Reorientation of Vocational Education and Training (VET) in SDC

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Employment and Income in Rural Areas
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Why do we talk about employment and income in
rural areas?
75 of the 1.2 billion people in extreme po-verty
live in rural areas
Traditional agriculture not profitable enough for
rural prosperity
Little non-land use based economic opportunities
Difficult to access markets and services
Widespread overuse of, and conflicts for, natural
resources
Livelihood insecurity due to inability to acquire
assets
Interfering globalization
Out-migration or brain and workforce drain
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Why do we talk about employment and income in
rural areas?

• Two typical situations

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Employment and income in rural areas path out
of rural poverty
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Pro-poor growth in rural areas
Strategic orientation, principles and practical
approaches

• How can the downward spiral process towards
  marginalization be reversed?

Balance between growth and equity

• The cake has to be distributed more evenly

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Pro-poor growth in rural areas (ctd.)
Strategic orientation, principles and practical
approaches

• Pro-poor growth requires an allocation of
  resources to

Sectors in which the poor work
Efforts that reduce inequality
Production factors that the poor own
Outputs which they consume
Areas in which the poor live
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Strategic orientation, principles and practical
approaches
Equal opportunities for women

• In rural areas especially women face manifold
  obstacles in accessing employment and income
  opportunities
• limited access to education and training
• limited access to land and other productive
  resources
• conflicting field of traditional role and
  economic activities
• limited power of decision
• Interventions are to be designed from the very
  beginning towards a more balanced access of women
  and men to employment and income opportunities

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Strategic orientation, principles and practical
approaches
Skill Development in Rural Areas

• Skill development in rural areas needs to cope
  with
• remoteness
• low basic education levels
• inappropriate skills to cope with globalized
  economy
• scarcity of qualified trainers
• out-migration
• scarce and centre based training supply
• In the past the focus was on formal schools and
  centres in towns, long-term training, and people
  were expected to go where training is offered.

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Strategic orientation, principles and practical
approaches
Skill Development in Rural Areas (ctd.)

• Newer approaches to skill development in rural
  areas are
• modular curricula
• work with mobile units
• focus on skills allowing people to improve
  incomes and livelihoods (market-orientation)
• tip the balance towards practice (without
  neglecting theory)
• training along value chains
• Emerging of market-oriented as well as
  community-based approaches
• Access to and sustainable financing of skill
  development in very remote areas remain big
  challenges

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10
Rural Finance
Strategic orientation, principles and practical
approaches

• Households and rural enterprises demand
• safe and flexible saving products
• short and long-term credit for farming and
  non-farming production
• payment services
• insurance products
• Rural areas are hardly served by financial
  institutions due to
• high transaction costs (low population density,
  lack of infrastructure etc.)
• risk handling ( high and co-variant risk)
• lack of qualified staff

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Strategic orientation, principles and practical
approaches
Rural Finance (ctd.)

• lack of effective legal systems rural areas
• building up of financial institutions is time
  consuming and costly
• Opportunities
• decentralized systems (e.g. saving and credit
  groups, NGO's, village banks, co-operatives)
  linked to commercial or development banks
• innovative approaches as mobile units, self
  management of decentralized units, bundled
  service provision, information technology etc.

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Strategic orientation, principles and practical
approaches
Rural enterprise development

• Rural enterprises mainly include
• agricultural, other natural resource-based and
  non-farming micro and small enterprises
• medium enterprises often located in local towns
• Rural enterprises face specific constraints
• low local purchasing power
• lack of access to business and financial services
• lack of access to markets
• competitiveness for products which are also
  produced in other places
• low education and skill level of entrepreneurs
  and employees

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Strategic orientation, principles and practical
approaches
Rural enterprise development (ctd.)

• Opportunities for rural enterprises and their
  promotion are
• linking of rural enterprises to local, national
  or international markets (integration into value
  chains)
• local processing of agricultural and other
  natural resource products (enhancing of local
  value added)
• enterprises which bridge distance (transport, in-
  and outbound trade, marketing of local products,
  information and communication)
• cluster development to reduce transaction cost
  and strengthen business linkages
• market creation for products with high utility
  for the poor

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Strategic orientation, principles and practical
approaches
Rural enterprise development (ctd.)

• A major proportion of the poor rural people
  depend on agriculture and other natural resource
  based activities (as farmers, tenants or
  labourers)
• A shift from traditional small-scale agriculture
  with occasional surplus sold on the market to a
  market oriented high-value and cash-crop
  production is required for sustainable income
  poverty reduction
• Challenges in high value and cash-crop production
  for (small) farmers are
• producing the right quality, at the right time
  and getting the produce to the right place
• coping with risks and increased dependency on
  outside actors
• access to production means and financial and
  non-financial services

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Strategic orientation, principles and practical
approaches
Rural enterprise development (ctd.)

• access to markets
• Opportunities in high-value and cash-crop
  production
• integration of small farmers in local, national
  and international value chains
• marketing links to supermarkets (including
  production planning, quality control, adequate
  packaging etc.)
• market creation and supply chain development for
  quality equipment and inputs (pumps, drip
  irrigation, seed, fertilizer etc.)
• delivery contracts between small producers and
  processing or trading enterprises

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Strategic orientation, principles and practical
approaches
Access to services

• Non-financial services for employment and income
  in rural areas include
• services for agriculture and other natural
  resource-based enterprises
• business development services
• Distinction between agricultural (extension
  services) and business development services
  becomes increasingly blurred
• Main challenges
• demand orientation of services (quality of
  services)
• sustainable financing mechanisms for services in
  remote areas (market-based approaches, subsidies)
• market distortion through publicly financed
  services
• differentiation of beneficiaries of services
  (public or private good)

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Strategic orientation, principles and practical
approaches
Access to services (ctd.)

• Opportunities for improved and sustainable access
  to quality services in rural areas
• service market development
• financing mechanisms based on cost sharing
• embedded services (services closely linked to
  business transactions)
• services provided by producer, value chain or
  business associations
• small-scale local private service providers with
  backstopping services
• establishment of service provider training and
  backstopping institutions
• bundled service provision
• collective delivery and consumption of services

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Strategic orientation, principles and practical
approaches
Rural-urban linkages

• The strengthening of rural urban linkages is
  important for the economic development of rural
  areas
• key sales markets for rural produce
• provision of services (financial and
  non-financial)
• access to job and education opportunities
• access to innovation
• etc.

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Strategic orientation, principles and practical
approaches
Cooperation between private and public sector

• Cooperation between public institutions and
  private enterprises in the form of Private Public
  Development Partnerships (PPDP)
• Cooperation with private enterprises in common
  projects along value-added chains
• utilization of synergies towards a win-win
  situation
• activation of additional resources for
  development (financial as well as competencies)
• Challenges
• Transparency on interests and objectives
• Clear distribution of responsibilities

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Strategic orientation, principles and practical
approaches
Rural organizations and interest groups

• Rural people have a better chance to make their
  voice heard or to represent common interests
  through well-organised lobbying or interest
  groups
• Lobby or interest groups may be short-term
  informal groups or sustainable formal
  organizations with common interests in
• exerting influence on policy decisions
• improving competitiveness and market access (e.g.
  business membership organizations, producer
  organizations etc.)
• Major challenges in supporting rural
  organizations are sustainability (financial and
  operational) and inclusiveness

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Strategic orientation, principles and practical
approaches
International trade

• Currently high discrimination of mainly
  agricultural products from developing countries
  in the frame of international and regional trade
  regimes (WTO and other regional agreements)
• limited access to international markets due to
  high import tariffs, non-tariff trade barriers
  and export subsidies
• ruin of domestic production in case of
  unprotected domestic markets
• Opportunities for supporting developing countries
  with regard to increasing trade globalization
• national and international advocacy for
  non-discriminating trade regimes
• support of developing countries in negotiations
  on trade agreements
• support of producers in developing countries to
  adapt to increasing globalization

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