Poverty (measured by the headcount ratio) declined from 1994 to 1997 , a period that saw a reversal of the secular decline in income per capita. But growth was accompanied by worsening income inequality, as demonstrated by an increased Gini-coefficient and the results from analysis of poverty-dynamics . If inequality had not increased, there would have been a greater de- cline in poverty. It is difficult to know whether the increase in inequality reflects a long-run trend or resulted from idiosyncratic shocks, but either way it is a con- cern for policy design.
One surprising empirical result is that the amount of land cultivated by rural households did not have a significant effect on poverty. This result might be bi- ased because they didn't control for the quality of land. But oxen-ownership sig- nificantly affected poverty. The two results might imply that land was not the most binding constraint for farmers; complementary inputs like ox draught-pow- er may be crucial. Unlike elsewhere in Africa, all land is still owned by the state, so the use-rights are somewhat insecure, which is probably not conducive to pro- ductivity-enhancing investments in agriculture. Nor can land be used as collater- al, which may reduce the efficiency of the credit market. The focus of public policy will have to be more on providing complementary inputs, such as credit facilities and improving security of tenure.
Reforms in trade and the exchange-rate regime, coupled with market-liberal- isation, have helped farmers producing marketable crops, but they still have ma- jor infrastructural constraints to grapple with. Access to markets creates opportunities for the poor to improve their standard of living; rural households who resided near a market were less likely to be poor. Farmers producing market- able crops in general, and exportables in particular (especially chat), had a better chance of escaping poverty. Chat has become an important export, and domestic demand has increased as well. The effect of coffee production was less clear. Rural households in remote areas may also be constrained in consumption goods, not because they cannot afford them, but because the goods are not available.
Compared to elsewhere in Africa, the availability of rural off-farm employ- ment remains limited. In remote areas, there are few non-agricultural opportuni- ties apart from traditional crafts. Poor rather than rich rural households were more involved in off-farm employment, so the provision of employment in the form of food-for-work or similar programmes with appropriate remuneration rates may be successful in targeting them, perhaps playing a role similar to informशन..............
One surprising empirical result is that the amount of land cultivated by rural households did not have a significant effect on poverty. This result might be bi- ased because they didn't control for the quality of land. But oxen-ownership sig- nificantly affected poverty. The two results might imply that land was not the most binding constraint for farmers; complementary inputs like ox draught-pow- er may be crucial. Unlike elsewhere in Africa, all land is still owned by the state, so the use-rights are somewhat insecure, which is probably not conducive to pro- ductivity-enhancing investments in agriculture. Nor can land be used as collater- al, which may reduce the efficiency of the credit market. The focus of public policy will have to be more on providing complementary inputs, such as credit facilities and improving security of tenure.
Reforms in trade and the exchange-rate regime, coupled with market-liberal- isation, have helped farmers producing marketable crops, but they still have ma- jor infrastructural constraints to grapple with. Access to markets creates opportunities for the poor to improve their standard of living; rural households who resided near a market were less likely to be poor. Farmers producing market- able crops in general, and exportables in particular (especially chat), had a better chance of escaping poverty. Chat has become an important export, and domestic demand has increased as well. The effect of coffee production was less clear. Rural households in remote areas may also be constrained in consumption goods, not because they cannot afford them, but because the goods are not available.
Compared to elsewhere in Africa, the availability of rural off-farm employ- ment remains limited. In remote areas, there are few non-agricultural opportuni- ties apart from traditional crafts. Poor rather than rich rural households were more involved in off-farm employment, so the provision of employment in the form of food-for-work or similar programmes with appropriate remuneration rates may be successful in targeting them, perhaps playing a role similar to informशन..............
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