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Chapter 3 The importance of addressing risk 101
Some institutional responses to risk
The risks discussed in this chapter do not represent an exhaustive list of those faced
by rural households. Yet they cover some of the most prevalent ones across regions.
Everywhere, poor rural households seek to manage the risks they face to the best of
their abilities, as we have seen. To support their efforts, risk mitigation and risk
management considerations need to be mainstreamed into policies and investments
(public and private) in rural development and growth. In the next chapters, we will
see what this may entail in the domains of agricultural markets, agricultural
production and the rural non-farm economy. Across domains, however, there are also
three types of institutions that deserve strengthening to support rural poor households
to better manage a variety of types of risks. We briefly review these below.
Community-level institutions
A range of local organizations and networks play important roles in mitigating and
managing risks facing poor rural households. Examples include extended families that
allow better provision of food and shelter than might be possible through nuclear
families, especially for those unable to engage fully in the productive economy; savings
and credit groups; cooperative labour arrangements, where a group works together on
different farmers’ land; a group sharing the costs and benefits of livestock herding; a
group jointly storing grain, or neighbours sharing produce. Local food, fodder and seed
banks, some of them collectively managed and/or funded by membership-based poor
people’s organizations (such as the Self Employed Women’s Association in India, for
instance) also exist in rural areas in many countries. In
the Niger, for instance, village cereal banks established
under an IFAD-supported project help poor
households get through the hungry season preceding
harvest. Households can take cereal loans from the
cereal stock and pay them back after harvest with
25 per cent interest. The cereal banks are credited with
improving nutrition, reducing levels of out-migration
and thereby increasing agricultural production, and
empowering local women and their organizations. In
some contexts, sharecropping may also represent a
traditional form of risk sharing, as long as rents are set
at a reasonable level. Patron-client bonds with local
elites may also be important sources of social
protection for poor rural people, although with
mixed effects in terms of local development, good
governance, social inclusion and equity.
“I know that in old times, when children
lose their parents, they go to their
uncles and grow up there. But
nowadays things have changed. It
seems that everyone fends for himself.
Life is so hard now. You cannot take
care of your family and add to your
burden the family of your deceased
brother. So it’s up to orphan children to
stick together and help each other. But
when we have a big problem we do go
to our uncles so that they can help us
find a solution. And also they have given
us the land our father used to plough.”
Oumar Diédhiou,
male, 22 years, Senegal