Seeking Opportunities: Migration as an Income Diversification Strategy of Households in Kakamega District in Kenya

Migration and remittances are widely seen as major components of diversification strategies aimed at coping with risky environments in developing countries. The debate in the literature mainly concentrates on effects of and access to the strategy of migration. Against this background, the paper investigates patterns, determinants and the impact of internal migration on households based on data from a densely populated rural area in Western Kenya. The motivation behind migration is largely economic in kind. Accordingly, remittances account for a substantial share of household incomes. Results derived from a probit model estimation indicate that the likelihood of migration is independent from the wealth position of households. Instead, demographic household factors, education-related variables and migrant networks are of central importance. Migration and remittances are obviously more easily accessible than other opportunities of income diversification beyond farming for households across all levels of wealth, including the poorest households.Migration, remittances, income diversification, coping strategies, sub-Saharan Africa, Kenya.

The Legacy of Civil War: The Case of Mozambique

How do households cope with post-war economic reconstruction? Are groups of households trapped in poverty? These questions are discussed using the case of Mozambique, a nation in Southern Africa. Shortly after gaining independence in 1975, Mozambique delved into a civil war that lasted until 1992. Our analysis explores poverty dynamics among rural households a decade after the civil war ended. Findings indicate that both income and asset endowments are very low and the prevalence of poverty is high. However, there is no evidence that households are trapped in poverty. Instead, the rural farm-based economy as such provides very few prospects for improved livelihoods. This appears to be one of the legacies of the civil war, which destroyed much of the public infrastructure and the physical asset endowments of households and increased the welfare gap between urban and rural areas.asset-based approach, Mozambique, poverty trap, shocks, violent conflict

Microinsurance: A Large Untapped Market

In tandem with the growth of microloans and microsavings, insurance policies geared towards low-income households have also become increasingly widespread over the past decade in developing and emerging countries. There is hope that microinsurance will allow large segments of the population who lack access to government social security to insure themselves against adverse life events, thus helping to safeguard their economic well-being. Yet much work is to be done if this goal is to be attained. On the one hand, the availability of microinsurance is still extremely limited. On the other hand, potential and current microinsurance customers do not place much trust in insurance providers. They also lack knowledge about specific insurance products, as shown by our investigation of a microinsurance policy in Ghana. Yet another factor is that many commercial insurers still have not managed to adapt to the particularities of the microinsurance market.Microinsurance, Low-income households, Risk, Ghana

Microinsurance and Risk Management: Evidence from Ghana

After the rapid success of microcredit and, to a lesser extent, microsavings in the past decades, microinsurance has been the third financial service to enter emerging financial markets in the developing world. Microinsurance could provide high welfare gains, given that low-income people often lack efficient strategies to manage and cope with risks, such as death, illness, old age, droughts or floods. In light of the low coverage of public security systems in many developing countries, it is seen as a promising innovation that could offer better protection for low-income people. However, little is known about the factors that constrain or facilitate demand to translate into uptake of microinsurance and on the product characteristics and business practices that create value for them. This thesis applies quantitative econometric and qualitative methods – based on own household and individual survey data as well as focus group discussions – to investigate participation patterns and perceived value in micro life insurance in Ghana. The results reveal, first, that household uptake of micro life insurance does not entirely follow the predictions made by standard insurance theories. Informal trust-building mechanisms and subjective risk perceptions turn out to play an important role in the context of information asymmetries and limited experience with formal insurance. Furthermore, there is a mutually reinforcing relationship between micro life insurance and other formal financial services available in the rural and semi-urban study areas in Ghana. At the same time, microinsurance does not substitute informal financial services. Given that households are burdened with a number of other risks besides death and old age, more universal strategies, such as risk sharing within social networks, do not lose their significance. Second, the perceived value of microinsurance consists not only of the expected or experienced benefits and costs, but also of quality, emotional and social dimensions. Perceptions of high or low value are driven by large discrepancies between expectations and experiences, clients’ knowledge about insurance, their interaction with peers, and the availability and effectiveness of alternative risk management options. Third, there are gender-specific patterns of market participation between and within households that are intertwined with the household type and regionally varying sociocultural conditions. Households headed by single women are less likely than other households to purchase micro life insurance, which could be a sign of gender discrimination in the market. However, results on the intra-household level show that women in couples are, in fact, more likely to purchase micro life insurance compared to their husbands. This is found especially in regions dominated by matrilineal societies, in which husbands typically have less control over household decision-making. Results at the intra-household level suggest that the wives’ bargaining power has little influence on their husbands’ decisions to purchase insurance, but increases uptake by the wives themselves. Overall, the results suggest that spousal preferences on insurance differ and that women are an important target group for the provision of micro life insurance

Microinsurance and risk management

Im Zuge der rasanten Verbreitung von Mikrokrediten und Mikrosparprodukten werden seit etwa einem Jahrzehnt auch Mikroversicherungen an einkommensschwache Haushalte in Entwicklungsländern verkauft. Sie stellen für diese Haushalte eine Möglichkeit dar, mit den Folgen von Risiken besser umzugehen und somit ihren Wohlstand zu steigern. Diese Arbeit verwendet quantitative und qualitative Analysemethoden – basierend auf eigenen Haushaltsumfragen und Fokusgruppendiskussionen –, um die Aufnahmebedingungen von Mikroversicherung in Ghana zu untersuchen. Die Ergebnisse zeigen erstens, dass über Standarddeterminanten der Versicherungsnachfrage hinaus Faktoren informeller Vertrauensbildung und die subjektive Risikoeinschätzung eine entscheidende Rolle spielen. Dies begründet sich in bestehenden Informationsasymmetrien und einer geringen Erfahrung mit dem Versicherungsprodukt und dem Versicherer. Ferner steht die Nutzung von Mikrolebensversicherung in einer sich verstärkenden Beziehung zu der Nutzung anderer formaler Finanzdienstleistungen. Zweitens wird deutlich, dass der Wert (Client Value), den die Zielgruppe in Mikroversicherung sieht, nicht allein auf Kosten- und Nutzenerwägungen basiert. Vielmehr spielen auch emotionale- und soziale Aspekte eine Rolle. Der Kundenwert wird dabei von Faktoren wie (geringen) Finanz- und Versicherungskenntnissen, der Beeinflussung durch die soziale Gruppe und dem Vergleich mit alternativen Risikomanagementstrategien beeinflusst. Drittens bestehen genderspezifische Muster in der Aufnahme von Mikrolebensversicherung, die mit dem Haushaltstyp und regional unterschiedlichen soziokulturellen Bedingungen zusammenhängen. Die Ergebnisse weisen darauf hin, dass Präferenzen bezüglich Lebensversicherung innerhalb von Haushalten variieren und die Wahrscheinlichkeit eines Versicherungskaufs mit wachsender Verhandlungsstärke der Frau zunimmt. Die Ergebnisse legen nahe, dass Frauen eine besonders wichtige Zielgruppe für Mikrolebensversicherungen sind.Microinsurance has been the third financial service – following microcredit and microsavings - to enter emerging financial markets in the developing world. It is widely regarded as a promising innovation that could provide high welfare gains, given that low-income people often lack efficient strategies to manage and cope with risks. This thesis applies quantitative econometric and qualitative methods – based on own household and individual survey data and focus group discussions – to investigate participation patterns and perceived value in micro life insurance in Ghana. The results of this thesis show that household, first, uptake of micro life insurance does not entirely follow the predictions made by standard insurance theories. Informal trust-building mechanisms and subjective risk perceptions turn out to play an important role in the context of information asymmetries and limited experience with formal insurance. Furthermore, there is a mutually reinforcing relationship between micro life insurance and other formal financial services available in the rural and semi-urban study areas in Ghana. Second, the perceived value of microinsurance consists not only of the expected or experienced benefits and costs, but also of quality, emotional and social dimensions. Perceptions of high or low value are driven by large discrepancies between expectations and experiences, clients’ knowledge about insurance, their interaction with peers, and the availability and effectiveness of alternative risk management options. Third, there are gender-specific patterns of market participation between and within households that are intertwined with the household type and regionally varying sociocultural conditions. Spousal preferences on insurance differ and women with a higher bargaining power are more likely to purchase insurance on their own. The results suggest that women are an important target group for the provision of micro life insurance

Financial Inclusion : Strategiewechsel in der Mikrofinanzierung

Intern kontroll fick ökad uppmärksamhet i svenskt näringsliv i och med att en svensk kod för bolagsstyrning (Koden) gavs ut 2004. Att övervaka och bedöma den interna kontrollen är ett komplext och omfattande ansvar som är svårt att överblicka för en enskild styrelseledamot. Viss forskning har bedrivits under 2000-talet inom bolagsstyrning och intern kontroll. Revisionsutskottets möjlighet att säkerställa den interna kontrollen och minska riskerna för felaktigheter i den finansiella rapporteringen har bl.a. studerats. När arbetet med den här avhandlingen påbörjades fanns i huvudsak endast forskning som baserade sig på andra länders regelsystem. Svensk bolagsstyrning har till stora delar påverkats av regelsystemen i de anglosaxiska länderna, men vissa förhållanden är specifika för bolag som är noterade på svenska börser. Det är därför angeläget att studera bolagsstyrning och intern kontroll från ett svensktperspektiv. I avhandling ges en genomgång av Koden och dess formulering av styrelsens ansvar för intern kontroll. Syftet är att undersöka hur tydligt styrelsens ansvar har formulerats i Kodens regelverk samt vilka förutsättningar styrelsen har att följa reglerna. En empirisk studie genomfördes under 2007–2008, då ett 80-tal svenska börsföretag var berörda av Koden. I studien intervjuas tio styrelseledamöter om hur de upplever sitt ansvar för företagets interna kontroll och sin roll gentemot övriga bolagsorgan, dvs. ägarna, företagsledningen och revisorerna. Som ett komplement till intervjuerna analyseras 2007 års internkontrollrapporter för de företag där styrelseledamöterna varit verksamma. När Koden gavs ut hade vare sig regelsättarna eller svenska styrelseledamöter en tydlig bild över innebörden och nyttan av intern kontroll. Tidigare studier om bolagsstyrning visar att det tar tid innan förändringar får genomslag. Även denna studie visar att förändringar sker successivt. I de företag som analyserats pågår ett arbete som syftar till att förbättra den interna kontrollen. För att nå framgång i arbetet har styrelseledamöterna anammat ett pragmatiskt synsätt på sitt ansvar, som till stor del innebär att de förlitar sig på samarbete med företagsledningen. I stället för att utöva strikt kontroll och övervakning, söker styrelseledamöterna skapa en effektiv företagskultur där de  tillsammans med företagsledningen strävar efter en god intern kontroll i bolaget. I likhet med tidigare forskningsresultat visar denna studie att kravet på revisionsutskott medfört att kontakterna mellan styrelsen och revisorerna har underlättats. Mötena i revisionsutskottet ger styrelsen en möjlighet att fördjupa sig i frågor om intern kontroll och finansiell rapportering. Dock saknas mer handfasta riktlinjer om vad revisorernas rapportering på utskottsmötena bör innehålla. Det finns en risk för ett förväntningsgap mellan styrelseledamöterna och revisorerna beträffande rapporteringens innehåll, och på vilket sätt den bör kommuniceras. Studien visar att internkontrollrapporteringen vid de undersökta företagen är alltför generell för att läsaren ska kunna få en uppfattning om företagets riskhanteringsprocess och kontrollåtgärder. Genom att komplettera Kodens Vägledning med förtydligande och metodbeskrivningar för riskbedömning skulle rapporteringen kunna göras mer informativ. Vidare visar studien att Kodens otydliga definition av internrevision återspeglas i styrelseledamöternas uppfattning om internrevisionens roll i internkontrollfrågor. Vare sig Koden eller Kodens vägledning beskriver internrevisionens roll och ansvar eller hur den kan bidra till att ge styrelsen ökad kunskap om bolagets interna kontrollstruktur. Kodens regler baseras på självreglering, vilket möjliggör för styrelsen att frångå reglerna och i stället ge en förklaring till varför dessa inte följs. Det ställs därför krav på att aktörer, såsom investerare, regelsättare och medier, intresserar sig för den information som lämnas eller inte lämnas, i styrelsens internkontrollrapportering. Om ingen efterfrågar informationen eller ställer krav på innehållet kommer intresset att minska, och företagens brist på god intern kontroll kommer endast att få fokus i samband med företagsskandaler

Assets, Shocks, and Poverty Traps in Rural Mozambique

Using a micro-level approach to poverty traps, this paper explores welfare dynamics among households in post-war rural Mozambique. Conceptually, the paper builds on an asset-based approach to poverty and tests empirically, with household panel data, for the existence of a poverty trap. Findings indicate that there is little differentiation in productive asset endow-ments over time and that rural households gravitate towards a single equilibrium, which is at a surprisingly low level. The analysis shows that shocks and household coping behavior help to explain the observed poverty dynamics. The single low-level equilibrium points to an overall development trap in the rural farm-based economy. This is attributed to the long-term impact of the civil war, which has consolidated unfavorable economic conditions in ru-ral areas and limited new economic opportunities outside of the agricultural sector.In wachstumstheoretischen Debatten bezüglich divergierender Wachstumspfade von Län-dern und Regionen wird die Möglichkeit multipler Gleichgewichte und damit einhergehen-der Armutsfallen in jüngerer Zeit auch auf der Mikroebene diskutiert. Gleichzeitig gibt es bisher noch wenig empirische Evidenz zu diesem Phänomen. Mithilfe von Panel-Daten wer-den in der vorliegenden Studie Wohlstandsdynamiken ländlicher Haushalte im Kontext des Wiederaufbaus nach dem Kriege in Mosambik untersucht. Im Rahmen eines auf Assets ge-stützten Ansatzes der Armutsanalyse, der die Ausstattung von Haushalten mit Vermögens-beständen zur Grundlage nimmt, wird empirisch überprüft, ob eine Armutsfalle vorliegt. Die Ergebnisse zeigen, dass ländliche Haushalte sich mittelfristig auf ein überraschend nie-driges, aber singuläres Gleichgewicht zubewegen. Darüber hinaus zeigt die Studie, dass auf Assets gestützte Wohlfahrtsdynamiken entscheidend von landwirtschaftlichen Schocks und von Anpassungsstrategien der Haushalte beeinflusst werden. Anders als in anderen Studien zu Armutsfallen im subsaharischen Afrika scheint das singuläre Gleichgewicht auf eine Ar-mutsfalle der gesamten ländlichen Ökonomie hinzudeuten, was auf die Folgen des Krieges zurückzuführen ist

Review: Roger Southall, The New Black Middle Class in South Africa (2016)

Review of the monograph: Roger Southall, The New Black Middle Class in South Africa, Auckland Park: Jacana, 2016, ISBN 9781431423163, xix + 296 pp

Africa's new middle class: fact and fiction of its transformative power

Africa's middle class has become a central protagonist in the development discourse. Beyond providing hope of economic growth, some analysts see it as a bastion of political stability, progress, and democratic consolidation. Many recent protests and (partly successful) attempts to overthrow ageing statesmen who tried to overstay in power have been connected by the media to the rise of an African middle class. After a decade of strong but largely jobless economic growth, the bulk of sub-Saharan Africa's new non-poor is still at the crossroads between upward and downward mobility. Researchers increasingly agree that the size and economic potential of African consumer markets have been exaggerated. Similarly, the link frequently made between the rise of a new African middle class and pro-democratic political reforms remains fragile. Rising incomes and falling poverty rates cannot easily be equated with the emergence of a politically conscious middle class that supports democracy and good governance. The economic and political transformative power of African middle classes will depend on (a) the development of a shared identity that goes beyond ethnic and historical ties, (b) economical detachment from state benefices, (c) increased political activism among the better educated, and (d) the alignment of political self-interest with the needs of the broader population. Creating jobs and reducing persistent inequalities remain central challenges that governments must face in order to prevent the frequently largest group of "strugglers" among the middle class from backsliding into poverty. Policy implications: Africa's rising middle class is not a homogeneous actor but a mosaic of different groups under a common label. Driven mainly by frustration, there is an increasingly vocal and politically conscious share of young, urban citizens within the lower middle class strata. The upper strata, however, are characterised by political lethargy and bias towards the status quo, which render the great expectations placed on the middle class's transformative political power unjustified