1. MOZAMBIQUE PILOT LEARNING ABOUT WHAT WORKS TO IMPROVE FARM JOBS THROUGH AGGREGATOR MODELS Ian Walker April 18, 2016

2. Outline of the presentation Main Jobs challenges in Mozambique Learning from pilot experiences in agribusiness aggregation

3. Main jobs challenges in Mozambique

4. The labor force remains overwhelmingly concentrated in smallholder agriculture with very low productivity and earnings Presentation Title3 Type of Employment 1997200320092012* Agriculture (%) 86.878.279.673.0 Household Enterprises (HEs) (%) 4.48.18.414.0 Non-farm Wage Employment (%): 8.912.612.013.1 Private Sector (%) 3.07.8 8.9 Public Sector (%) 5.94.74.2 Total 100 Sources: Author’s tabulation from IAF 1996/97, 2002/03; IOF 2008/09; and INCAF, 2012 *NOTE: 2012 data not fully comparable to earlier data owing to changes in survey methodology Structure of primary employment (age 20+), 1997-2012

5. Low agricultural productivity remains the key factor underlying Mozambique’s low growth-to-poverty elasticity Sector1. Share of GDP (%) 2. Share of Labor force (%) 3. Relative productivity (=1/2) Agriculture27720.375 Mining90.518.0 Manufacturing1243.0 Services51242.1 Source: Jones and Tarp (2015) Shares of GDP, Labor force and relative productivity (2014) Presentation Title4 Services are nearly 6 times more productive than agriculture; manufacturing is 8 times more productive; and mining is almost 50 times more productive

6. Two types of jobs transformations are needed to shift from the persistent pattern of high poverty and inequality Accelerated productivity transformations within the rural economy (agriculture and forestry) Improved quality of labor flows out of agriculture, towards jobs in modern businesses with high productivity, instead of self employment in informal services The key is to generate jobs with linkages to the formal economy that will permit adequate capitalization and increased productivity Presentation Title5

7. Learning about the jobs potential of agribusiness

8. AGRICULTURE: A HIGH POTENTIAL VALUE CHAIN Mozambique has extensive climatic, soil and locational advantages Under-utilization of land in traditional slash and burn agriculture Under-employment of rural labor Need to overcome: atomized land holding pattern; lack of access to technology, training, finance and markets Aggregator models can capitalize agriculture to develop crops for urban demand, replace imports from South Africa, facilitate agro- industrial transformations and meet growing demand from Asia and Europe Increased labor and land intensity and higher productivity will generate more and better jobs

9. AGRIBUSINESS AGGREGATOR MODELS Over the last decade development agencies have focused on the importance of linking smallholder farmers and growers to modern business organizations Multiple variants exist of aggregator models linked to anchor buyers working across a range of crops and in small animal husbandry (chicken farming) in different regions of Mozambique They attempt to address market failures such as the atomization of land holdings, lack of access to finance and technology and information asymmetries Many have innovative elements such as incentives systems to reduce the risk of side selling and guarantee mechanisms to permit financing to farmers without asset bases or credit histories

10. LETS WORK WILL CONDUCT A RIGOROUS PILOT STUDY OF AGGREGATOR MODELS, WITH A FOCUS ON JOBS We contracted a consultant study (Technoserve) to analyze sector-level potential across regions of the country The study also highlighted generic aspects of aggregator models: how they address key obstacles to potential transformations within agriculture It showed that few agencies place explicit emphasis on jobs – rather, they highlight creating successful businesses Lets Work will now organize a rigorous evaluation of a sub set of the most promising models, to quantify the jobs dimensions (number and quality of jobs created) and identify the most successful approaches The contracting process will be completed in 2016 and the field work will be carried out in 2017-18

11. For more information, visit worldbank.org/jobsanddevelopment worldbank.org/jobsanddevelopment Follow us on Twitter @WBG_Jobs