Reaching the underbanked and unbanked in subsistence markets at the nexus of the formal and informal economy

It is estimated that globally over 2 billion people do not have a bank account, with many more in the developed and developing worlds ‘under-banked’, meaning they have limited access to financial services. Reaching the unbanked and underbanked with appropriate financial services is widely recognised as critical for future global economic growth and prosperity. Drawing upon multidimensional understandings of poverty, and framed by literature on poverty pools, traps and cycles, this paper explores the use of financial products and services in the developing world and critically reflects on their potential role in poverty alleviation and wider sustainable development. Discussions are illustrated with reference to qualitative empirical research undertaken in East and Southern Africa, and a sense-making of the lived financial experiences of low income individuals, households and communities.

Imitation, entrepreneurship and the informal/formal economy nexus: an African perspective

This paper explores a segmentation of micro and small enterprises (MSEs) in developing countries within the formal/informal economy nexus that has wide-ranging implications for the targeting of base-of-the-pyramid initiatives and entrepreneurship theory. This proposed segmentation emerges from the analysis of a sample of Kenyan MSEs utilising current and prior business models; the antecedent influences shaping the business model; barriers to entry associated with knowledge, capital and skills; the degree of innovation or imitation evident in the business model linked to the nature of opportunity recognition; and their relationship with the formal institutional business environment.

The Jua Kali and the Mali-Mali: the informal/formal nexus amongst Kenyan micro enterprises

This paper presents a preliminary exploration of the informal/formal economy nexus and entrepreneurial processes amongst a sample of Kenyan roadside vendors who mostly operate in the informal economy. Using semi-structured interviews, data was collected from sixty street vendors across Kenya. In particular the paper focuses on the relationship between the informal and formal economy and the factors that promote formality amongst micro and small enterprises in developing countries. The paper presents a conceptualization of a potential segmentation of the informal economy, considering the implications of this in terms of base of the pyramid initiatives and the promotion of development through enterprise.

The rise of urban tourism in Havana since 1989

This article looks at the development of urban tourism in Havana, Cuba, in the period since the collapse of state socialism in the USSR and Eastern Europe. It provides an interesting case study of the adoption of an outward-oriented state development policy in the context of a socialist state. The dramatic rise of urban-based tourism in Havana since 1989 is described, followed by a review of the socio-economic impacts of such tourism. These include: income generation; job creation; the rise of the informal economy, including crime and prostitution; increased migration to the primary city, along with spatial concentration on the coastal strip, and associated environmental impacts. In conclusion, the article considers the fat that the promotion of tourism has returned Havana to some of the conditions that existed in the city Socialist Revolution in 1959.

Political economy of state-building: power after peace

The purpose of this volume is to examine and evaluate the impact of international state-building interventions on the political economy of post-conflict countries over the last 20 years. It analyses how international interventions have shaped political and economic dynamics and structures – both formal and informal – and what kind of state, and what kind of state-society relations have been created as a result, through three different lenses: first, through the approaches taken by different international actors like the UN, the International Financial Institutions, or the European Union, to state-building; second, through detailed analysis of key state-building policies; and third, through a wide range of country case studies. Amongst the recurring themes that are highlighted by the book’s focus on the political economy of state-building, and that help to explain why international state-building interventions have tended to fall short of the visions of interveners and local populations alike are evidence of important continuities between war-time and “post-conflict” economies and authority structures, which are often consolidated as a consequence of international involvement; tensions arising from what are often the competing interests and values held by different interveners and local actors; and, finally, the continuing salience of economic and political violence in state-building processes and war-to-peace transitions. The book aims to offer a more nuanced understanding of the complex impact of state-building practices on post-conflict societies, and of the political economy of post-conflict state-building.

Improving participatory varietal selection processes: participatory varietal selection and the role of informal seed diffusion mechanisms for upland rice in Ghana

This paper considers the process of Participatory Varietal Selection (PVS) and presents approaches and ideas based on PVS activities conducted on upland rice throughout Ghana between 1997 and 2003. In particular the role of informal seed systems in PVS is investigated and implications for PVS design are identified. PVS programmes were conducted in two main agroecological zones, Forest and Savannah, with 1,578 and 1,143 mm of annual rainfall, respectively, and between 40 and 100 varieties tested at each site. In the Savannah zone IR12979-24-1 was officially released and in the Forest zone IDSA 85 was widely accepted by farmers. Two surveys were conducted in an area of the Forest zone to study mechanisms of spread. Here small amounts (1-2 kg) of seed of selected varieties had been given to 94 farmers. In 2002, 37% of 2,289 farmers in communities surveyed had already grown a PVS variety and had obtained seed via informal mechanisms from other farmers, i.e. through gift, exchange or purchase. A modified approach for PVS is presented which enables important issues identified in the paper to be accommodated. These issues include: utilising existing seed spread mechanisms; facilitating formal release of acceptable varieties; assessing post-harvest traits, and; the need for PVS to be an ongoing and sustainable process.

Informal finance and rural finance policy in India: historical and contemporary perspectives

From the 1950s up to the early 1990s the All-India data show an ever-declining share of informal credit in the total outstanding debt of rural households. Contemporaneous micro-level studies, using more qualitative research methodologies, provide evidence that questions the strength of this trend, and more recent All-India credit surveys show, first, a levelling, and then a rise, in the share of rural informal credit in 1990/91 and 2000/01, respectively. By reference to findings of a study of village moneylenders in Rajasthan, the paper notes lessons to be drawn. First, informal financial agents have not disappeared from the rural financial landscape in India. Second, formal-sector financial institutions can learn much about rural financial service needs from the financial products and processes of their informal counterparts. Third, a national survey of informal agents, similar to that of the 1921 Census survey of indigenous bankers and moneylenders, would provide valuable pointers towards policy options for the sector. A recent Reserve Bank of India Report on Moneylender Legislation not only explores incentive mechanisms to better ensure fair practice, but also proposes provision for a new category of loan providers that would explicitly link the rural informal and formal financial sectors.

Livelihood diversification and moneylending in a Rajasthan village: what lessons for rural financial services?

The complexity of rural economies in developing countries is increasingly recognised, as is the need to tailor poverty reduction policies according to the diversity of rural households and their requirements. By reference to a village in Western India, the paper examines the results of a longitudinal micro-level research approach, employed for the study of livelihood diversification and use of informal finance. Over a 25-year period, livelihoods are shown to have become more complex, in terms of location, types of non-farm activities, and combinations of activities. Moreover, livelihood pathways taken continue to be critically affected by economic and social inequalities implicit in the caste system and tribal economy. A longitudinal micro-level research approach is shown to be one that can effectively identify the many complexities of rural livelihoods and the continued dependence on the informal financial sector, providing important insights into the requirements for rural financial products and services.

Nitrogen recycling through the gut and the nitrogen economy of ruminants: An asynchronous symbiosis

The extensive development of the ruminant forestomach sets apart their N economy from that of nonruminants in a number of respects. Extensive pregastric fermentation alters the profile of protein reaching the small intestine, largely through the transformation of nitrogenous compounds into microbial protein. This process is fueled primarily by carbohydrate fermentation and includes extensive recycling of N between the body and gut lumen pools. Nitrogen recycling occurs via blood and gut lumen exchanges of urea and NH3, as well as endogenous gut and secretory N entry into the gut lumen, and the subsequent digestion and absorption of microbial and endogenous protein. Factors controlling urea transfer to the gut from blood, including the contributions of urea transporters, remain equivocal. Ammonia produced by microbial degradation of urea and dietary and endogenous AA is utilized by microbial fermentation or absorbed and primarily converted to urea. Therefore, microbial growth and carbohydrate fermentation affect the extent of NH3 absorption and urea N recycling and excretion. The extensive recycling of N to the rumen represents an evolutionary advantage of the ruminant in terms of absorbable protein supply during periods of dietary protein deficiency, or asynchronous carbohydrate and protein supply, but incurs a cost of greater N intakes, especially in terms of excess N excretion. Efforts to improve the efficiency of N utilization in ruminants by synchronizing fermentable energy and N availability have generally met with limited success with regards to production responses. In contrast, imposing asynchrony through oscillating dietary protein concentration, or infrequent supplementation, surprisingly has not negatively affected production responses unless the frequency of supplementation is less than once every 3 d. In some cases, oscillation of dietary protein concentration has improved N retention compared with animals fed an equal amount of dietary protein on a daily basis. This may reflect benefits of Orn cycle adaptations and sustained recycling of urea to the gut. The microbial symbiosis of the ruminant is inherently adaptable to asynchronous N and energy supply. Recycling of urea to the gut buffers the effect of irregular dietary N supply such that intuitive benefits of rumen synchrony in terms of the efficiency of N utilization are typically not observed in practice.

Shock persistence in a dual economy model of India

This article examines shock persistence in agricultural and industrial output in India. Drawing on the dual economy literature, the linkages between the sectors through the terms of trade are emphasised. However different dual economy models make differing assumptions regarding the categorisation of variables as being either endogenous or exogenous and this distinction is crucial in explaining the pattern of shock persistence. Using annual data for 1955-95, our results show that shocks to both output series are permanent while those to the terms of trade are transient.