Linking Poor Rural Households to Microfinance and Markets in Ethiopia Baseline and Mid-term Assessment of the PSNP Plus Project in Doba March 2010 John Burns Solomon Bogale Gezu Bekele Table of Contents SUMMARY ................................................................................................................................... 7 1. INTRODUCTION .................................................................................................................. 9 1.1 PSNP Plus Project Background....................................................................................... 9 1.2 Linking Poor Rural Households to Microfinance and Markets in Ethiopia ............... 11 2 THE PSNP PLUS PROJECT .................................................................................................. 11 2.1 PSNP Plus Overview....................................................................................................... 11 2.2 LIS Overview.................................................................................................................... 12 2.2 Overview of PSNP Plus Project Activities in Doba ...................................................... 13 2.2.1 Study Area General Characteristics ........................................................................... 13 2.2.2 Microfinance Linkage Component .............................................................................. 13 2.2.3 Village Saving and Lending Associations................................................................... 14 2.2.4 Market Linkage Component ....................................................................................... 15 2.3 Research Questions ....................................................................................................... 17 3. ASSESSMENT METHODOLOGY ......................................................................................... 17 3.1 LIS Approach................................................................................................................... 17 3.2 Overview of Methods and Indicators ............................................................................ 19 3.3 Indicator Selection .......................................................................................................... 19 3.4 Sampling .......................................................................................................................... 19 3.4.1 Method and Size......................................................................................................... 19 3.4.2 Study Locations........................................................................................................ 20 3.5 Data Collection Methods ............................................................................................. 22 3.5.1 Household Interviews ................................................................................................. 22 3.5.2 Focus Group Methods ................................................................................................ 23 3.6 Pre-Testing ...................................................................................................................... 23 3.7 Triangulation ................................................................................................................... 24 3.8 Data Analysis................................................................................................................... 24 3.9.1 Analysis of VSLA and Non-VSLA Comparison Groups ........................................... 24 4 RESULTS ................................................................................................................................ 26 4.1 PSNP Plus in the Context of Other Programs in Doba................................................ 26 4.2 Project Status at the time of the Assessment .......................................................... 27 4.3 Community Characteristics ........................................................................................... 29 4.3 Characteristics and Background Data on sampled PSNP Plus Households ............ 30 4.4 Income.............................................................................................................................. 31 4.4.1 Sources of Income...................................................................................................... 31 4.4.2 Livestock Sales........................................................................................................... 31 4.4.3 Crop Sales.................................................................................................................. 31 4.5 Expenditure ..................................................................................................................... 32 4.6 Asset Levels and Changes............................................................................................. 34 4.6.1 Land............................................................................................................................ 34 4.6.2 Livestock..................................................................................................................... 34 4.6.3 Productive Assets (Tools)........................................................................................... 35 4.7 Savings and Loans ......................................................................................................... 38 4.8 Comparison Between VSLA and Non-VSLA Households ........................................... 41 5. DISCUSSION ......................................................................................................................... 43 Longitudinal Impact Study of the PSNP Plus Program Baseline Assessment in Doba Woreda 5.1 Assessment Constraints and Methodological Limitations ......................................... 43 5.1.1 Timing......................................................................................................................... 43 5.1.2 Attribution ................................................................................................................... 44 5.1.3 Indicators .................................................................................................................... 45 5.1.4 Sampling Challenges.................................................................................................. 46 5.1.5 Selection and Respondent Bias ................................................................................. 46 5.1.6 Secondary data limitations ......................................................................................... 46 5.1.7 Other Challenges........................................................................................................ 47 5.2 Community Wealth Indicators ....................................................................................... 47 5.2.1 Livestock..................................................................................................................... 47 5.2.2 Land............................................................................................................................ 48 5.2.3 Cash Crops and Honey Production ............................................................................ 48 5.2.4 Dwellings and Household Items ................................................................................. 48 5.2.5 Food Security Duration............................................................................................... 49 5.3 Factors Affecting Food Security and Asset Accumulation......................................... 49 5.3.1 Rain Failure and Pests ............................................................................................... 49 5.3.2 Livestock Disease....................................................................................................... 50 5.3.3 Food Prices ................................................................................................................ 50 5.3.4 Education Expenses................................................................................................... 50 5.3.5 Lack of Employment Opportunities and Land Division ............................................... 51 5.3.6 Medical Expenses ...................................................................................................... 51 5.3.7 Household Responses to Food Insecurity.................................................................. 51 5.4 Income Sources .............................................................................................................. 52 5.4.1 Cash Crops................................................................................................................. 52 5.4.2 Livestock Production and Trade ................................................................................. 52 5.4.3 PSNP Employment..................................................................................................... 53 5.4.4 Petty Trade and Other Income Generating Activities ................................................. 53 5.4.5 Informal Employment and Firewood Sales................................................................. 53 5.5 Expenditure ..................................................................................................................... 54 5.6 Assets and Asset Changes ............................................................................................ 54 5.6.1 Land Holdings............................................................................................................