Background

Following a request by the Ministry of Finance of the Government of Bangladesh and an inception mission, the Second Smallholder Livestock Development Project was approved for entry into the IFAD's lending programme pipeline. The project's Inception Report recommended that a number of studies be conducted to gain a better understanding of the situation facing poor households engaged in smallholder livestock production in the South-West and North-East districts of Bangladesh. One of these studies was to focus on the factors that affect the livelihood strategies of the communities to be involved in this follow-up project.

This study took the form of a Sustainable Livelihoods Approach (SLA) analysis and was conducted in February-March 2002. Two activities were undertaken to support its objective, and both involved the active participation of the poor people themselves:

• exploring the livelihood systems of groups of poor people, and the factors that make them vulnerable or prevent them from having more livelihood assets; and
• assessing livestock/poultry, non-livestock and other sources of livelihood and identifying ways for groups of poor people to be socially included and find pathways out of their poverty.

The Mission

The mission team was made up of three sociologists who were selected following advice from the SLA technical advisor in IFAD and the DFID team in Bangladesh. The team spent 15 days in 12 villages, where they used a number of Participatory Rural Appraisal techniques and exercises with the villagers, including semi-structured interviews, focus group discussions, criteria listing and scoring, word pictures, poverty grouping/mapping, joint walks and observation, livelihood time lines, listing, oral livelihood analysis, livelihood matrix, social/resource/institutional mapping, matrix scoring, institutional (Venn) diagramming, relationship/linkage matrix, linkage diagramming, and seasonality analyses. The 3 member team was contracted for 30 days and the total cost of the mission was USD 35,000.

Relevant Points for Project Design

Through the SLA analysis, a number of issues emerged that the team recommended be considered in the project design:

• Livestock disease and insurance. Livestock diseases are a major problem for the poor and make livestock production risky. Resources will be needed to train para-veterinarians and ensure that they can make a living from providing animal health services. In addition, livestock insurance is needed. NGOs already offer this, but it adds to the cost of loans. An alternative to conventional insurance could be an agreement within an individual group to use group savings to compensate people who lose livestock.
• Targeting. Given that the previous programme failed to reach the poorest of the poor, it is suggested to draw upon two other successful projects to carefully select beneficiaries and ensure that the poorest of the poor be assertively taken into account.
• Loan repayment. The government's loan services have been too severe on poor women who have difficulties repaying their loans. At the same time, a gentle approach to repayment can lead to poor repayment performance and, as a result, an unsustainable credit programme. Loan repayments should be flexible, corresponding to the cash flow of an enterprise. (For example, it may be possible to design loan products that combine small regular interest payments with larger capital repayments timed to suit the cash flow of the enterprise.)
• Microcredit. The poor people interviewed identified a number of enterprises that they preferred. Most of them were livestock enterprises. However, micro-credit is used primarily for non-livestock activities (share cropping, dowry). If non-livestock activities are generally the priority for credit, the project should not tie credit to livestock activities – or people might join the project to receive loans and then neglect their livestock enterprises. In addition, microcredit programmes didn't reach the poorest of the poor.
• Livestock housing and grazing. Communal housing for livestock could be a useful approach when participants do not have enough space to keep animals by their home. Social exclusion also stems from inequitable fines for trespassing livestock.
• Focus on women. There needs to be a greater focus on older and younger women, as they are particularly disadvantaged.

Impact of the SLA Analysis on Project Design

The SLA analysis was included as an annex to the project's Formulation Report, and many of its findings were fully reflected in the final project design. For example:

• Livestock disease. Project design has allocated resources to train village-level para-veterinarians and ensure that they can make a living from providing animal health services.
• Microcredit. The SLA analysis pointed out that most NGO microcredit programmes do not reach the poorest people. Project design includes a totally demand-driven savings and credit programme tailored to the needs of the poorest people. In addition, livestock has been de-linked from the savings and credit programme.
• Livestock housing. The SLA analysis suggestion for communal housing for livestock has been taken up directly as one of the project activities.