• back


    Measuring Impact: Seeing Results-ITC's Pilot Project in Ethiopia


    International Trade Forum - Issue 2/2009 

    Photo by Marden Dean 

    Comparative analysis shows that export-led programmes help to alleviate poverty in developing nations.

    Since 2005, ITC has been working to increase trade and reduce poverty in Ethiopia, specifically by helping to build export capacity in small businesses within the agricultural sector. The pilot project, known as the Ethiopian Export-led Poverty Reduction Project (EEPRP), has worked with trade support institutions to help establish links between market-oriented production and overseas buyers. Results of the programme's first significant survey provide encouraging signs that building trade capacity and providing access to international markets improve the lives of the poorest communities in developing nations.

    Some 123 households were surveyed when the pilot project began in October 2005, and 118 of these were followed up in February 2008. The target community was selected on the basis of a number of criteria: its relative poverty, potential to grow the selected agricultural crop and geographical accessibility; the commitment of local and regional partners; and several other indicators. As the area is largely undeveloped and isolated, and new developments take some time to be implemented, the turmoil in world trade over the past 18 months is not thought to have impacted on the beneficiary communities.

    The results showed marked improvement in all areas relating to standards of living, including access to education, earnings, savings and trade capacity.

    Demographic and social indicators

    The impact assessment found an increase in the size of the household communities, from an average of 7.54 members in 2005 to 8.05 in 2008. In 99 per cent of cases, men were heads of households. In the same period, literacy among adults (over 15 years of age) doubled.


    Note: All figures in the above graphs have been rounded up. 

    Economic indicators

    There was marked improvement in the livelihoods of targeted communities, where households enjoyed a significant increase in their incomes between 2005 and 2008. In particular, livelihoods of the poorest improved, with gross average incomes more than doubling. On average, heads of households earned 710 birr (around $56) per month in 2005; by 2008, this had risen to 1,673 birr ($133). Increases in earning were also more evenly spread, with the average daily income of household members increasing from $0.46 to $0.98. These are remarkable gains, although it's important to remember that this still places many individuals below the international poverty line of $2 per day. Over time, the European Union will fund the expansion and replication of the project, which is expected to generate further increases in income in these communities, with standards of living crossing the poverty line.

    As a result of this dramatic doubling of income, more households were able to save (96 per cent compared to 68 per cent) and to save more (73 per cent of households now have savings of over $100, compared to 40 per cent in 2005).

    There was also considerable improvement in the quality of drinking water - in 2008, over 71 per cent of homes had access to running water, compared to 56 per cent during the initial phase. This was achieved by installing additional communal tap-water facilities, increasing the mobility of beneficiaries and improving their knowledge of the sanitation risks associated with river and pond water. Some 90 per cent of households own a radio, as compared to 80 per cent in 2005. There is still no electricity in the community, but the project's partners have supported efforts to change this and the Government has given the green light.

    Agricultural indicators

    The primary household activity is agriculture, thus the relationship between revenues, harvest and trade is the nub of the EEPRP. The number of livestock per household effectively doubled over the period. The sale of livestock products also increased by a significant 89.1 per cent. Use of bicycles, the only modern form of transport, increased from 9 per cent in 2005 to 32 per cent in 2008.

    In 2005, only 23 per cent of households earned more than $1,000 through product sales; in 2008, this had jumped to 75 per cent. Only 3 per cent of households now earn less than $500, a dramatic change from the 30 per cent during the initial phase (part of this increase in revenues can be attributed to the rise in cereal prices). As a result of developments in agricultural activities, over 85 per cent of households have become members of agricultural cooperatives, which provides them with greater production capacity and marketing opportunities.

    The authors of the report point out that, although trade favours economic growth, its role should not be overstated. Sustained growth depends on factors such as the development of human capital, infrastructure, good governance, sound institutions (including efficient financial markets) and technology, as well as on macroeconomic stability. Furthermore, policies to improve income distribution, credit, education and health care play a crucial role in reducing poverty and promoting economic growth.

    To attain the goal of reducing poverty, a holistic view of the problem is required including empowering small producers to acquire the skills they need to harness their productive potential and the inclusion of trade in a country's overall development and poverty reduction strategy. In addition, while economic growth alone cannot guarantee a sustained reduction in poverty and inequality, it is a necessary condition towards that goal. As these survey findings attest, empowering small producers to acquire the skills necessary to export their produce is a key strategy for reducing poverty.