Rural Income Generation and Diversification - A Case Study ... - Doria

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4.5 Labour, credit and product markets
The potential to seize work opportunities outside the family farm varies according to various
factors such as gender, skills, education and age. Labour markets in Sub-Saharan Africa are
often poorly developed (e.g. Holden 1997), which is reflected in seasonal labour shortages in
agriculture, for example. Farm production is, to a large extent, dependent on family labour,
and in that respect a large family is an advantage. A large family may also facilitate income
diversification.
According to Ellis (2000), rural wage labour is plentiful in South and South East Asia, due to
the high population density, inequalities in land ownership, and shortages of land. Wage
labour is the main means of survival for landless or near landless families.
Educated household members have better access to wage labour opportunities, and they are
also more likely to migrate to other areas in search of work. Islam (1997) suggested that
primary education improves labour productivity, whereas secondary education stimulates
entrepreneurial activity. He also concluded that education was of great benefit to the selfemployed
and to rural family enterprises irrespective of the location or sector.
Health status is a critical factor affecting the capacity to participate in income-earning
activities. The high prevalence of HIV/AIDS in Sub-Saharan Africa results in the loss of
household members, an increasing household workload for women, and a high number of
orphans who need to be cared for. According to some studies this has led to a growing
reliance on non-farm income-generating activities and migration (Gordon and Craig 2001).
RNF activities may be both a consequence of and a response to failure in the credit markets
(Davis et al. 2002). Non-farm income is often essential for households to access agricultural
inputs and investments. Reardon et al. (1994) claimed that the structural-adjustment
programmes combined with shrinking government budgets brought large cuts in formal
credit and input-supply programmes in developing countries, which increased the need to use
non-farm earnings to finance farm inputs and capital investments. On the other hand, some
non-farm activities require start-up capital, and the absence of credit limits the options. The
poor tend to be drawn to poorly remunerative, low-entry-requirement activities, whereas the
wealthier, with access to credit, can make deliberate decisions with regard to sources of nonfarm
income. Islam (1997) refers to the results of a study covering four countries in Africa
indicating, that in terms of the development of RNF activities, the lack of credit was the
second biggest constraint, next in importance to the lack of infrastructure and followed by
the lack of inputs and markets.
A distinction is often made between tradable goods, which are traded mainly outside the
region, and non-tradable goods, which are mostly consumed within it (Delgado 1995).