Pastoralism: Africa’s invisible economic powerhouse?

Ced Hesse, James MacGregor - November 2012

This paper calls for investments in developing countries in better statistical collection and analysis on the issues critical to sustainable development within those nations.

Many elements of developing economies are missing from national accounts. This is more than a statistical dilemma since it hampers development of government policy, results in under-investment in those missing elements, over-investment in other options, and helps to paint an incomplete picture of the health, wealth and opportunities in these economies. 

Governments of developing countries base many key decisions on data extracted from their national accounts. As such, these governments can undervalue a range of activities that are not captured in their national accounts. These include environmental services, informal social and economic services, and the informal economy, and resulting in the promotion of policies that seek to change or replace these services. 

This paper uses pastoralism to exemplify this underinvestment and marginalisation. The virtual absence of pertinent and reliable data confirming pastoralism’s contribution to national economies provides the underlying rationale for a general lack of support. The lack of recognition of pastoralism as an economic sector helps create a vicious circle of impoverishment, conflict and environmental degradation in most developing countries with significant pastoral communities. Specifically there are twin concerns over the impact of poor statistical management in developing countries. 

First, the informal economy is rarely captured. But at the same time it is the backbone of most developing nations – accounting for over half of employment and GDP. Furthermore, the informal economy supplies much of the raw material for the monitored, taxed and managed formal economy. 

Second, and the focus for this paper, the informal economy includes some economic activities that are worthwhile preserving and investing in for their continuation. Pastoralism is an example of an activity that both is not included routinely in national accounts and has environmental, social and economic elements which are impacted by its ‘invisible’ nature at a national policy level. Indeed, many policy makers in East Africa have preconceptions about the value of pastoralism as a land-use system, believing it to be economically inefficient and environmentally destructive. Yet, this is not evidence-based. Rather, pastoralism is a rational economic land use system in which maximum returns, be they economic, social or environmental, are sought from investments. Demonstrating the logic underpinning pastoral livelihood systems requires a ‘tweaking’ of the conceptualisation of rational economic models rather than a re-invention. 

We argue that counting counts. Currently, existing national statistics on pastoral economic activities are inadequate and inaccurate. Direct values of pastoralism include production of milk, beef and hides for subsistence and export, but these are rarely included in the national accounts, even when as inputs to the formal sector. Indirect values of pastoralism include income from tourism, sustainable land use and risk management in disequilibrium environments, biodiversity conservation and improved agricultural returns, but these too are rarely captured in national statistics or recognised by policy makers. 

Indeed, all governments in East Africa have embarked on a radical agenda of institutional reform centred on the modernisation of the agricultural sector as the motor of economic development for poverty reduction - Programme for modernisation of agriculture (Uganda); the Strategy for revitalisation of agriculture (Kenya); and the Agricultural sector development programme (Tanzania). And pastoral land is shrinking and with it the opportunities for pastoral people to make a viable living. Within this, the replacement of pastoralism either by a livestock sector based on western models of animal husbandry or alternative land use systems is promoted as a key objective. This view of the relative inferior returns from pastoralism is not based on solid empirical or quantitative evidence. 

Pastoralism’s decline is a vicious circle which dilutes national-level economic growth. Pastoral land use is undervalued, and either ignored or appropriated for alternative uses, thus making pastoralism less viable and ripe for persistent neglect or appropriation for alternative uses. This represents a missed opportunity to capitalise on the significant economic potential this livelihood system offers, particularly in the arid and semi-arid regions of East Africa. These areas are not suited to widespread agriculture or more intensive or sedentary forms of animal husbandry. Thus, investing in pastoralism has low opportunity costs. Pastoralism offers the most cost-effective way of supporting relatively large populations in these areas and at minimal environmental cost. Furthermore, and perhaps more significantly, it offers East African governments a major opportunity to capitalise on the rapid projected growth in demand for livestock products over the next 15-20 years. Finally, the continued neglect of pastoralism carries huge potential costs as poverty, environmental degradation and conflict are likely to increase as local people lose their livelihood base and struggle for survival. 

Furthermore, lack of economic data reporting on pastoral activity limits any study or analysis of pastoralism. Academic analysis of dryland systems is a wide discourse but it rarely seeded with economics. Indeed, there no consensus on what is a dynamic economic model of pastoralism. 

It is clear that pastoralism is a diverse and dynamic livelihood system integrating livestock husbandry with other activities including agriculture and NTFP. Although livestock are raised for economic reasons these are framed within strong social, environmental and cultural objectives. Pastoralism is also well-adapted to, and able to generate significant returns from, dryland environments characterised by scarce and unstable resources. 

Economic tactics to maintain an optimal balance between pastures, livestock and people include raising different species and breeds of livestock to make optimum use of different ecological niches, particularly in the dry season when resources are scarce, controlling access to water to manage pasture use, particularly in the dry season, managing the age-sex composition of their herds and allocating different rights of use over different animals to meet the day-to-day needs of the family while ensuring the future viability of the herd and family, practicing mobility to track fresh pastures, avoid over-grazing and evade disease, conflict or drought conditions, splitting herds to lessen the risks of disease, Investing in animals, particularly fertile females, to build up herd size as an insurance against drought, disease and raiding, and loaning animals “surplus” to subsistence requirements to family and friends to help them rebuild their herds and develop social relations as a form of social capital as a hedge against drought and other risks. 

Low, unpredictable, scattered and variable rainfall from one season to the next and one year to the next is the defining feature of the drylands of East Africa. Rainfall variability is normal in these areas and represents the single most important factor determining the quantity and quality of natural pastures and water on which the majority of livestock in pastoral and agro-pastoral systems depend for their survival. In the face of this variability, pastoral families are seeking to balance three factors upon which the success of pastoralism depends, such as the number of animals versus the availability of natural pastures and water, the size and age-sex ratio of the herd versus the size and age-sex ratio of the family it supports and on which it is depends for its management and other market roles and relationships, which have a primary aim to spread current and future risk through accumulation of a diverse portfolio. Included here are non-livestock sources of income such as Non-Timber Forest Products (NTFPs), and reciprocal arrangements with other pastoralists and sedentary agriculturalists. Yet few mechanisms exist to inform government decision-making of its comparative advantages over alternative land uses. We argue that a new conceptual framework is needed to assess the value of pastoralism that goes beyond conventional economic criteria in order to provide fresh insights to its contribution to poverty reduction, sustainable environmental management and the economic development of dryland areas of East Africa in the context of increasing climate uncertainty. This paper proposes such a framework. This paper argues that pastoralism does make a significant contribution to society and that, with better understanding, planning and data collection, its value can be demonstrated. It adopts a revised TEV approach for identifying the range of values that can be attributed to pastoralism. Identifying goods and services from an informal sector such as pastoralism, determining who values them and how best to measure them, is not a straightforward process. Many of the goods and services are not traded on commercial markets and therefore have no easily calculated market value. The values of non-market goods and services need to be measured and expressed in monetary terms, when this is possible and appropriate, so that they can be weighed on the same scale as commercially traded components.

Indeed, for policy makers, the key question should be whether pastoralism offers the most cost-effective investment for the drylands, and how to both increase its efficiency and distribution of benefits. At a policy level, implementation of such a framework in each country will enable policy, investments and trade-offs to be made rationally and transparently. There is no need to formalise existing functioning informal economic activities. But an expression of an economic activity’s benefits and costs to a nation are crucial. Investment in data collection and analysis will result in considerable benefits to policy, activities to achieve sustainable development and to transparency. 

The example of pastoralism both as an invisible powerhouse and a livelihoods refuge for millions of people, alerts us to the plight of other hidden informal economies which likewise require attention by policymakers.

A longer version of this paper will be published in World Economics Journal Volume 14 (1), January to March 2013