From Drought to Development in the horn of Africa: An exploration into alternative investment options

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FROM DROUGHT TO DEVELOPMENT IN THE HORN OF AFRICA: AN EXPLORATION INTO

ALTERNATIVE INVESTMENT OPTIONS

Derek Headey, Alemayehu Seyoum Taffesse, Liang YouInternational Food Policy Research Institute (IFPRI)

1. Background

2. Pastoralism

3. Crop farming (irrigated & non-irrigated), natural products

4. Cross-cutting investments (education, training, finance infrastructure, urbanization and migration, drought management, governance)

5. Summing up

Outline

The Horn has witnessed recurring and devastating droughts (and floods), seemingly with more frequency

Perceptions that these regions are on an unsustainable development path – a nexus of climate change, resource pressures and conflict

1. Background

Figure 1. A map of estimated food insecurity levels in the current drought

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4,000,000

6,000,000

8,000,000

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12,000,000

14,000,000

Rough estimates of the number of people affected by droughts in the Horn of Africa: 1970-2010

Ethiopia Kenya Somalia

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This context has produced some very polemical views: those have favor sedentarization, those who want to see pastoralist livelihoods protected.

Can either view draw on a strong evidence base? Hence IFPRI was asked by USAID to do a stocktaking of

what we know and don’t know about these economies, with a regional perspective

Key questions: To what extent is pastoralism sustainable? What role should other sectors play? What is the right balance between different investments?

1. Background

Commercialization of pastoralist livestock sector?

Figure 5. Transforming the Arid and Semi-Arad Lowlands of the Horn of Africa

• Some limitations & strengths of this study…1. This is very much a desk study: we rely on existing

evidence, which is often somewhat weak, and some new estimates of profitable irrigation potential

2. We chiefly focus on “what”/”where” questions more than “how” questions (literature stronger on how)

3. Because of 1 & 2 the study falls short of being a rigorous cost-benefit appraisal of alternatives, though we work with costs & benefits in mind

4. Some value-added, we think, because there is very little macro (big picture) work on ASALs

1. Background

2. Pastoralism: characteristics, constraints, potential

• Livelihoods in ASALs still dominated by pastoralism• In Ethiopia, for example, a recent USAID-DRMFSS

Atlas of Ethiopian livelihoods shows that it is the major source of cash income, and even dominates crop income, in all lowlands, and even some highlands

• This is not surprising: in the ASAL landscape where rainfall patterns vary across an abundance of land, mobile livestock is a sector of comparative advantage

• Pastoralism is also virtually the sole source of Ethiopian livestock exports, and faces strong demand

2. Pastoralism

• Despite its importance, there is a declining share of pastoralism in employment and income over time

• Main problem is that the shift out of pastoralism is more related to push factors than pull factors, particularly drought (Devereux 2006 for Somali region; PARIMA Project for Borena and Northern Kenya).

• In essence there is a herd size threshold, below which recovery is very difficult.

• Hence pastoralists try to maximize pre-drought herd size to ensure that post-drought herd size remains above this threshold; there is no tragedy of the commons

2. Pastoralism

Figure 4. Herd size threshold effects that push households out of pastoralism

Source: Lybert et al. (2004).

Figure 3. Cattle cycle and median herd size

Source: Lybbert et al. (2004).

• This view of the world is in contrast to older “carry capacity” notions that cited overpopulation issues

• A dominant view now is that the increasing frequency of emergencies is as much related to mobility restrictions as it is to overpopulation (Flintan 2011; ILRI 2010): cropland expansion, fencing, border controls, pests, resettlement policies

• In our view, this remains an unsettled question: mobility restrictions could partly be a result of overpopulation; population growth rates very high (2-3%) & indefinite pop. growth is not sustainable.

2. Pastoralism

• Within pastoralism there is also a lot of inequality: some HHS only a dozen TLUs, others have hundreds

• The larger pastoralists engage with markets/exports much more (Catley and Aklilu 2010) & choose to diversify incomes out of choice rather than necessity

• They earn substantial income from exports to Middle East and to highlands (even recently)

• Some anecdotal evidence that inequality is increasing• Moreover, not much evidence that commercialization

has benefited poorer pastoralists

2. Pastoralism

• So what do these facts imply about pastoralism?1. Pastoralism is too big to fail – in the medium term it is

impossible to create enough viable livelihoods in other sectors & livestock has strong potential

2. Land fragmentation & carrying capacity - Little et al. (2011) persuasively argue that current policies are not well informed by rangeland sciences; but indefinite population growth is not an option either

3. Understanding commercialization: constraints, engagement with the poor (there is a literature)

4. Improving drought management: destocking, restocking & interactions with commercialization

2. Pastoralism

• The share of pastoralism in ASAL incomes is thought to have been declining for some time

• Recent snapshots also tell us that there is variation across space, and significant populations are engaged in sedentary farming (irrigated and non-irrigated) and firewood/charcoal production, smaller shares in trade, various types of labor, shopkeeping, etc.

3. Non-pastoralist livelihoods

• Do sedentary occupations offered more lucrative & resilient livelihoods, but do they?

• The largest non-pastoralist livelihoods are crop-farming, following by sale of charcoal, firewood, gum resin

• But they earn less than average than livestock; collecting natural products earns less than begging!

• Crop-farming earns about the same as livestock, though this masks high returns for irrigated farming, and substantially lower returns for non-irrigated farming: see evidence from Somali region (Devereux 2006), Southern Ethiopia and Northern Kenya (PARIMA; USAID)


Activity types Birr/month

% HHs engageda

Most & least lucrative activities

Birr/month

Most lucrative activitiesTrading 615 3.8% 1. Contraband trader 1,607Rents 502 <2% 2. Construction worker 1,307Labor 447 2.4% 3. Carpentry/metal-worker 873Services 300 10% 4. Khat trader 868Food /drink proc. 244 8% 5. Selling meat 853

Livestock 216 69.9% Least lucrative activitiesCrop farming 210 50-55% 60. Charcoal seller 100Small industry 182 6.3% 61. Firewood collector 88Begging 123 <2% 62. Basket/mat maker 88Natural products 117 25-30% 63. Selling eggs 79

64. Beekeeper 77

Table 4. Average income by livelihood category, and by highest and lowest returnsSource: Devereux (2006).

• Picture in northern Kenya is quite different: somewhat more trade, labor, government employment, and remittances; households having a wage earner or small business also seem to be more resilient

Site Pastoral income

Trade & business

Wage & salary

Net remittances

Crops

Logologo 30% 13% 43% 13% 0%N’gambo 43% 7% 30% 8% 13%Dirib Gumbo 61% 1% 16% 11% 10%Suguta Marmar 74% 18% 10% 7% 0%North Horr 73% 3% 13% 11% 0%Kargi 81% 3% 9% 7% 0%

Table 5. Sources of income by research site, Northern Kenya, 2000-2002Source: PARIMA project. Notes: Pastoral income includes livestock sales and sales of livestock products.


• Rainfed farming in ASALs is also not a more resilient livelihood because it lacks mobility of pastoralism

• Finally, urban occupations pay well, and are generally more resilient (but how do you get them?)

• So for settled farming to be an improvement irrigation is the main option


• He we look back and look forward.• Looking back, what are the strengths and weaknesses

of existing schemes.• Several studies from Ethiopia and Kenya show that

irrigated farmers are better off than pastoralists, on average.

• However, there is variation according to market access (Devereux 2006)


• Behnke et al. (2010) look at irrigation schemes in Afar, since these are the most mature in the region:

1. State cotton schemes earned losses in half the years; 2. State sugar plantation made big profits, but more

through value addition; raw sugar cane earned the same as pastoralism.

3. Afar cooperative scheme earned same as pastoralism• Flintan (2011) & others also cite negatives: prosposi,

reduced access to water & feed for pastoralists, machine failure, silting


• Looking forward, we apply a recent GIS-based “profitable irrigation potential” model for small and large irrigation to ASALs (You et al, forthcoming in Food Policy): areas below 1500m in HOA

• Irrigation profitability is a function of groundwater supply, optimal crop mix, crop prices, market access (travel times) and assumed irrigation costs

• Large schemes are also a function of elevation, with only lower altitude areas regarded as profitable

• Note that this is only addition irrigable area, not existing; also, these estimates might be quite optimistic


Figure 6. A map of profitable irrigable areas by lowland and highlands of eastern Africa

Source: Authors construction from data and methods described in Liang et al. (forthcoming).Notes: Lowlands (highlands) are defined as areas below (above) 1500 meters in altitude. This is a standard definition in Ethiopia, but may perhaps be too high in Kenya. IRR refers to internal rate of return.

Cost scenariosc

Countries Profitable increase in irrigated ASAL areas (Ha)b

Rural ASAL population in 2020 (millions)d

Percentage of 6-person rural HHs that could work 1 irrigated hectaree

Percentage of 6-person rural HHs that could work 2 irrigated hectarese

Low Ethiopia 217,060 22.7 5.7% 2.9%cost Kenya 291,486 19.7 8.9% 4.4%

Djibouti 7 0.2 0.0% 0.0%Somalia 14,297 7.3 1.2% 0.6%Total 522,850 49.9 6.3% 3.1%

Medium Ethiopia 159,568 23 4.2% 2.1%cost Kenya 152,869 20 4.7% 2.3%

Djibouti 7 0 0.0% 0.0%Somalia 8,245 7 0.7% 0.3%Total 320,689 50 3.9% 1.9%

High Ethiopia 156,030 23 4.1% 2.1%cost Kenya 108,762 20 3.3% 1.7%

Djibouti 0 0 0.0% 0.0%Somalia 1,293 7 0.1% 0.1%Total 266,085 50 3.2% 1.6%

Table 6. Profitably irrigable area in the arid and semi-arid lowlands of eastern African countriesa

Source: Authors’ estimates based on the data and methods described in Liang et al. (forthcoming).

costcost

• Some investments could clearly benefit multiple livelihoods/sector

• We argue that the highest returns are probably in education, followed by roads, and finance. Why?

• Education outcomes are appallingly low, even though it yields multiple benefits: increased opportunities for urbanization, migration, skilled employment; improved governance; reduced fertility rates; female empowerment

• The question is how best to deliver these services: boarding schools, mobile schools, distance learning, etc

4. Cross-cutting investments

Figure 7. A map of literacy status in Ethiopia by pastoralist and non-pastoralist woredas

• Infrastructure is also important, but in low population density environments infrastructure investments need to be strategic.

• New roads have been transformative in Borena, Garissa, and other parts of the region

• But roads in lowland areas have sometimes been criticized for low rate of usage (low benefit-cost ratios)

• Also, there is an argument for more strategic use of space in general; e.g. clustering road, water and feed resources, markets, government services


• Issues of finance are also important.• Not a great deal of evidence, but many argue that

much more tailoring is needed to local livelihoods and culture

• Also, not clear that microfinance will lead to diversification unless additional training and extension is offered.

• Linking to weather insurance is one avenue being explored for pastoralists, but not obvious that this will address the major constraints


• Drought management, emergency relief and safety nets are also important because there is an increase overlap with development initiatives (food aid critique)

• It appears that emergency destocking has been quite successful when implemented well; but this suggests that better access to market is the deeper constraint that needs to be addressed in the long term

• Productive safety nets also widely cited, but so far the productive component has not worked well in ASALs

• So what makes for a well targeted & productive safety net program in ASALs is still an open question


• Finally, governance is a cross-cutting issue• Unique livelihoods and cultural divides mean that

bottom up policymaking is essential, but elite capture also needs to be minimized

• Conflict resolution is also essential, both local, national and regional

• And how can pastoralist issues get better traction at the highest levels, on issues like land fragmentation, trade, and so on?


• An economic interpretation of the evidence suggests that a balance development strategy is needed.

• Pastoralism has significant advantages, but we need to work at downsizing risks and transition some pastoralists into other sectors

• Sedentary farming is constrained by natural resources, by profitability and by implementation issues; only one pillar, not a central one

• Cross-cutting investments also offer high returns, though implementation issues are obviously key

5. Summing up

• Finally, we should revisit the evidence base:1. We need some transition out of pastoralism, but

how much? (environmental sustainability meets economic viability; more macro modeling)

2. How can drought management and development strategies be made more coherent & compatible?

3. What are the best implementation strategies for ASAL investments?

There is an evidence base to inform all of these questions, but in relative terms it is certainly quite weak

5. Summing up