Agriculture and The Informal Economy

Subsistence agricultural farming provides a key source of livelihood for a large percentage of populations living in developing countries. Participants in this sector are generally less well- resourced than commercial-scale farmers. Often, they are usually considered to be part of the informal economy as they either have limited records or lack social security. The International Labor Organization (ILO) estimates that 1.3 billion people depend on agriculture for their livelihoods. Included in this are roughly 500 million agricultural workers employed by plantations. Unpaid family members carry out agricultural work as unrecognized farm labor or to support small-scale farming. Segments of the rural poor engage in agriculture for subsistence.


The ILO further estimates that the informal economy comprises half to three-quarters of all non-agricultural employment in developing countries. Although it is a challenge to generalize the quality of informal employment, it often means poor employment conditions and is associated with increasing poverty. The salient features of informal employment are lack of protection in the event of non-payment of wages, compulsory overtime or extra shifts, unsafe working conditions, lay-offs without notice or compensation and an absence of social benefits such as pensions and health insurance. Those excluded from formal employment opportunities have little choice but to take informal low quality jobs.

According to the Kenya Economic Survey 2016 there has been a shift out of farming happening for both young and old. However, the very young (age 15-19) are most likely to be working on family farms, possibly representing the limited options for rural youth leaving school early. While this represented a relative shift out of agriculture, some 300,000 jobs were nonetheless created in the agricultural sector. Importantly, farming still made up the largest single sector of employment. Unsurprisingly, opportunities still differed significantly between urban and rural areas. In rural areas, family farming dominated employment, while wage work was the predominant form of work in urban areas. According to the Food and Agriculture Organization (FAO), Africa is a continent where 60 percent of the continent’s population is under 24, the average age of farmers is 60 years old. Given this perspective, there needs to be a system in place that encourages the younger generation to pursue opportunities in farming.

The importance of agriculture as the backbone to the Kenyan economy cannot be overlooked. There however needs to be a more proactive approach geared towards making it a formidable employer as opportunities for growth in this area are immense. Making farming inputs competitively cheaper, as well as capacity development through the provision of access to technical services as is in the case of agricultural extension officers will go a long way in ensuring that these farmers attain higher quality yields.

Also, an aspect that would be worth considering is that of supporting small holder out-grower enterprises that are in a dependent, managed relationship with an exporter. These include farmers who do not own or control the land they farm or the commodity they produce as they produce relatively small volumes on relatively small plots of land. A good example in this case is that of French beans farmers who sell their produce to horticultural export companies. This move will go a long way in improving product quality that will enhance the competitiveness of Kenyan produce in the export markets thus ensuring a sustainable and equitable growth in that sector.
Informal Economy Analyst 


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