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By Andrew Adjei-Holmes (ISSER, UoG) Ernest Aryeetey (ISSER, UoG) Christopher Barrett (Cornell University) Robert Darko Osei (ISSER, UoG) Thomas Walker.

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Presentation on theme: "By Andrew Adjei-Holmes (ISSER, UoG) Ernest Aryeetey (ISSER, UoG) Christopher Barrett (Cornell University) Robert Darko Osei (ISSER, UoG) Thomas Walker."— Presentation transcript:

1 By Andrew Adjei-Holmes (ISSER, UoG) Ernest Aryeetey (ISSER, UoG) Christopher Barrett (Cornell University) Robert Darko Osei (ISSER, UoG) Thomas Walker (Cornell University) Presented at ISSER, 15 th July, 2010

2  An introduction  Main Research Questions  Some Preliminary Results  Some concluding remarks

3  Idiosyncratic risks (shocks) tends to dominate covariate risks in rural incomes in Africa and Asia  They can affect household incomes directly – e.g. loss of job  Such shocks affect rural incomes through asset accumulation and productivity – funeral rites  In Ghana, such shocks are widespread and are important determinants of current incomes of rural households  Improving the management of such risks will improve the rate of asset accumulation by households – and therefore improve household incomes

4  The ability of households to cope with such shocks depends on among other factors, how socially connected households are  Evidence suggests that shocks have persistent effects on asset dynamics of households that are least connected  There are different mechanisms that help households deal with such shocks –  Examples in Ghana include hometown associations (and others) and other informal insurance mechanisms such as funeral contributions.

5  The aim of the project is to ◦ study the nature of idiosyncratic shocks that affects households, ◦ The effects of these shocks on households ◦ The nature and type of mechanisms that help mitigate the effects of these shocks

6

7 DarmangPokromOboadakaKonkonuru Eastern RegionNational None8.811.622.012.814.516.8 Primary21.628.328.416.136.435.5 Junior61.550.037.659.124.721.8 Senior2.05.85.76.05.47.4 More0.10.00.1 4.46.5 Highest school level attended (per cent of respondents)  Damang seems to trail the other villages in terms of senior high school attainment  Junior school attainment is higher than the national average – lagged effects of capitation grant?

8 Reasons for leaving School (per cent of respondents)  The main reason why people would have left school is because they could not afford it  In Pokrom and Oboadaka people left to help parents – Is there a Pineapple story? DarmangPokromOboadakaKonkonuru Had enough education14.75.47.58.5 Failed exam7.42.34.27.8 No higher school/grade0.72.30.01.6 Could not afford to go66.972.362.569.8 To help parents2.29.27.53.1 Was ill0.03.81.72.3 Marriage/pregnancy4.40.85.81.6 Other3.73.810.85.4

9 KonkonuruOboadakaPokromDarmang Eastern RegionNational Well with pump / borehole92.933.326.060.527.130.4 Well without pump-48.02.724.713.010.3 River1.217.363.07.420.411.4 Public pipe/tap2.4-1.41.215.610.7 Private outside pipe/tap-1.2- 2.55.0 Neighbouring HH-1.3---- Other3.6-6.94.921.432.2

10 Occupation (per cent of respondents) DarmangPokromOboadakaKonkonuru Item Female (%)Male (%) Female (%)Male (%) Female (%)Male (%) Female (%)Male (%) Artisan1.22.64.86.9 Baker/cook1.21.3 Carpenter/carver5.31.58.3 Construction worker2.61.58.3 Factory worker2.61.52.8 Farmer31.755.341.483.856.494.251.837.5 Hairdresser6.12.91.37.2 Health worker1.21.4 Herbalist1.4 Mason1.56.9 Not in labor force4.91.32.91.31.53.62.8 Not specified Office worker1.31.51.22.8 Other8.55.32.91.51.34.82.8 Shop attendant/trader41.51.347.11.537.21.524.12.8 Student1.4 Taxi/tro-tro driver10.54.48.3 Teacher2.47.91.54.2 Truck driver1.21.3 2.9 Unemployed1.32.92.62.41.4 Total 77 71 70 72

11  Men are more likely to be employed as farmers generally –  However this is not true for Konkonuru  Women are more likely to be a shop attendant or trader  The Nsawam effect is quite evident in Damang – more taxi and trotro drivers  There are also signs of the Aburi effect on Konkonuru

12 Consumption by Households (Monthly GHC)  On average individuals in these communities are very close to the poverty line Community Food, purchased Food, from farm Other purchases Total consumption PC Cons/day (US$) DarmangTotal 125.8638.94139.02303.82 P/C 29.969.3933.5972.94 1.68 PokromTotal 88.7542.61177.58308.94 P/C 18.919.2133.5861.7 1.42 OboadakaTotal 77.4351.48107.72236.63 P/C 17.611.6825.1454.42 1.25 KonkonuruTotal 125.7528.4139.36293.51 P/C 33.837.1234.6375.58 1.74

13 Household Incomes (Over Past 2 months - GHc)  Income seems to be higher in the communities that do less farming of pineapples RoundFarms Other Bus.Wages Other Farms Other Income Farm Cons’n Total Income Darmang13.96132.3451.252.254.4246.78240.99 2-12.27131.2668.227.977.2943.34245.81 3-14.02141.4589.556.309.9733.23266.48 4-7.88125.8472.312.2912.1337.50242.19 5-6.63117.2772.750.429.1533.85226.81 Pokrom1-27.8711.2938.5814.8715.1947.3599.41 2-70.25108.9638.468.2145.4934.51165.37 3-25.6663.0028.111.0422.0439.49128.03 4-30.7038.8355.359.5516.0946.75135.86 5-29.2957.5931.0218.7736.1344.96159.18 Oboadaka1-3.9820.7435.8415.210.0057.46125.27 2-31.4587.5830.250.1014.8944.23145.59 3-18.1659.9825.071.5725.1144.02137.60 4-8.0953.8325.075.4218.3355.51150.07 5-6.8337.8420.560.8524.7656.17133.36 Konko-1-0.27174.9293.79-0.773.0635.76306.50 Nuru2-2.5293.21150.143.1521.3127.44292.72 3-5.03150.96154.610.008.6723.31332.52 4-3.77137.04147.820.0012.2325.83319.15 5-3.36123.95147.381.0914.8429.68313.58

14 Mean Transfers – Given and received by age  Two interesting observations here  Net transfers received is higher for older people (pensioners)  Generally households are net receivers – consistent with consumption > incomes

15 Household Asset- Mean GHC CommunityRoundPerishablesDurablesLivestock Financial assetsTotal assets Darmang1658391701,0992,174 2321,6691821,0132,895 398181677371,731 4278591859792,051 5318721687621,834 Pokrom15544,8145762,5158,460 22513,7905971,5016,139 3834,1916391,2426,156 41943,4226411,1215,378 51692,6885751,1354,567 Oboadaka11674932338851,778 21006012619731,935 3726482727571,748 41325693037281,732 51665502636681,647 Konkonuru1314611459171,553 2195171948731,603 3117991638001,773 4165001647151,395 5194771409221,558

16  Financial assets seem to dominate except for Pokrom where durables are quite important  Maybe related to history of pineapple business in pokrom  Pokrom still dominates in terms of total assets  Possibly driven by outliers

17 Shocks to the Household - Damang Shock Value of Loss No of time occurred Extent of shock Loss of productive assets 6,00011 Loss of contract or default by creditor 1,23922 Loss of a regular job of a household mem 1,14011 Death of other household member 81411 Loss or destruction of other consumption 43312 ACCIDENT (DESTRUCTION OF BEER BAR) 40011 Divorce, separation or abandonment 40012 Funeral expenses 35432 Loss of income due to illness or injury 29311 Failure or bankruptcy of business 25722 Death of household head or spouse 23311 Major loss of crops due to drought 20012 Loss of livestock due to theft 17832 Medical expenses due to illness or injury 17622 Division of father’s property 17513 Major loss of crops due to pests and dis 17012 Loss of livestock due to death 15842 Major loss of crops due to other reasons 15012 ACCIDENT 10012

18 Shocks to the Household - Konkonuru Shock Value of Loss No of time occurred Extent of shock Loss of productive assets 40011 DEATH OF 4 UNCLES 30041 Division of father’s property 30022 Funeral expenses 30042 Major loss of crops due to other reasons 21212 Loss or destruction of other consumption 20022 Cut-off or decrease of regular remittanc 15332 Loss of contract or default by creditor 13582 Loss of livestock due to theft 13232 Loss of livestock due to death 9132 Failure or bankruptcy of business 8213 DEATH OF MOTHER 5013

19 Shocks to the Household - Oboadaka Shock Value of Loss No of time occurred Extent of shock COMPENSATION (SHOT AND KILLED A MAN)5,00011 SHOT A MAN TO DEATH5,00011 DUPED3,00011 FRIEND DEFRAUDED HIM2,90011 PREGNANCY EXPENSES1,50011 Failure or bankruptcy of business1,266182 Loss of contract or default by creditor948222 COURT EXPENSES92011 Funeral expenses876222 Division of father’s property80021 TWO CHILDREN IN SAME CLASS40012 Withdrawal of government or NGO assistan29012 LOW MARKET PRICE FOR PINEAPPLES20021 MY DOG BIT SOMEBODY20014 OUR DOG BIT SOMEBODY20013 Loss of livestock due to death16623 Loss of livestock due to theft14112 Loss or destruction of other consumption7512 Major loss of crops due to other reasons5311

20 Shocks to the Household - Pokrom ShockValue of LossNo of time occurredExtent of shock Lost home5,00011 Cut-off or decrease of regular remittanc4,60021 Death of household head or spouse4,50011 Loss of a regular job of a household mem4,35511 Loss of contract or default by creditor1,77911 Failure or bankruptcy of business1,11911 Funeral expenses1,08312 Major loss of crops due to drought83313 Major loss of crops due to other reasons56712 Medical expenses due to illness or injur54822 COURT CASE50012 LOSS OF INCOME DUE ARREST OF FAMILY MEMB50021 REPAIRS FOR DAMAGE TO ANOTHER VEHICLE50011 Loss of productive assets39812 Loss of income due to illness or injury37912 Loss of livestock due to death37712 Division of father’s property31612 Loss or destruction of other consumption22512 Major loss of crops due to pests and dis20013 CHILD'S TRAVEL EXPENSES15012 SON'S TRAVEL EXPENSES15012 Death of other household member14011 Loss of livestock due to theft10813 Divorce, separation or abandonment012

21 Coping Strategies of Households – Funeral expenses shock Coping strategyDamangKonkonuruOboadakaPokrom Ate less to reduce expenses 7.0213.79-----4.65 Ate lower quality food ----- 2.33 Forced to change occupation ----- 2.04----- Mortgaged consumption asset ----- 4.08----- Mortgaged productive asset 1.75----- 4.65 None 36.8441.3832.6548.84 Other ----- 6.12----- Sold consumption asset 1.7524.4927.91 Sold land -----1.72----- Sold productive asset 21.055.172.04----- Took children out of school -----1.72----- Took help from others 7.0229.3120.416.98 Took loan from informal source 24.565.178.164.65 Took loan from NGO/institution -----1.72-----

22  Shocks ◦ In value terms different shocks ranks differently in different communities ◦ In terms of the number of times these shocks occur, funerals and death of hh member or relative is important – true across communities  Coping Strategies (Funerals) ◦ Majority will not have done anything – could mean ‘most of the above’ ◦ Getting help from others, taking loans from informal sources remain quite important  Oboadaka and Pokrom, selling of assets is important

23  Most households in these communities are poor  Idiosyncratic shocks are significant and wide- ranging  Value of shocks sometimes exceed value of consumption  Selling of assets remain an important strategy for coping with these shocks  Other strategies rely on social networks – how connected the households are


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