Since 2005, ITC has been working to increase trade and reduce
poverty in Ethiopia, specifically by helping to build export
capacity in small businesses within the agricultural sector. The
pilot project, known as the Ethiopian Export-led Poverty Reduction
Project (EEPRP), has worked with trade support institutions to help
establish links between market-oriented production and overseas
buyers. Results of the programme's first significant survey provide
encouraging signs that building trade capacity and providing access
to international markets improve the lives of the poorest
communities in developing nations.
Some 123 households were surveyed when the pilot project began
in October 2005, and 118 of these were followed up in February
2008. The target community was selected on the basis of a number of
criteria: its relative poverty, potential to grow the selected
agricultural crop and geographical accessibility; the commitment of
local and regional partners; and several other indicators. As the
area is largely undeveloped and isolated, and new developments take
some time to be implemented, the turmoil in world trade over the
past 18 months is not thought to have impacted on the beneficiary
communities.
The results showed marked improvement in all areas relating to
standards of living, including access to education, earnings,
savings and trade capacity.
Demographic and social indicators
The impact assessment found an increase in the size of the
household communities, from an average of 7.54 members in 2005 to
8.05 in 2008. In 99 per cent of cases, men were heads of
households. In the same period, literacy among adults (over 15
years of age) doubled.
Note: All figures in the above graphs have been rounded
up.
Economic indicators
There was marked improvement in the livelihoods of targeted
communities, where households enjoyed a significant increase in
their incomes between 2005 and 2008. In particular, livelihoods of
the poorest improved, with gross average incomes more than
doubling. On average, heads of households earned 710 birr (around
$56) per month in 2005; by 2008, this had risen to 1,673 birr
($133). Increases in earning were also more evenly spread, with the
average daily income of household members increasing from $0.46 to
$0.98. These are remarkable gains, although it's important to
remember that this still places many individuals below the
international poverty line of $2 per day. Over time, the European
Union will fund the expansion and replication of the project, which
is expected to generate further increases in income in these
communities, with standards of living crossing the poverty
line.
As a result of this dramatic doubling of income, more households
were able to save (96 per cent compared to 68 per cent) and to save
more (73 per cent of households now have savings of over $100,
compared to 40 per cent in 2005).
There was also considerable improvement in the quality of
drinking water - in 2008, over 71 per cent of homes had access to
running water, compared to 56 per cent during the initial phase.
This was achieved by installing additional communal tap-water
facilities, increasing the mobility of beneficiaries and improving
their knowledge of the sanitation risks associated with river and
pond water. Some 90 per cent of households own a radio, as compared
to 80 per cent in 2005. There is still no electricity in the
community, but the project's partners have supported efforts to
change this and the Government has given the green light.
Agricultural indicators
The primary household activity is agriculture, thus the
relationship between revenues, harvest and trade is the nub of the
EEPRP. The number of livestock per household effectively doubled
over the period. The sale of livestock products also increased by a
significant 89.1 per cent. Use of bicycles, the only modern form of
transport, increased from 9 per cent in 2005 to 32 per cent in
2008.
In 2005, only 23 per cent of households earned more than $1,000
through product sales; in 2008, this had jumped to 75 per cent.
Only 3 per cent of households now earn less than $500, a dramatic
change from the 30 per cent during the initial phase (part of this
increase in revenues can be attributed to the rise in cereal
prices). As a result of developments in agricultural activities,
over 85 per cent of households have become members of agricultural
cooperatives, which provides them with greater production capacity
and marketing opportunities.
The authors of the report point out that, although trade favours
economic growth, its role should not be overstated. Sustained
growth depends on factors such as the development of human capital,
infrastructure, good governance, sound institutions (including
efficient financial markets) and technology, as well as on
macroeconomic stability. Furthermore, policies to improve income
distribution, credit, education and health care play a crucial role
in reducing poverty and promoting economic growth.
To attain the goal of reducing poverty, a holistic view of the
problem is required including empowering small producers to acquire
the skills they need to harness their productive potential and the
inclusion of trade in a country's overall development and poverty
reduction strategy. In addition, while economic growth alone cannot
guarantee a sustained reduction in poverty and inequality, it is a
necessary condition towards that goal. As these survey findings
attest, empowering small producers to acquire the skills necessary
to export their produce is a key strategy for reducing poverty.
