The Future of Smallholder Farming in Eastern Africa - Uganda ...

1.5 Justification of the study
The privatization process and livestock keepers’ choice of veterinary services is best
understood through the principal/agent framework. Principal/agent theory is a framework that
has been expanding rapidly and is devoted to explanations of micro-analytic organizational
details. It explains social organizational phenomena using assumptions derived from
transaction cost economics. The literature describes it as an analytical tool, joining aspects of
law, economics, and organizational theory to observe and understand the organizational
variety involved in economic activity (Williamson 1984; Leonard 1993, 2000).
Principal/agent theory can be used to analyze situations in which there is severe
imbalance (asymmetry) in information between consumers and suppliers. In the veterinary
field, clients (livestock keepers) are at a disadvantage in dealing with the health practitioners
(veterinarians and their associated paraprofessionals). The veterinarians are consulted
because they have specialized knowledge, but clients cannot be sure that the veterinarians’
skills are appropriate to their problem (Ly 2000). Unless this problem is solved, clients lose
confidence in the quality of services offered by the practitioners. Clients may reduce their
consumption of the services, or they may be prepared to pay no more than the value of the
lowest-quality services available in the market, because they fear that this is the service level
they are likely to receive. If this information asymmetry is not eliminated, it will lead to what
Akerlof referred to as a “market of lemons,” a situation in which transaction costs are
dominated by inferior products (Akerlof 1970). Possible mechanisms for assuring clients that
they are getting high-quality service from their agents are the incentive systems. These
include professional supervision, information supply, and strict legislation enforcement that
will maximize the agents’ effort.
If left alone, the market for veterinary services in Kenya’s marginal areas may evolve
toward a situation similar to Akerlof’s market of lemons, in which clients demand lowquality
services. This situation is likely to produce suboptimal results for livestock keepers,
animal health practitioners, and the society at large. With several players in the ASAL
veterinary market, a quantitative assessment of the efficiency of comparative service
delivery, level of outreach, and benefits to livestock keepers of each of these service systems
is essential. This study explains how the livestock keepers respond to the particular veterinary
service system they face and how well that system responds to their demands and
expectations. This is important since the veterinary services market is quite prone to
distortions and inelasticities as much as opportunistic behavior of participants is concerned
(Ly 2000). It is hoped that this information will guide policy debate regarding veterinary
service delivery in the marginal areas.
1.6 Organization of the study
The remainder of this study is organized as follows. Chapter 2 gives a brief account of
the evolution, structure, and constraints facing CBAHW programs. Chapter 3 contains details
on the methodologies employed in data collection and analysis. Chapter 4 assesses the
performance of CBAHW programs in the delivery of animal health services. It also examines
the criteria for selection of trainees for these programs and the correlation of these selection
criteria to the success rate of the trainees. Chapter 5 describes the clientele of CBAHWs and
compares the productivity of livestock served by CBAHWs with that served by other
professional services. Chapter 6 assesses the priorities of livestock keepers and the