Income alone misleading indicator

In the market, the trader is not just a cashier but a manager, marketer and “nutritionist” able to explain the benefits of his or her commodities to customers

In the market, the trader is not just a cashier but a manager, marketer and “nutritionist” able to explain the benefits of his or her commodities to customers

Charles Dhewa
In Zimbabwe and other developing countries, a critical way of trying to understand rural people’s incomes is taking the cash expenditure route.

Where the household says it uses $500 to meet school fees and other needs annually, that information is often used to arrive at their monthly income.

However, at least 70 percent of rural livelihoods cannot be understood through income. One of the reasons why income can be misleading is because there is a lot of barter trade, donations and own consumption among farming communities. Payment for services such as labour is often done through grain, chickens, goats and other assets.

In informal agricultural markets, for instance, it is very difficult to keep records of all transactions as they happen. Rather, traders can assess how much they earned at the end of the day in comparison to remaining stocks. This is because unlike in super markets where people can stand in a queue to pay for commodities, in the people’s agriculture market transactions happen too fast.

For example, in markets like Mbare a trader can handle commodities worth more than $600 in less than an hour, especially during peak periods like the morning. The main activities are buying and selling. That is why transacting using mobile money has remained a challenge. One cannot have the patience to punch figures into a gadget, wait for 5 to 10 minutes for a transaction to go through. People’s agriculture markets can be frustrated by such slow processes.

In the market, the trader is not just a cashier but a manager, marketer and “nutritionist” able to explain the benefits of his or her commodities to customers. The same person is responsible for packaging, cleaning, attending to orders and responding to calls all in one as marketing is underway. Transacting is just one of the roles. If the trader was to record all these activities the business would stop functioning and s/he would lose customers. Based on their experience, traders usually plan before making an order.

The trader can say: “Ordering 50 crates of tomatoes at such a price will give me so much.”

Once the crates are obtained, serious business begins. Reconciliations are done at the end of the day. What is important, in between, is monitoring price changes and make quick decisions whether to reduce prices or adjust upwards depending on observed trends.

In terms of planning, traders’ instincts are more speculative – “How much should I spend ordering commodities every week? What is likely to be the price? How much will I get if I order a box of tomatoes at $3?”

These commodities are often brought to the market before the market stabilises and sometimes stabilisation knocks the price of a box to $2,50.

Toward context-specific

indicators

Although many development agencies are fond of income as a key indicator of success because it can be easily quantified and fed into Return on Investment (ROI) calculations, it says nothing about the stability of the income source. For instance, how stable is the local market as an income source for farmers in Buhera, Chipinge or Umguza?

Also, it does not capture power relationships at household and community levels. Income also fails to account for perceived incentives, seasonality of production and gender dynamics, among other complications. For instance, how does an increase in youth income lead to changes in financial policies?

While indicators like income are easier to collect and aggregate, they miss out a lot. It is important to consider context-specific indicators which reflect local people’s notions of wealth and well-being. In many rural areas, livestock ownership and living in asbestos-roofed house constitute what people understand as well-being than income.

Some recognition is based on knowledge and leadership qualities, for example, some people are recognised for being very frank when contributing to community meetings such that everyone would want them to be present at certain meetings. Some have their own resources while others rely on extended family ties. All this is part of why communities do not just use income as a measure but consider many things. This has kept communities closely knitted. No matter how rich materially, you will ask for a favour or service from a poor person. Someone may be poor but very good in building goat and cattle pens or thatching.

Accounting for tangible

and intangible results

A smart way of going beyond income as a measure of impact is to divide results into tangible and intangible. All these can be reflected at individual household, community and national levels. Tangible results refer to physical results which can be attached to a programme, for example irrigation schemes and dams.

Intangible results refer to impact on things like self-esteem, stress, stigma and many other forms of social exclusion. The benefits of setting up or supporting an irrigation scheme should be assessed at individual household, community and national scales in terms of contribution to household and community food and nutrition objectives.

What benefits can be derived at all these levels from a particular development programme? How do they affect people’s self-esteem?

The tricky and most neglected assessment relate to intangible impact/results of development programmes. Although most vulnerable households are affected by lack of food and income, it is critical to assess the extent to which a development programme addresses intangible aspects such as low self-esteem, lack of ambition, stigma and all hidden forms of exclusion.

Many individual household members with low self-esteem lead to a community which looks down upon itself. In addition, a community with many vulnerable households can become a burden on well-up families and extended family members because the stressful effect extends to the whole community.

Vulnerable households are often not the only ones worrying about drought but community leadership and well-resourced people in the same area. An agro-dealer in a place affected by drought feels the weight of the whole community on his/her shoulders. The whole challenge becomes a community burden, sometimes leading to the disintegration of the social fabric. An evaluation of a development intervention should assess the extent to which it has addressed or exacerbated some of these issues.

It should not just focus on statistics like income. For instance, it is important to find out how payment of school fees for vulnerable children is translated into better lives for vulnerable households. That improvement is an example of an intangible indicator.

Income as an instrument for addressing underlying

vulnerability

Income is just a tool that can be used to address the underlying effects of vulnerability. An increase in income should translate into particular change on vulnerability. For example, it is important to find out from those surviving on remittances whether receiving remittances from the diaspora relieves pressure on their community.

Where 60 percent of the households were exploiting natural resources such as land and water for their nutritional requirements, what is the effect of adding 20 percent more people on the same resources, in terms of food security and stress on those resources? To what extent does this effort impact on food and nutrition security or lessen the burden at community and national levels?

Probing further around the income can reveal impact along the entire production chain. Even when accessing food aid, most households will be having their own planning for coping with hunger. It is important to find out how they re-allocate their resources to other means of livelihood after receiving food aid.

If a household was going to sell a goat in order to meet food needs, now that they have received food aid but decide to go ahead and sell the goat, how will they use the income from selling a goat? What are some of the farmers’ pre-planned coping strategies?

Counting the number of people receiving food aid may not be as important as figuring out local resources that are re-allocated to other livelihood activities in response to receiving food aid. Government programmes like input schemes should also try to ask the same questions.

From your allocation of two bags of fertiliser which gave you five tons of maize, how much could you have produced without the government input scheme? Re-allocation of resources represents opportunity benefits created by the intervention which may turn out to be more important than tangible since they speak to resilience, innovation and sustainability.

At what point should

impact be assessed?

It is also important to define at what point development impact is assessed. It can’t just be a one-size fits all formula. Depending on the crisis, an intervention can create impact immediately. But in some communities which invest in long-term coping strategies, impact can take long to be visible. That is why impact assessments require community involvement.

Community members should answer questions such as: Is the programme addressing immediate results or the community has already invested in some long-term coping strategies?

Where the immediate result is saving livestock from drought, the intervention may turn out to be an investment in long-term impact where saving livestock from drought will positively impact individual households, the community and other value chains.

Why indirect impact requires its own assessment framework

Indirect impact needs its own impact assessment framework since the benefits or results come indirectly. For instance, what is the impact of reduced stunting at household or community levels in the medium to long- term? Impact assessments should not be once-off but longitudinal research, attaching each intervention to emerging impact. When a heifer scheme is introduced, it is important to do a longitudinal assessment so that future livestock programmes are attached to it.

At the moment, some interventions find it difficult to attach effectiveness to their impact separate from what communities are achieving on their own. If you take food aid, school feeding programmes and nutrition gardens programmes all implemented by different organisations in the same community, which one is contributing more to the nutrition of school children? We end up with double or triple claiming of the same impact from different organisations.

When financial programmes are introduced for youth, it is important to figure out how the youth are coping before the programme is introduced. This will enable assessment of impact directly related to a particular finance programme. Without this effort, some interventions can have adverse effects on existing ecosystems.

Need for local studies

towards assessing impact

The development sector and policy makers do not seem to have impact assessment mechanisms beyond use of external evaluations. That is why there is a huge knowledge gap where one project runs for five years within a community and two years lapse before another project comes on board.

Meanwhile, a lot will have happened during the time there is no project in this particular community as people rely on their coping mechanisms. When a new project comes and conducts a baseline, 60 percent of its baseline results may be attributed to the previous programme. Unfortunately there is no tracking of activities up to when a new project comes into a community.

Just as we now have a Monitoring and Evaluation Framework at national level, we need an Impact Assessment Framework. This can guide data gathering processes to avoid a situation where different organisations come up with different variables that are incomparable. At the moment some organisations look at income, others look at numbers of children out of school or in school, yet others look at HIV and AIDS statistics.

A lot has been done around M&E but for most organisations, impact remains a statement like: To increase income and standards of living for 300 000 households. What do you mean by standard of living? What are the variables around income? In addition, most development organisations do not plan or allocate resources for impact.

Sustainability strategies are more about handing over project documents to local organisations without any resources for longitudinal studies that can track the impact of the project for at least two years after the project has ended. These results should be communicated back to the organisation or inform new community develop initiatives.

While the development sector still takes a linear approach to impact, impact should be a collaborative effort involving people from different backgrounds. We have to look beyond the limitations of existing ways of evaluating impact and recommend changes that look at development programmes as pathways of co-producing knowledge. Co-production of knowledge creates more authentic and multi-faceted knowledge that reflects lived experiences. Without embracing such an approach, development organisations and policy makers continue basing important resource-allocation decisions on inadequate indicators such as income.

Charles Dhewa is a proactive knowledge management specialist and chief executive officer of Knowledge Transfer Africa (Pvt) (www.knowledgetransafrica.com whose flagship eMKambo (www.emkambo.co.zw ) has a presence in more than 20 agricultural markets in Zimbabwe. He can be contacted on: [email protected]; Mobile: +263 774 430 309 / 772 137 717/ 712 737 430.

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