Business and Livelihoods in African Livestock: Investments to overcome information gaps

Abstract

Poverty is widespread in Africa, but the continent is fast growing, with the consumption of animal protein skyrocketing, in particular for relatively low-value, low-processed livestock products. Meanwhile, in rural areas, the majority of households are livestock keepers, many of whom are poor. This growth in demand for animal protein can provide major business opportunities for livestock producers, with implications for poverty reduction. While there is heterogeneity among livestock keepers, clustering them into homogenous groups is useful to guide policy and investment decisions that stimulate a market-driven and inclusive growth of the sector. A small share of livestock keepers, from between 5 to 20 percent, depending on the country, can be considered business-oriented with incentives to expand their livestock production and tap into the growing market for animal protein. These keep relative large herds and derive a significant share of their cash income from accessing and utilizing livestock markets. The remainder of livestock keepers can be defined as livelihood-oriented: they keep animals more for the many livelihoods services they provide - such as insurance, manure and hauling services - than for selling meat, milk and other livestock products to the market. The reason is simple: on average, they keep 1.60 Tropical Livestock Units (TLUs), which is equivalent to about three beef cattle per household or about 0.6 TLU per household member, and, therefore, they cannot derive large benefits from regularly selling their surplus production to the market. Policies and investments aimed at enhancing the contribution of livestock to economic growth and poverty reduction should consequently adopt a dual strategy of targeting livelihood-oriented and business-oriented livestock keepers, who have diverse incentives to keep animals. There are, however, major information gaps which constrain the formulation of effective policy and investment decisions.