4.2. Vulnerable Populations and the Value Chain Approach

Introduction

Vulnerable populations are defined as those groups of people who are typically excluded, disadvantaged or marginalized based on their economic, environmental, social, or cultural characteristics. While many fit this description (e.g., people with disabilities, people living with HIV, and refugees), this section of the wiki focuses on three groups commonly targeted by development programs:

It is important to consider that these groups are not homogeneous and not all individuals within these groups are necessarily vulnerable. In particular, there are many women and youth whose social context and individual circumstances do not make them vulnerable.

Relevance of the Value Chain Approach to Vulnerable Populations

Markets in general are essential for building the resilience of individuals, households and communities. (For more on the role of markets in strengthening resilience, click here). In addition, there are a number of features of the value chain approach that make it particularly relevant for programs targeting poverty reduction and economic growth among vulnerable populations.

Relationships. The value chain approach recognizes that relationships play a critical role in competitiveness and poverty alleviation. Vulnerable populations are often more socially and geographically isolated. Their relationships are frequently limited in terms of the diversity of individuals and institutions they interact with, thereby reducing their options. At-risk youth, for instance, typically lack connections to potential employers and buyers. In addition to limited diversity, relationships are frequently unequal due to limited social control. The value chain approach can strengthen linkages with public- and private-sector actors with the potential (given additional support) to influence the way vulnerable groups see themselves. For instance, enhancing access to better quality or more affordable goods and services can shift self-perceptions from being recipients of charity to being consumers making their own choices.
Incentives. Incentives determine how value chain actors interact with each other. The value chain approach focuses on understanding and shaping those incentives. While profit maximization is a powerful incentive, there are many others that influence how people and particularly vulnerable populations behave, including risk-aversion, low self-esteem, and a culture of dependency. By focusing on incentives, the value chain approach can be used to identify opportunities for promoting desired behavior.
Behavior. By intervening in ways that shift incentives, vulnerable individuals and groups can be encouraged to act in new ways that contribute to reduced vulnerability and poverty (such as valuing learning, savings, willingness to innovate, etc.). Peer pressure at the community level and new value chain relationships can reinforce these incentives toward new ways of thinking and acting.
Social impacts. Economic constraints often cause or exacerbate other social challenges within a household. Inadequate access to resources, for instance, is a major contributor to food insecurity and to morbidity and mortality from HIV/AIDS.^[1] School attendance and life expectancy are also often negatively affected. The increased income and assets that are generated by value chain interventions help to empower households to address these challenges.
Sustainability. The focus of the value chain approach on relationships and incentives supports the creation of sustainable systems for poverty reduction. When such systems are not created, results can rarely be sustained in the longer term. Research findings from Tanzania, for instance, indicate that food aid and employment generation through public works reduced the immediate likelihood of food shortages for vulnerable households but were insufficient to ensure sustained graduation from donor support.^[2]

Challenges in Applying the Value Chain Approach to Vulnerable Populations

Although there is growing emphasis on applying the value chain approach to vulnerable populations, most projects have not disaggregated their monitoring data to identify the extent to which the very poor, youth and other vulnerable populations directly and indirectly participate and benefit. Evidence suggests, however, that their involvement in many initiatives to date has been marginal for a number of reasons:

The vulnerable face barriers such as lack of time or social exclusion that make them unlikely to participate if not specifically considered.
While most initiatives have focused on linking producers to output markets, many vulnerable populations lack the required assets for market engagement.
Projects have assumed that vulnerable populations will benefit from wealth creation within the community even when they are not direct participants. This assumption has rarely been backed with analysis to understand how intra-household and inter-household resource transfers function within a specific context, and thus this trickle-down effect has rarely been confirmed.
Projects have found it difficult to strike an appropriate balance between concentrating resources on a small numbers of the vulnerable and achieving large-scale impact through a focus on the less vulnerable.

Vulnerable households present unique challenges in the context of value chain development. These households tend to be more isolated from the mainstream economy, have far fewer assets, and suffer from more disadvantageous (or exploitative) relationships with the private sector. The need for upgrading is comparatively greater yet the resources to support it are very limited. Vulnerable populations may have limited capacity to make informed choices about how to engage with mainstream markets and allocate their scarce resources. They often view investment decisions and perceive risk in different ways from the less vulnerable, and have much shorter time horizons. All of these factors will tend to reduce the role of the vulnerable in value chain programming if programming is not adjusted to encourage their participation.

The Value Chain Approach and Complementary Approaches to Working with Vulnerable Populations

The value chain approach has much to contribute to advancing the economic situations of vulnerable households, but these households typically require more than this approach alone is likely to provide. Households are less vulnerable when they have appropriate mechanisms to save, manage their scarce resources, protect themselves against risks and shocks, resolve conflicts, and transfer assets to subsequent generations. Successful practitioners need to use a portfolio of intervention strategies to meet these complex needs, of which the value chain approach is one valuable component.

Sustainable Livelihoods Approach

The Sustainable Livelihoods Approach (SLA)^[3] excels at describing the context, motivations and resources of target households—especially those that are very vulnerable. The participatory tools that it advocates (e.g., seasonal calendars, wealth rankings) can provide excellent information on who the vulnerable are, how they participate in value chains, and what factors will constrain or enable their engagement in upgrading opportunities. For instance, livelihood tools may identify households that regularly lack resources during the dry season, thereby inhibiting the viability of investments in livestock rearing without access to finance. The value chain approach complements SLA by understanding how to sustainably intervene in the broader market systems in which these households operate.^[4]

Food Security

Food security^[5] programming is very complementary with the value chain approach in addressing the needs of the vulnerable. Food security programming can strongly support the value chain approach by increasing the availability of food and the capacity of the poor to access and use it. Building food security is particularly important for extremely vulnerable populations so as to address their basic needs and prepare them for engaging in income generating opportunities through the value chain approach. Without basic food security, households will lack the capacity to engage in longer-term investments. The value chain approach best complements the food security framework through the specific tools that it has developed to improve peoples’ access to food through income generation and sustainably increased production.

Social Protection

Social protection approaches^[6] provide sustenance for the most vulnerable with interventions including conditional or unconditional cash transfers, food for work, or assets for work programming. Many such programs also seek to build longer-term capacity to engage in value chains through skills training and the provision of productive assets (e.g., livestock, agricultural machinery). Social protection aims to provide the most vulnerable households with an opportunity to stabilize their livelihoods and rebuild their self-insurance mechanisms. It also often identifies legal barriers to the economic participation of women, youth and other vulnerable populations, such as inheritance legislation that may strip the vulnerable of critical assets following the death of a family member. The value chain approach complements social protection methodologies by providing vulnerable populations with opportunities to sustainably graduate from social assistance.

Other approaches focus on specific economic outcomes, such as the asset building and consumption-smoothing objectives of group-based savings and lending approaches^[7], which may equip vulnerable households to take advantage of economic opportunities. Such approaches are less effective in identifying or creating new opportunities, which the value chain approach can provide.

Recommended Good Practices

The limited number of initiatives that have integrated the value chain approach with vulnerable populations constrains the identification of definitive best practices. Much remains to be learned. Click here for a list of promising good practices that have emerged from existing experience.

Footnotes

↑ L. Ivers et al, HIV/AIDS, Undernutrition, and Food Insecurity, (2009) 1.
↑ J.Wolfe, Household Economic Strengthening in Tanzania: Framework for PEPFAR Programming, (2009), 8.
↑ http://www.eldis.org/go/livelihoods/
↑ M. Albu, Making Markets Work for Poor, Comparing M4P and SLA frameworks: Complementarities, divergences and synergies, (2008) 17-22.
↑ http://www.eldis.org/go/topics/resource-guides/food-security
↑ http://www.eldis.org/go/topics/resource-guides/poverty/social-protection
↑ http://www.vsla.net/