, increasing the focus of the budget, and giving people confidence to claim their rights (DFID, 2004). There is evidence to support the claim that the period between 1992 and 2000 may mark the transition of Uganda from recovery to fresh growth. Recovery has necessitated the rehabilitation of traditional export crops, the restoration of the public sector and a reversal of the retreat to subsistence. In this economic environment, the percentage of Ugandans who were poor decreased sharply from 56% in 1992 to 34% in 2000.
     
     
   • Public Expenditure and Human Capital in Nigeria: An Autoregressive Model
     July 2005
     Michael Adebayo Adebiyi
     In this study, we set out to empirically investigate the direction of causality between human capital (i.e. education and health) expenditures and defence spending including debt service obligations in Nigeria, using annual time series data from 1970 to 2000. Some statistical tools are employed to explore the relationship among these variables. The study examines stochastic characteristics of each time series by testing their stationarity using Augmented Dickey Fuller (ADF) and Phillip Perron (PP) tests. Then, the effects of stochastic shocks of each of the endogenous variables are explored, using vector autoregressive (VAR) model. The evidence from the Granger causality tests shows that, in Nigeria, debt service obligations determine human capital expenditure such as education. Also, from impulse response analysis, the result shows that unanticipated effect of debt service obligations or defence spending on human capital expenditure is ambiguous in Nigeria.
     
     
   • Operationalizing Pro-Poor Growth: A Country Case Study of Ghana
     October 2004
     Andrew McKay and Ernest Aryeetey
     This paper is prepared as part of the multi-donor Operationalising Pro-Poor Growth study, which is focusing on aiming to provide advice to governments on how to facilitate the involvement of poor people in the growth process. It is prepared as one of 14 case studies prepared as part of this project, and following a common outline structure and analytic approach. The case study papers are prepared to assess countrylevel evidence on the relationships between growth performance and trends in poverty, and on how this can be enhanced. This implies therefore an analysis which combines macro and sectoral analysis of the determinants of growth and its distributional pattern, with more micro-level poverty analysis. While much of the analysis investigating the links between pat-terns of growth and changes in poverty is historical, assessing past evidence, there is also an important forward looking component on how poverty-reducing growth can be initiated, sustained or enhanced….
     
     
   • Characteristics and Determinants of Urban Youth Unemployment in Umuahia, Nigeria: Implications for Rural Development and Alternative Labour Market Variables
     June 2005
     Raphael N. Echebiri
     Umuahia metropolis typifies a fast growing capital city in terms of population growth rate. Its population grew from less than 20,000 residents in 1991 to an estimated excess over a million at present. This astronomical growth in population followed the creation of Abia State in 1991 and the subsequent change in the status of Umuahia as a state capital territory. Following this tremendous rise in population, Umuahia North metropolis which is the core capital city now has a teaming population of youths, most of whom are unemployed. This study was conceptualized against the backdrop of the increasing social and economic problems associated with youth unemployment in the metropolis. Some effort was made to characterize youth unemployment in the city from the perspective of the socio-economic and labour market perceptions of a sample of 220 youths drawn from areas with varying residential configurations. The sample randomly included youths, unemployed and employed in order to provide some basic counterbalancing assessment of the situation. It was found that youth unemployment in the town shared common characteristics with that observed in several other cities in the developing world. In particular, age of respondent was found to be inversely related to level of unemployment, hence suggesting that unemployment in the city was most pronounced among youths. Educational attainment and job preference were interrelated variables which had direct relationship with unemployment level. It was particularly noted that majority of the unemployed and first-time job seekers preferred salaried employment to selfemployment. This orientation, although deriving from the economic and human capital development realities of the country, could be retrogressive in a liberalized market-driven economy. The youths showed strong aversion to rural-residency for several reasons prominent among which were lack of employment opportunities and poor social and physical infrastructures. Some policy issues were raised to provide a basis for a stronger community-driven rural and agricultural development strategy and alternative labour market variables.
     
     
   • Structure of Sectoral Decomposition of Aggregate Poverty Changes in Cameroon
     July 2005
     Francis Menjo Baye
     This paper defines an exact decomposition rule based on the Shapley Value for assigning entitlements in distributive analysis and assesses the within—and between sector contributions to changes in aggregate poverty. Between 1984 and 1996 poverty remained a rural phenomenon in Cameroon. It became more widespread, deeper and severer in both rural and urban areas, but more so in urban than rural areas. While the within sector effects disproportionately accounted for the increase in poverty in the period 1984-1996, the between-sector contributions in both rural and semi-urban areas played a mitigating role on the worse effects of the increase in poverty. These findings indicate the potential positive feedback effects of migration and the associated remittances as an effective strategy used by migrants to left their families and villages out of the worse effects of poverty. The implication of this interpretation is that decision-makers need to better understand the factors that push or pull potential migrants. Rural-urban mobility could, therefore, be viewed as a strategy used by households to moderate the worse effects of poverty and a vector of shared growth. The implications for public policy, in terms of open unemployment and associated social and insecurity problems at the receiving end, point to the wisdom of addressing the push-factors via targeting more in favour of rural areas.
     
     
   • Gender Inequalities and Economic Growth: New Evidence from Cassava-based Farm Holdings in Rural South-Western Nigeria
     July 2005
     Awoyemi Taiwo Timothy
     It is a widely accepted fact that persistent inequality between men and women constraints a society’s productivity and ultimately slows its rate of economic growth. The economy pays for this inequality in reduced labour productivity today and diminished national output tomorrow. Motivated by this the study aim is to assess the possibilities of enhancing productivity gains by improving the efficiency of smallscale agriculture through gender-responsive intra-household allocation of resources in South-Western Nigeria. It adopts a stochastic parametric decomposition method which yields efficiency measures that are not distorted by statistical noise to estimate the efficiency level of resource allocation by small-scale cassava producers. The results indicate that average overall productive efficiency in the sample was 75.78 per cent implying that small scale cassava farmers in the sample could reduce total variable cost by 24.22 per cent if they reduce labour, fertilizer, land and capital applications to levels observed in the changing input mix (technical efficiency) and then obtain optimal input mix for the given input prices and technology (allocative efficiency). The average technical efficiency and allocative efficiency indexes for the sample were 82.2 per cent and 92.2 per cent respectively. Also, evidence from empirical analysis of data from the male respondents showed that the average economic, technical and allocative efficiency indexes were 88.06 per cent, 89.34 per cent and 78.67 per cent respectively while the same computed for the female sample were 94.9 per cent 74.85 per cent and 71.03 per cent respectively. Labour was the most limiting factor in cassava production suggesting that the technologies that enhance the productivity of labour are likely to achieve significant positive effects on cassava production. The paper shares the notion that producers control over the means of production and impact of development are related and has influence on the economic efficiency and growth of society. Again, technical inefficiency constituted a more serious problem than allocative inefficiency thus most cost savings will accrue to improvement in technical efficiency.
     
     
   • Labor Market Flexibility, Wages and Incomes in sub-Saharan Africa in the 1990s
     June 2005
     Geeta Kingdon, Justin Sandefur and Francis Teal
     This paper provides an overview of how African labor markets have performed in the 1990s. It is argued that the failure of African labor markets to create good paying jobs has resulted in excess labor supply in the form of either open unemployment or a growing self-employment sector. One explanation for this outcome is a lack of labor market ‘flexibility’ keeping formal sector wages above their equilibrium level and restricting job creation. We identify three attributes of labor market flexibility. First whether real wages decline over time, secondly the tendency for wages to adjust in the face of unemployment, and thirdly the extent of wage differentials between sectors and/or firms of various size. Recent research shows that real wages in Africa during the 1990s may have been more downwardly flexible than previously thought and have been surprisingly responsive to unemployment rates, yet large wage differentials between formal and informal sector firms remain. This third sense of the term inflexibility can explain a common factor across diverse African economies - the high income divide between those working in large firms and those not. Those working in the thriving self-employment sector in Ghana have something in common with the unemployed in South Africa – both have very low income opportunities relative to those in large firms.
     
     
   • Institutional Foundations for Shared Growth in Sub-Saharan Africa
     July 2005
     Machiko Nissanke and Alice Sindzingre
     The paper examines the dynamically evolving triangular relationships between institutions, growth and inequality in the process of economic development, in order to deepen the understanding on institutional conditions for pro-poor growth and shared growth. In this specific context, the paper discusses the institutional conditions found in Sub-Saharan Africa, which may have produced the growth pattern that are unequal and against the poor. The analysis shows that Sub-Saharan African countries require transforming institutions for embarking upon and sustaining a development path which would ensure shared growth in years to come. The paper first evaluates the growth-inequality-poverty nexus, as found in the recent literature, which increasingly challenges the trade-off between growth and equity, as postulated in the traditional theories. Various definitions of pro-poor growth are discussed and a sharper definition of the concept of ‘shared’ growth is provided. Definitions of institutions are then examined, as well as the triangular interrelationships between institutions, inequality and poverty. The paper finally analyses specific institutional conditions found in Sub-Saharan Africa that prevent economies from emerging out of low-equilibrium poverty traps that are characterised by low economic growth, unequal distribution of income and wealth as well as unequal access to resources and power.
     
     
   • Market Structure and Productivity Growth in Ghanaian Cocoa Production
     June 2005
     Andrew Zeitlin
     This paper argues that market structure, and in particular the degree of competition among Licensed Buying Companies, is an important determinant of productivity in the Ghanaian cocoa industry. This issue is studied in the context of a two-year doubling of cocoa output at the national level. Evidence from microeconomic data confirms a significant increase among existing farmers, although this rate of increase is smaller than that observed at the national level. Analysis of production reveals an economically significant and statistically robust relationship between village-level Licensed Buying Company competition and the level and growth rate of total factor.
     
     
   • Can Africa Achieve Millennium Development Growth Targets Through Effective Negotiations of the Doha Development Mandate?
     June 2005
     William A. Amponsah
     The general consensus of opinion in international economic development circles is that Africa is lagging far behind in global efforts to meet the Millennium Development Goals (MDGs) by its target date of 2015. Africa is still far from reaching the targeted goal of an annual growth rate above 7 percent a year required to achieve economic convergence with other developing countries and to maintain similar quality of life. In particular, sub-Saharan Africa (SSA) has seen poverty rise and life expectancy decline in the five years since the Goals were declared in 2000 (United Nations Economic Commission for Africa, 2005). But achieving the MDGs would provide a unique opportunity for Africa and its development partners to seriously tackle the important issue of reducing endemic poverty for the continent.
     
     
   • Social Exclusion and Insurance Failure for the Poorest: On Informal Finance through Social Networks in Kenya’s Smallholder Sector
     April 2005
     Heidi Hogset
     This study looks at informal finance through social networks among smallholder farmers in Kenya. This paper explores the patterns of economic transfers within networks, and characterizes recipients and providers of informal credit and insurance, as well as the relationship between them and the purposes such transfers serve. Participation in transfer networks depends on one’s resources. The poor engage in frequent, low-value transfers in kind and in exchange labor. The poorest do not engage in cash transfers. Those of intermediate wealth engage more actively in transfers in kind, but not cash. The rich (or non-poor) are also active in transfer networks, and it is they who are able to raise large cash amounts through social networks, either as loans or gifts. As people get wealthier, they engage more in cash transfers and less in transfers in kind. People who have access to formal financial services, i.e., formal banks or Savings and Credit Cooperatives (SACCOs) participate less in transfers through networks. Those who are able to save in banks are less vulnerable to shocks. Women are more active than men in Rotating Savings and Credit Associations (ROSCAs), and they also engage more frequently in bilateral transactions within networks, especially for transfers in kind. Transfer networks are correctly perceived as kinship-based and family members are important sources of unearned income (remittances). Transfers through networks are important for consumption smoothing, in addition to investments in income-generating activities and payment of school fees, but not for assistance when a household member is seriously ill. The failure of social networks to provide support during sickness and death is particularly disturbing viewed in light of the ongoing AIDS crisis which is keenly felt in the villages where the study took place.
     
     
   • Ghana: Recent Trends in Growth and Poverty Reduction
     July 2005
     Carlos B. Cavalcanti
     The received wisdom about poverty and growth in Ghana is that poverty is mostly rural and that its economic structure has changed little since independence. As a result, the country’s poverty reduction record has been mixed, with growth benefiting primarily urban and export producing regions, leaving behind deep poverty in regions of subsistence agriculture, especially in Northern Ghana. Recent evidenced indicates, however, that poverty continuous declining, especially in rural areas, with slight increases in urban areas, albeit from much lower levels. This development reflects the fact that the structure of employment in the Ghanaian economy has changed quite significantly, with a shift away from agriculture and toward urban activities linked to trade and other services, as well as to manufacturing and construction. These labor market transitions are even more pronounced among younger workers, reflecting rapid urbanization and rising rates of educational attainment. While this virtuous cycle of urbanization has lead to progress in poverty reduction, sustaining the progress achieved so far will depend on maintaining the current economic expansion and raising the rate of job creation. The economic expansion of the last three years has been driven by the exceptional combination of record cocoa crops and historically high world market prices for cocoa and gold. Export growth, combined with rising workers remittances from abroad and continuous aid flows, have allowed the urban economy to expand and workers to move from rural to urban areas. This transition is still unfinished, however, as most of the new jobs are being created in the informal sector, meaning lower wages, greater job insecurity and lower productivity. Lower productivity, in turn, means less scope for raising real wages, and is a reminder that removing obstacles for the growth of private sector firms is essential for the sustainability of poverty reduction and the economic expansion. The rest of this paper elaborates on these points. It begins with a quick overview of changes in Ghana’s poverty profile. It considers next the transitions in the labor market, and how these reflect broader changes in the economy. It proceeds then to investigate the factors driving or hindering these labor market transitions. The last section concludes with a summary of the main findings.
     
     
   • Women Education and Economic Empowerment in Tanzania: A Women Business Survival Model Analysis
     July 2005
     Aurelia N. Kamuzora
     This paper examines the survival analysis of credit supported women businesses in Tanzania using various survival models. Survival models have been used in studies of lifetime bonds, labour strikes, market preferences, and business survival. By examining several predictor variables, the analysis demonstrates some variables can be used to business mortality. We use Product limit estimators, life table method, Cox Product Hazard Models to investigate women businesses over 22 years period. The median (half-life) of all businesses is exact 3.6 years. It was found, however, that level training and level of education before credit provision to have an impact on business survival. In this paper, the dataset of women businesses in Kagera region- Tanzania was analyzed by employing Survival models. Through applied non-nested econometric model that was conceptualized in order to determine the women business survival, we have found out that there many variables that can predict women business survival in Tanzania. Two of them were found to be the level of profit and training. The baseline hazard ration was estimated. It was found out that after receiving credits so as to start businesses, the women in Tanzania the median (halflife) survival time of all women business in Kagera region were found to be 3.06 years. The methods used in estimating survival function are no-parametric univariate model (KM), parametric (Weibull distribution), and semi parametric multivariate models. Then the product limit estimator (Kaplan-Meyer), life table method, and Cox proportional hazards model was used. They’re several types of Cox hazard models. In this study, Weibull distribution function was used. Weibull distribution is the commonly used in econometric (Greene, 2003). This paper examines the survival analysis of women businesses in Tanzania, using various survival models. Survival analysis have been used to study life unemployment spell, labor strike, household of durable goods, number of women worked in the labourforce, vocational expenditure (Greene, 2003), market preferences, life time bonds and many other areas (Gregoriuou, 2002). During recent years there has been a great deal of interest in the analysis of clustered data. Observations from the same cluster usually share certain unobserved characteristics and as a result tend to be correlated (Hung, et.al. 2004). Data are analyzed based on index function and latent regression function of duration models based on survival and hazard functions.
     
     
   • The Road to Pro-Poor Growth in Zambia: Past Lessons and Future Challenges
     December 2004
     James Thurlow and Peter Wobst
     Zambia is one of the poorest countries in Sub-Saharan Africa. Almost three-quarters of the population were considered poor at the start of the 1990s, with a vast majority of these people concentrated in rural and remote areas. This extreme poverty arose in spite of Zambia’s seemingly promising prospects following independence. To better understand the failure of growth and poverty-reduction this paper first considers the relationship between the structure of growth and Zambia’s evolving political economy. A strong urban-bias has shaped the country’s growth path leading to a economy both artificially and unsustainably distorted in favor of manufacturing and mining at the expense of rural areas. For agriculture it was the maize-bias of public policies that undermined export and growth potential within this sector. A series of poverty profiles are developed and compared to the structure of growth during the structural adjustment period. Substantial policy-changes led to rapidly rising poverty, especially in urban areas. The costs of adjustment were particularly pronounced given the big bang approach to reform. Concurrent trade liberalization and privatization collapsed the formal sector with persistent macro-economic instability undermining necessary private investment. Middle income urban households were hardest hit, with more-educated workers moving into informal activities and the less educated migrating to rural areas. Agricultural liberalization prompted changes in the structure of rural production, with a general shift away from maize towards export-crops for medium-scale farmers and more sustainable staples crops for small-scale farmers. While overall rural poverty increased during the 1990s, its depth has declined considerably. Poor market access and low agricultural productivity were key constraints facing small-scale and more remote rural households. The urban core of the economy therefore collapsed under structural adjustment but agriculture and rural areas have continued to grow. Since this growth has occurred at the lowest end of the income distribution, there is some evidence of ‘pro-poor’ growth in Zambia under structural adjustment despite national stagnation. Sustained investment and economic growth during recent years suggest a possible change of fortune for Zambia. In light of this renewed growth, the paper uses a dynamic and spatially-disaggregated economy-wide model linked to a household survey to examine the potential for future poverty-reduction. The findings indicate that the current growth path, while positive, will be insufficient to substantially alleviate poverty. The large increases in growth that would be required suggest that finding a more pro-poor growth path should be a priority for public policy. The paper examines alternative growth paths and finds that diversification through an agriculture-led development strategy is likely to prove the most pro-poor. This is particularly pronounced for staples-led growth, although this option is contingent on improving productivity and market access, especially in remoter rural areas. Although agricultural growth is essential for substantial povertyreduction, the country’s large poor urban population necessitates growth in nonagriculture. The findings suggest that returning to a copper-led growth path is not propoor and that non-mining urban growth, although undermined by foreign exchange shortages and inadequate private investment, is likely to be preferable for reducing poverty.
     
     
   • The role of local organizations in risk management: Some evidence from rural Chad
     July 2005
     Katinka Weinberger and Johannes P. Jütting
     This paper analyses the role of local organizations in Southern Chad in helping poor people to deal with risk. Different categories of risks are identified and set into relation to response strategies at the community level. Membership in local organizations is mainly motivated by the desire to reduce the occurrence of risks, however the actual impact of membership is risk mitigation. Using regression analysis we establish that while local organizations help people to mitigate risks via access to information, saving and credit and social networks, a “middle class effect” of participation materializes. The exclusion of the poorest parts of the population should seriously be taken into account when donors set up or support local organizations.
     
     
   • Shared Growth in Ghana: Do migrant remittances have a role?
     July 2005
     Peter Quartey
     The economy of Ghana has recorded modest net growth rates over the past decade. However, the current growth rates are inadequate to move the economy to a middle income status by 2015. Besides, not all benefited from the growth recorded so far and there is no doubt that the level of growth necessary to propel the country towards middle-income status cannot be achieved with the current levels of savings and investments within the domestic economy. The obvious issues are: how do we fill the savings gap and ensure shared growth? And how do we ensure that growth trickles down to the poor? The study believes that migrant remittances can serve the dual purpose; fill the savings gap, ensure shared growth and poverty reduction.
     
     
   • Agricultural subsidies removal in North countries: what about the effects in Senegal?
     July 2005
     François Joseph Cabral
     In this paper, experiments of the impact north countries subsidies removal on Senegal is performed based on a general equilibrium framework. The model that we suggest includes 19 sectors and four factors: capital, labour, land and water. In agriculture, we distinguish two sub-sectors: the set of the irrigated sectors and that of the nonirrigated sectors. An export demand function unable us take into account constraints facing local producers on international markets. A simulation is performed based on ICAC, IFPRI, IADB and Iowa state university predictions on the impact of subsidies removal on world prices. It appears from the experiments carried out that the elimination of agricultural subsidies in developed countries will result in a shift of agricultural supply toward external markets. However, this will induce an increase in the cost of imported cereals, in particular rice and will have an adverse effect on households, worsening their well-being, except those of Delta rural households.
     
     
   • The Relative Inflation Experience of Poor Urban South African Households: 1997-2002
     October 2005
     Bhorat, Haroon and Morné J. Oosthuizen
     Much work has been done in South Africa on the relationship between the labour market and household poverty, as well as more generally the association of differentially sourced incomes to household poverty and inequality. The notion is that it is access to incomes, or lack thereof, which lies at the heart of characterising inequality and poverty in the society. Clearly though, a critical intermediary to income access remains the fluctuations in the real values of these incomes, despite controlling for access to income. This line of enquiry – namely the role of relative final price movements in affecting households across the income distribution – is a new one for the post-apartheid period, with its local intellectual origins lying in Kahn (1985). At one level the study aims to identify and quantify the impact of relative price movements on household poverty levels, with a key aim being to identify those products that are critical to indigent households’ vulnerability. At a more generic level, the paper is implicitly a representation of how the macroeconomic environment is able to, and indeed does, impact on household welfare. Ultimately, the paper hopes to deliver a detailed analysis not only of the construction of an appropriate consumer price index for South Africa, but also, through the use of income and expenditure survey data, the impact of reported price movements on inflation for households at different points in the national income distribution. Specifically, this study’s two main objectives are, firstly, to derive inflation rates for urban households grouped according to expenditure deciles and, secondly, to identify some of the key product categories responsible for the largest shares of inflation of the poorest 40% of urban households.
     
     
2. From the SAGA Conference on Empowering the Rural Poor and Reducing Their Risk and Vulnerability
   February 10, 2005
   Nairobi, Kenya
   An International Conference sponsored by Cornell University and Institute of Policy Analysis and Research (IPAR)
   
   Policy Briefs (available as PDF):
   
   
   • Enhancing Access, Accountability and Empowerment for the Poor Through Decentralization and Participation: A Case for Agricultural Extension Service in Eastern Kenya
     (Godiah L. Mugunieri and John M. Omiti-IPAR)
     
     
   • Enhancing Access, Accountability and Empowerment Through Decentralization and Participation: Agricultural Extension Service in Western Kenya
     (Elizabeth Nambiro and John M. Omiti-IPAR )
     
     
   • Exploring the Effects of Farmer Community Group Participation on Rural Livelihoods
     (David M. Amudavi, Cornell University)
     
     
   • An Analysis of Success, Failure and Demand Factors of Agricultural Cooperatives in Kenya
     (James Nyoro and Isaac Komo, Tegemeo Institute)
     
     
   • Imperfections in Membership Based Organizations for the Poor: An Explanation for the Dismal Performance of Kenya’s Coffee Cooperatives
     (Andrew Mude, Cornell University)
     
     
   • The Role of Rural Factor Markets in Reducing Poverty, Risks and Vulnerability in Rural Kenya: Evidence from Kakamega and Vihiga Districts
     (Joseph Karugia, Willis Oluoch-Kosura, Rose Nyikal, Michael Odumbe and Paswell Marenya, University of Nairobi)
     
     
   • Economic Transfers Through Social Networks and Financial Trickle Down in Kenya’s Smallholder Sector
     (Heidi Hogset, Cornell University)
     
     
   • Effects of Market Price Volatility on Production Patterns and Apparent Retreat into Subsistence Farming by Kenyan Smallholders
     (Hezron Nyangito, Walter Odhiambo, Samuel Mwakubo and Lydia Ndirangu, KIPPRA)
     
     
   • Decomposing Producer Price Risk: A Policy Analysis Tool with an Application to Northern Kenyan Livestock Markets
     (Christopher B. Barrett and Winnie K. Luseno, Cornell University)
     
     
     
3. From the KIPPRA-CORNELL SAGA Workshop on
   QUALITATIVE AND QUANTITATIVE METHODS FOR POVERTY ANALYSIS
   March 11, 2004, Nairobi, Kenya
   
   
   • PROCEEDINGS OF THE WORKSHOP
     Edited by Walter Odhiambo, John M. Omiti, and David I. Muthaka
     
     

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