EVOKATION

EVOKATION

Rural Poverty Alleviation in Lebanon: an Entrepreneurial Approach

Ari Tatian

Head of Department

Research & Studies

Lebanese Parliament

ari.tatian@gmail.com

Abstract: Following is a brief account of the entrepreneurial initiative that has been undertaken or evoked, aiming at harnessing local rural development efforts, by resorting to alternative strategies that would render poverty mitigation schemes more comprehensive and efficient.

The Evokation in a Nutshell

Background: Being the Head of Research & Studies Department at the Lebanese Parliament, I was involved in rural poverty mitigation efforts, through preparing studies and providing expert opinion to respective parliamentary committees and deputies, where some of those efforts have been conducted in cooperation with UNDP. However, given the complexity of the prevailing situation and the urgency of the emanating challenges, I was compelled to undertake a personal initiative that would entail creative thinking and unconventional methods, in order to meet the strategic objective of rural poverty alleviation, in a time when governmental interventions in the form of pro-poor policies are continuously dwindling, especially in terms of financial resources and schemes of comprehensive development.

Organizational Mission: The Lebanese Parliament (www.lp.gov.lb) plays an important role in the formulation of national developmental policies, in terms of initiating laws that would enhance the growth process and through assuring that the government executes development policies effectively and as stipulated by the parliament.However, the lack of public funds and resources constituted a real challenge for the parliament to finance its developmental projects and ventures, especially in regard to certain pressing issues, such as rural poverty alleviation. Given these facts, the parliament had to look for alternative means in order to meet its development (finance) requirements. Furthermore, it needed a new input, a revolutionary vision based on sound knowledge and expertise that would initiate, develop and materialize a roadmap of rural development scheme. And this is where I come in as a researcher, an entrepreneur, an evoker, assuming the responsibility of such endeavor.

Preparatory Steps: In order to meet the developmental objectives and in order to face the mounting challenges, I had to devise a strategic plan based – as a preliminary step – on capacity building and culminating eventually into a well founded scheme of rural poverty alleviation strategy. To begin with and during the recent years, I participated in capacity building programs and courses, in the areas of water and agriculture, as these sectors constitute important drivers for rural economic development. As far as water sector is concerned, I participated in capacity building programs with Sida, Sweden (Integrated Transboundary Water Resources Management), USAID (Water Supply and Sanitation) and I am currently preparing a paper on water sector governance and accountability for International IDEA, Sweden. In the agricultural sector, I participated in several programs with the World Bank and Dutch institutions. These trainings and other efforts enabled me to prepare a project, an evokation, which aims at creating an enabling framework for private sector participation in Lebanese agricultural sector development. The project tends to initiate alternative strategies for local agricultural sector development, through fostering private sector participation, in face of diminishing state role. Having poverty mitigation as an ultimate target, the project will touch upon several developmental themes and objectives, pertaining to agriculture, private sector, legal and policy rejuvenation.

Institutional Merit: The envisaged research project will have its positive impact on the functions of the parliament, as related to agricultural, private sector and rural poverty alleviation policies. It is important to note that laws, if they are based on sound facts and rigorous research inputs, create a synergy between agricultural and private sector policies, touching upon the entire network of market value chains. The Lebanese Parliament is the place where the process of building an enabling environment or framework for private sector participation in agricultural development would pick its momentum.

Looking Ahead: So far, local rural poverty alleviation efforts have been of limited success, due to the lack of public funds and expertise. My initiative will be a modest step toward filling that gap. The art of introducing the private sector (and its investments) as a potential and credible partner in agricultural sector development requires considerable entrepreneurial skills. I have moved onward to a certain extent; there is still much to be done. Please meet me halfway and reinvigorate my efforts, in order to receive the necessary input and to establish a scheme of productive cooperation, for the many years to come, which will enable me to execute my project in an efficient and professional manner. And in regard to the first US$1,000 received or invested toward my project, it will be utilized to embark with my evokation.

The Evokation in Details

Preface

The evokation/project rests upon on the majority of the missions presented and concepts raised in the evokation course, e.g. social innovation, food security, water, women empowerment, indigenous knowledge and crisis networking. It tends to treat the said issues in both theoretical and practical manner, based on the spirit and principles of the evokation course.

I. Project Background and Case Description

A. The Lebanese Economy

The Lebanese economy is based primarily on the services sector (tourism, finance, banking…), which contributes, in recent years, with an average amount of 71% to country's GDP, while the share of the industrial sector is 23% and the agriculture 6%. The agriculture sector employs 20-30% of the workforce and contributes 17% of the value of exports, while it receives approximately 1% of national budgetary resources.

The Lebanese economy faces a number of daunting challenges, manifested mainly by Lebanon's lack of comprehensive development strategy, as its fiscal policy suffers from widespread budgetary problems – depressed government revenues and weak national and sectoral planning – which result in a failure to properly prioritize government investments and service expenditures. The Lebanese government has an important role to play in setting policies that maintain macroeconomic stability, fostering competition in the private sector, expanding and deepening financial markets and expanding access to retail services to the underserved.

B. Local Agricultural Policies

1. Major problems: Seemingly, the agricultural sector faces a number of problems, ranging from production means to marketing strategies, as it receives less concern, mainly from the government, as compared to other sectors. Lack of planning is a major problem, especially when over-production goes without government’s intervention to adjust policies. Along this line, Lebanese exports face harsh competition from neighbouring countries, because of high labour costs, while farmers tend to leave their land to pursue other more rewarding jobs.

Production and productivity remained low in the sector (crops, livestock, fisheries and forestry), which was due to a variety of reasons: use of traditional (or old) technologies (non-mechanized tools, unimproved seeds and planting materials), inadequate agricultural service support (extension, research, rural financing), decline in soil fertility and population pressure. The government intervened very marginally in market outcomes and restricted its intervention to building infrastructure. The Lebanese market is not well insulated for Lebanese farmers. The export potential is there, but the over-valued exchange rate and the typical negligence of consistent and effective marketing partnerships between the private and public sectors are increasingly forfeiting it.

Local agricultural producers and farmers continue to have limited access to market and financial services, which are necessary elements for accelerating agricultural growth and reduction of poverty. The current efforts, seemingly, do not result in lasting economic empowerment of Lebanese farmers or their organizations, beyond the trade relationship in question, as collective action remains an important strategy for increased smallholder participation in dynamic markets, especially when private companies, conventionally, often prefer to work with organized farmers rather than individuals, despite bargaining power those groups might enjoy.

It is important to note that despite various attempts, the linkages between agricultural research extension and public and private partners have not been effective so far. The institutional framework of the Ministry of Agriculture and its agencies were not well suited to respond to a client-oriented approach. Farmers were only marginally involved in the planning and provision of the services they received. Agricultural services also largely failed to address the needs of the poor and vulnerable groups, who form the majority of the resource-poor farm population.

Evidently, market access is determined by the social, physical and institutional infrastructures, which are quite underdeveloped in Lebanon. Examples include: poor infrastructure and transport systems, inadequate registration of land rights, and a poorly trained labour force. Furthermore, poor information systems, weak institutional capacity in the market chain and the dominance of middlemen also limit access to the market.

2. Recovery efforts: In order to deal with the said problems, the Lebanese government has introduced the “Agricultural Calendar”, which was designed to protect particular crops during the harvest season. It also advanced cash subsidies to products such as tobacco and sugarbeet, to convince farmers to move off illegal products, in certain zones, into more acceptable crops. Lebanon can and must seek efficient allocation of resources and exploit comparative advantage, as other social objectives may be necessary but the cost and benefits of these should be clearly and objectively determined. It is important to note that some poor local smallholder farmers actually have access to funds, and are willing to invest in their agricultural enterprises, had prevailing conditions been promising and sustainable.

The Ministry of Agriculture is trying to adopt appropriate irrigation and land utilization strategies, in addition to provision of microcredits, in order to enhance sectoral development, as the potential of the available land for agriculture has not been fully realized. The Ministry of Agriculture has initiated national agricultural development strategies (2005, 2010) which rested on the principles of efficient and sustainable use of natural resources; maintenance of food security; development of rural areas; increase of farmers' income; provision of employment opportunities; increase of the competitiveness of Lebanese agricultural products and consolidation of agricultural trade balance, as undergoing efforts had not culminated yet into the aspiring conclusions.

It is imperative for the Lebanese authorities to enable poor people to become more involved in agricultural trade, which means ensuring that poor producers, small-scale entrepreneurs and employees share in the benefits, e.g. by setting conditions to secure a fairer division of profits along the market chain, and stimulating responsible chain management. Chain development is a strategy that can provide an insight into potential bottlenecks in the marketing of products. Pro-poor growth, agribusiness and rural development are the sectors which form the backbone of the informal economy, and generate jobs and income, especially for poor people in remote areas.

C. The Private Sector as a Driver for Growth

1. The developmental role of the private sector: The recent civil war and the current political instability had an adverse effect on the role and the activities of the local private sector, despite governmental efforts to pursue market liberalization policies, which might further the efforts of the said entrepreneurial and resilient sector.

The private sector has broad-ranging activities in local economic sectors, mainly in the form of development, production and distribution of products and services. It has the ability to strengthen institutional and investment capacity, mobilize finance, and support the innovative provision of public goods. It has also the managerial, organizational, and technological skills to address the needs of low-income groups and communities, through locally grown initiatives for wealth creation, through furthering employment, income, and investment that generate self-sustaining livelihoods. Business activity can create jobs and entrepreneurial opportunities, cultivate inter-firm linkages, enable technology transfer, build human capital and physical infrastructure, generate public revenue for governments, and offer a variety of products and services to consumers and other businesses. Each of these impacts has multiplier effects on social and economic development.

The private sector has a very significant untapped investment potential (savings, remittances, labor, ingenuity, knowledge, assets) that can make a major contribution to agricultural sector investments, and help offset declining public investments. It is essential to attract the private sector to participate in innovation networks and clusters, where public investments can leverage use of some of these private funds.

2. Enhancing the role of the private sector: The potential of the private sector as a strategic partner in the agricultural sector is yet underutilized, whether that being in Lebanon or in other developing countries, as well, especially when its initiatives could bring along economic benefits for smallholders, in addition to technical capacity building and necessary inputs of production. The reasons for low private sector participation in Lebanese agriculture are varied, as some of the constraints are due to lack of credit and financial resources, policy environment (complex tax regimes, red tape, high transaction costs), lack of appropriate investment instruments, public sector's inability to deliver agricultural services, lack of strong linkages between producers, processors and agri-business, inaccurate information regarding investment opportunities, absence of clear rules, lack of dependable supporting infrastructure, and uncertain regulatory frameworks. These have inhibited competitiveness and profitability, which are the cornerstone of private sector involvement.

The public sector has an important role to play with respect to private sector investments in agriculture, as it has to prioritize and facilitate farmer and SME related investment processes. Facilitation includes training, demonstration, information centres, adequate legislation, setting up of institutions to empower farmers and micro SMEs, quality control of agricultural inputs and products, transfer of management of irrigation schemes to empowered farmers, establishing credit schemes etc. In order to encourage private sector participation, crucial are stable, non-interventionist policies, robust institutions, basic physical infrastructure, and transparency. Governments can promote private sector participation by guaranteeing investment-friendly climate, secure tenure of land, access to water for smallholders, and facilitation of access to input and output markets. Providing and promoting affordable technologies and information can assist the private sector to improve skills, awareness and particularly market opportunities.

D. The Enabling Environment

The economic or social performance of a country depends on a set of enabling conditions that foster the emergence of innovative players, like the private sector. The conditions include infrastructure, effective governance of input and output markets, and a supportive policy and fiscal framework for science, technology, legal, advisory, and trade issues. Most developing countries lack an optimum enabling environment and must choose among the many options to improve it.

The private-public sector partnership is required for provision of enabling environment for private sector investment and participation in agricultural sector development. Despite the fact that public sector manages most of the agricultural sector program expenditures, private sector actors are the main beneficiaries of it, in the form of small farmers, agriculture input suppliers, traders and processors, who usually operate in a distorted policy environment of price controls, inefficient government provision of financial and marketing services. They are likely to function more effectively in a liberalized economy if a supportive policy environment is in place.

Within the framework of market enabling role of the state, it has to provide an economic framework (tax system, social safety net); deal with market failures; foster development; address barriers faced by farmers (risks, monopolies, lack of market choice, intermediaries, enforcement of contracts with firms), as well as economic shocks (high input costs, climate change, price volatility); protect small scale farmers from unfair deals, ensuring that competitors do not take advantage of or exclude the small-scale producer through preferred suppliers' requirements or unrealistic contract conditions.

It should be noted that failure in policy can be due to a poor understanding of the political, social and cultural environment in which small-scale producers operate, as policy intervention impacts on different scale producers in different ways. It is imperative to understand the drivers of market change and the reality of small-scale production, and to recognize the specificity of small-scale farmers' exclusion from markets. Furthermore, quality issues represent a considerable risk for small-scale producers being excluded from the market, thus a dialogue between businesses and government to properly set up local standards adapted to national situations is necessary.

Based on the presented facts, the role of the Lebanese government should be one of enabler, facilitator, regulator and investor in the agricultural sector, providing the basic infrastructure (physical, institutional, information), implementing policies and rules (legal frameworks, regulations, standards), and creating a supportive investment climate for prospective micro, small and medium investors and entrepreneurs, based on a transparent legislation. Furthermore, the government should coordinate and facilitate interaction among partners – and/or create opportunities for other impartial groups, such as civil society, to facilitate the interaction – and ensure that poor people's interests are taken into account. The legal and regulatory environment for sustainable economic development is one of the aspects that determine the quality of the business climate in Lebanon, which is faced by significant political and institutional challenges. In that respect, one could question the extent which Lebanese public policy encourages stronger market linkages between small-scale farmers and agribusiness, and the specific policies that encourage the private sector to invest in agriculture in an extremely competitive environment.

II. Strategic Planning

A. Overall Objective

To develop sustainable livelihoods for farming communities in Lebanon.

B. Project Purpose – Core Question

Based on the facts presented, in terms of problems and opportunities associated with the private and agricultural sectors in Lebanon, the project proposal tends to answer the following core question: what kind of an enabling framework would have a positive impact on private sector participation in agricultural development in Lebanon?

C. Stakeholder Analysis

There are four main stakeholders in the project, distributed equally between the private and public sectors. In the private sector, we have the farmers (and farmer organizations), and businesses (and companies); while in the public sector, we have the Lebanese Parliament, and the Ministry of Agriculture (and relevant agencies and organizations). There are also other stakeholders who might belong to the both sectors (universities, research centres…).

Farmers and farmer organizations: They are the main stakeholders of the project, as their welfare and interests are significantly affected equally by both private and public sector policies. Like many other developing countries, farmers in Lebanon constitute a vulnerable group, and they are part of poverty mitigation policies and strategies undertaken by government and international developmental organizations. The project tends to target these stakeholders and work on improving their living conditions and productivity.

Businesses and companies: They can be good drivers for growth and farmer empowerment, in a time when governmental interventions in terms of funding and knowledge shrink continuously. Business enterprises, whether in the form of ventures undertaken by non-subsistence farmers, or investments made by companies, might provide valuable input to the agricultural sector. And in order to enhance business activities, it is imperative to create an enabling framework, where public authorities have a very important role to play in that respect.

Ministry of Agriculture and respective agencies: They are supposed to be one of the major protagonists of agricultural sector development and modernization, provided that the necessary resources are at hand. Despite the fact that the ministry has not been active lately and despite its limited capacities, it still plays a pivotal role in agricultural development, and is considered indeed a major stakeholder in the project.

The Lebanese Parliament and its Committees: They represent the main infrastructure upon which the wh*** bulk of the enabling environment or framework is constructed. The role of the parliament is without doubt extremely significant, not only in terms of agricultural policies, but in terms of policies related to private sector and other pertaining laws that have their impact on the project theme. Laws, if they are based on sound facts and research inputs, create a synergy between agricultural and private sector policies, affecting the entire network of market value chains. The Lebanese Parliament is the starting point in the process of building an enabling environment or framework for private sector participation in agricultural development.

D. SWOT Analysis

Strengths Access to information (laws, decrees, plans, strategies…) Contacts with public officials (ministers, deputies, directors…) Strategic partner (World Bank)	Weaknesses Difficulty in reaching a multitude of stakeholders in the private sector Difficulty in reaching farmers from all regions, especially those dispersed in remote areas Compromising contending interests, policies and demands of various stakeholders
Opportunities Lobbying possibilities Capacity building prospects Impact on public policy making	Threats Political instability Lack of comprehensive developmental agenda Unaccountability and corruption

E. Strategic Objectives / Results

The project aims at the development of the agricultural sector in Lebanon, which could be made possible also by the empowerment and involvement of the private sector, through creating an enabling framework, especially at the public policy level. In order to achieve the said objectives, the project will work at research (fieldwork, fact finding, paper writing…) and advocacy levels. The project will culminate eventually into a major research work enclosing the findings of the project, as it envisages, as mentioned, to have its impact on public policy making through the advocacy efforts in the area of agricultural development, based on private sector participation.

In brief, the project will:

Promote innovative and alternative policies for agricultural development.

Ensure an efficient and effective private sector participation in the agricultural sector.

Establish an enabling legal and policy framework and environment.

F. Indicators

The project aims at accomplishing its objectives based on the following standards and criteria:

1. Agricultural development:

comprehensive and current research on agriculture sector

improvement in the conduct of various components and players of the agricultural sector

revised organizational policies and laws

reform concepts in farmer organizations

adoption of poverty mitigation laws and policies at public level

increase in market chain productivity

2. Private sector participation:

increased farmer share in market benefits

increased coordination among stakeholders

agro-industrial development

increased financial flow into the agricultural sector

technological advancement of farmer enterprises

3. Enabling framework:

recommendations for establishment of suitable enabling policy framework

advocacy efforts toward furthering and maintaining appropriate policy environment

revisited laws and policies (that have impact on the framework)

G. Activities

The project will undertake fact finding, research and advocacy activities in the following specific areas:

1. Agricultural development, in:

public rules and standards for food quality governance

local institutions and agencies: values; formal/informal rules and institutions; organizational arrangements…

farmer organizations: types; acts; capacities; services to members; costs; skills; assets…

farmer empowerment and coordination: support for farmers; capital formation; entrepreneurship; legal, institutional, economic, operational conditions…

agricultural and rural finance: local banks; loans; financial products…

pro-poor policies

market value chains: analysis; upgrading; product and market development; chain operators (producers, processors, traders, exporters, wh***salers, retailers); chain supporters, enablers, facilitators; connectivity, interdependence and governance of chains…

irrigation strategies: efficient technologies and policies…

2. Private sector participation, in:

efficiency of local production chains and producer organizations: leadership; assets; governance; functions; relations…

prevention of farmer exclusion from market share

stakeholder cooperation: traders; processors; innovation agents; financial institutions' inputs; chain governance…

human, social, physical, financial and natural capital formation and preservation

farmer engagement in market access and development

agribusiness clusters

investments in agriculture

transfer of knowledge and skills to agriculture: vocational training; training of businesses; research; responses to deficiencies in management of infrastructure…

3. Enabling policy environment, in:

conducive public policies: private sector sourcing from small-scale farmers; provision of support services to small-scale farmers; investment in community development…

private sector enabling environment: regulatory policies determining access to and efficient allocations of resources or inputs; identification of principle determinants of costs of transactions for private sector players; factors contributing or hindering the acquisition of technological capabilities and their subsequent development and distribution…

agricultural sector enabling environment: support for SMEs in agriculture; integration in global economy…

enabling laws in: commerce; property rights; land tenure; corporate taxation; business transactions, registration, procurement and licenses; trade regulations and customs; competition and tendering; labor; corruption; foreign direct investment…

H. Means of Verification

The project will publish – in addition to its eventual major research work – series of periodic papers, which will:

verify the steps that had been already taken

ascertain that course and sequence of events adhere to the prescribed plan of action

point out to the impact of the project on the stakeholders

substantiate the feedback of stakeholders toward the project

validate the impact of the project on public policy making

a****s the contribution of the project in regard to enabling framework building

I. Assumptions

The project will find its way through provided that:

stakeholders are ready to cooperate and work for common interest and good

minimum levels of security and political stability prevail in the country

III. Project Planning

A. Time Schedule

The project will be implemented within four years. Each strategic objective (3) will take one year to accomplish, while the fourth year will be consecrated for general a****sment, advocacy and research conclusion.

B. Budget

The project envisages a monthly expense of 500US$, which will include expenses incurred as a result of fieldwork, transportation, research, office supplies, communications, consultations...

IV. Project Organization

A. Project Environment and Cooperation

The project will be executed in an unstable local environment; however it will be an established interest and will cooperate with the various stakeholders of the project, as it will have a strategic advantage in its relations with the public sector, due to the experience of the applicant.

B. Project Sustainability and Project Handing Over

The project will publish periodic reports a****sing the course of events and their conformity with the basics of the project. When accomplished, it will present its findings to the stakeholders, the university and the funding party and it will state its recommendations for future research in the field.