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The Private Sector and the Marginalized Poor

An Assessment of the Potential Role of Business in Reducing Poverty and Marginality in Rural Ethiopia

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Christine Husmann

The book examines the role that the private sector can play in reducing poverty and marginality in Ethiopia by providing improved agricultural inputs to marginalized poor farmers. By creating a marginality map the author analyzes who and where the marginalized poor are. Data from a household survey about purchasing behavior, demand and needs indicates that this group can be a promising market segment for the private sector if adequate business models are applied. Yet, an analysis of the institutions governing agricultural input markets shows that investments by the private sector are discouraged by de facto monopolies of the government on crucial elements of the different supply chains, including seed breeding, fertilizer imports and finance.
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V. Conclusion

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This research has shed light on several aspects concerning the possibilities of the private sector to contribute to the reduction of poverty and marginality. First, it introduced the concept of marginality and identified marginality hotspots in Ethiopia. Marginality has been identified as a root cause of poverty. The concept refers to people being at the edge of social, political, economic and ecological systems, which prevents them from access to resources and assets and hinders the development of capabilities. Marginality thus helps to explain why some people have not or only in a limited way benefited from poverty reduction efforts in the last decades.

The concept of marginality was operationalized with the help of seven indicators representing the various spheres of life that determine people’s well-being. These indicators have been overlaid using Geographic Information System software to produce a marginality hotspot map of Ethiopia that shows in how many of these spheres of life people in a certain area are marginalized. As has been shown, marginality hotspots are spread across northern and southern parts of Ethiopia and are neither bound to certain agro-ecological conditions nor to special ethnic groups. However, a relationship between ethnic dominance and marginality was detected as marginality hotspots are located in areas where the dominant ethnic group constitutes on average more than 95% of the population while this dominance is less pronounced in non-hotspot areas. This result holds even when urban areas, that are likely to have a higher ethnic diversity due to...

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