THE EFFECT OF EMPLOYMENT ON POVERTY REDUCTION

A CASE STUDY OF COCA-COLA COMPANY KAMPALA UGANDA

ABSTRACT

The topic of study was the effect of employment on poverty reduction a case study of coca-cola company Kampala Uganda, the objectives of the study were; To investigate the Effect of contract employment on poverty reduction among coco-cola employees, to examine the relationship between permanent employment on poverty reduction among coca-cola employees and to determine the causes of poverty among employees of coco-cola bottling company. A case study design shall be adopted for this research.  They provide an in depth study of a particular situation. The study also shall use qualitative and quantitative methodologies for data analysis. Quantitative and qualitative methodologies shall be used in examining the influence of employment on poverty reduction; Quantitative research consists of those studies in which the data concerned can be analyzed in terms of numbers while qualitative describes events, persons and so forth scientifically without the use of numerical data. Using Krejcie and Morgan’s (1970) table for sample size determination approach, a sample size of 148 employees were selected from the total population of 239 employees.

According to the results the poverty levels is high among the temporary employees and though the permanent staff are paid a decent salary there is still high levels of poverty.

The findings in the study further indicate that employees may not get enough time to do other businesses which could help them fight poverty; this has therefore made these employees poor despite of their salary. The management of Century Bottling Company Limited should do regular planning and evaluating of employee compensation and performance appraisal systems. Because compensation is visible and important to employees, it is critical to consistently communicate a clear message regarding how pay decisions are made. In short, a solid pay-for-performance strategy requires that employee pay matches the organization’s message

CHAPTER ONE

1.0 Introduction

This chapter presents the Background, problem statement, purpose, general objectives, specific objectives, research questions, Significance of the study, and scope of the study.

1.1 Background of the study

1.1.1 Historical Perspective

Poverty is one of the major problems facing human kind today. Poverty has been associated with suffering, diseases, and deaths (Seimenis, 2012). There are more than three billion people in the world living under extreme poverty and majority of these people are in developing countries especially sub-Saharan Africa and some parts of Asia, United Nations (2012).

According to Haydar (2005) mentioned that a large part of the world’s population lack the basic commodities for survival, such as food, shelter, clothing, energy and medicine. Although the challenge of poverty has been dominant in both developed and developing countries, it is more common in sub-Saharan Africa (Gafar, Adeyani & Raheem 2009, Human Development Report, 2012). Based on $1.25 per day poverty line, about 65% of Sub-Saharan Africa’s population was said to be living in poverty in 2011 (World Bank, 2011).

Unless one pretends, poverty can be seen everywhere, although the form and nature of it vary from region to region and country to country (Domfeh and Bawole, 2009). As stated by Juan Somavia (Torado and Smith, 2006), the unfinished business of the twenty-first century is the reduction of poverty, and as a result, the international community, governments and aid agencies will continue to demonstrate an unparalleled commitment and interest in poverty issues.

Many hundreds of millions of people in the poorer countries are preoccupied solely with survival and elementary needs. For them, work is frequently not available or when it is, pay is low and conditions often barely tolerable. Homes are constructed of impermanent materials and have neither piped water nor sanitation, Electricity is a luxury. Health services are thinly spread and in rural areas only rarely within walking distance, Primary schools, where they exist, may be free and not too far away, but children are needed for work and cannot be easily spared for schooling.

World Bank acknowledges that poverty across the Africa continent may be lower than what current estimates suggest, though the number of people living in extreme poverty has grown substantially since 1990 from 56% to 43% in 2012. It is indicated that 389million poor live in Sub Saharan Africa faced by: fragile contexts and remote areas, with no access to good schools, no health care, no electricity, no safe water and other critical services, no jobs, (World Bank, 2015).World Bank (1990) articulated this understanding and argued that improvements in health and education were important not only in their own right but also to promote growth in the incomes of poor people. Though this may be true to some extent one wonders what may happen to the poor who may be educated through scholarship but has no job and again the poor who could assess free healthcare but has no income to take care of other physiological needs.

In Africa there are signs of poverty everywhere to the extent that three hundred and forty (340) million people or half the population of Africa lives on less than $1.00 per day. The mortality rate of children under five (5) years of age is 140 per 1,000 and life expectancy at birth is only fifty-four (54) years. Only 58% of the population has access to safe water. The rate of illiteracy for people over 15years is 41% (New Partnership for Africa’s Development Report, 2001).

Nevertheless, since the early 1990s, global employment has risen by over 400 million. While China and India account for most of this increase, almost all of the new jobs have been created in developing countries (Global Economic Prospects, 2007), however in Uganda’s unemployment rate was 4.2 percent in 2009/2010, compared to 1.9 percent observed in 2005/2006. Unemployment remained predominantly an urban problem as the unemployment rate in urban areas is more than three times that of their rural counterparts, (UBOS, 2011).

In a globalized labour market only the countries that can respond rapidly to market flexiations will be successful and attract sought-after international investments. Simultaneously this is also the era that the concept of decent work is the motto of workers. The answer of Europe to the tension between labour market flexibility and the demand of workers for more employment security is the concept of flexicurity. The European Commission (EC) considers flexicurity as an integrated strategy to simultaneously enhance flexibility and security in the labour market.

Employment is no guarantee of escaping poverty, the International Labour Organization (ILO) estimates that as many as 40% of workers are poor, not earning enough to keep their families above the $2 a day poverty line. For instance, in India most of the chronically poor are wage earners in formal employment, because their jobs are insecure and low paid and offer no chance to accumulate wealth to avoid risks. According to the UNRISD, increasing labor productivity appears to have a negative impact on job creation: in the 1960s, a 1% increase in output per worker was associated with a reduction in employment growth of 0.07%, by the first decade of this century the same productivity increase implies reduced employment growth by 0.54%.Both increased employment opportunities and increased labor productivity (as long as it also translates into higher wages) are needed to tackle poverty. Increases in employment without increases in productivity leads to a rise in the number of working poor, which is why some experts are now promoting the creation of quality and not quantity in labor market policies. This approach does highlight how higher productivity has helped reduce poverty in East Asia, but the negative impact is beginning to show.  In Vietnam, for example, employment growth has slowed while productivity growth has continued. Furthermore, productivity increases do not always lead to increased wages, as can be seen in the United States, where the gap between productivity and wages has been rising since the 1980s, (Chosewood, 2011).

In the International Labour Conference (ILC) 2005, the discussion on youth employment concluded that there were many young workers who did not have access to decent work. A significant number of youth are underemployed, unemployed, seeking employment or between jobs, or working unacceptably long hours under informal, intermittent and insecure work arrangements, without the possibility of personal and professional development working below their potential in low-paid, low skilled jobs without prospects for career advancement; trapped in involuntary part-time, temporary, casual or seasonal employment; and frequently under poor and precarious conditions in the informal economy, both in rural and urban areas (ILO, 2005).

Developing countries are becoming increasingly prominent in the world economy as emerging market share and responsibility within the global economy increases. Youth employment and unemployment is a challenging policy arena for developing countries, and little empirical evidence is available to inform policy planning and development. While there are numerous studies of youth labor market outcomes in advanced countries, studies of youth labor in developing countries are more limited. Since developing countries have considerably larger young populations as compared to developed countries, issues of youth employment and unemployment in developing economies, first of all, will increase in importance as these countries continue to gain weight within the global economy.

The UNDP view poverty as revealed by Rakodi (1995) as a situation of people deprived of those opportunities and choices that are essential to human development, for a long healthy creative life, a reasonable standard of living, freedom, dignity, self respect and respect from others. This is referred to as the life situation approach to poverty.

It is well known that unemployment imposes severe costs on individuals, both monetary and non-monetary (e.g. loss of self-worth, depression, descent into alcoholism).These costs not only

Increase in the duration of unemployment, but also do so at an increasing rate (i.e. they are convex). Moreover, people unemployed for long durations face the risk that their skills will atrophy or become obsolete; they can also be considered as victims of an important form of social exclusion. It is therefore necessary to realize that not all of the unemployed are similar, and that short-term and long-term unemployment are qualitatively different, requiring different kinds of policy responses. However, many commonly used conceptualizations and measures of unemployment (e.g. the rate of unemployment) and the official and academic discourses in many countries (e.g. India) do not take this distinction seriously. In this paper, we try to address this gap by developing a “distribution-sensitive” measure, which we use to shed light on unemployment in India in the past two decades, (Rakodi (1995).

According to Townsend (1974) poverty consists of subsistence, inequality and externality. He explained that subsistence is concerned with the minimum provision needed to maintain health and working capacity while inequality represents the relative position of income groups to each other, indicating further that poverty is concerned with how the bottom layers fare in relation to the rest of the society.

The above issue arises in poverty too, viz. the distinction between short-term and long-term/chronic poverty. In fact, the measurement of unemployment and the measurement of poverty share some similarities. Going back to Sen (1976), the measurement of poverty as been conceptualized as comprising of two different exercises –identification and aggregation. The former deals with identifying whether a person is poor or not by using a poverty line , whereas the latter refers to the use of a poverty line and the distribution of income to arrive at a number for a country, region etc. Analogous exercises exist in the case of unemployment too (Shorrocks 1992).

In an environment of ever-increasing costs of living and non-existent social protection, a young worker is condemned to fend for him- or herself and also to provide for dependents. In desperation, they accept any job with any conditions that are offered to them. Most of these jobs are without any rights. They are made to work for longer hours, paid much less and can be terminated without any notice. As a result, India is faced with in-creasing numbers of working poor.

Due to the global attention garnered by the issues of employment, unemployment and job-creation in India among academics, policy makers and intelligent lay persons, India has been one of the fastest growing countries in the world since the mid-1980s, but there is concern that this growth has not translat5ed into adequate reduction in poverty (Kotwal et al. 2011;Motiram and Naraparaju 2014). A crucial link that has been highlighted is the inadequate creation of good jobs, particularly in labor-intensive manufacturing, which can absorb the poor from rural areas and the urban informal sector. The spectre of a large unemployed population in India, particularly among the younger generations, has been haunting the world recently. Consequently, it is important that the issues of unemployment and employment in India be adequately and properly understood.

Noting that unemployment entails a loss of welfare, this literature identifies at least two reasons that underscore the importance of taking the duration of unemployment and its distribution seriously. First, the longer a person is unemployed, the more severe is his/her welfare loss with the losses rising more than proportionately to an increase in the duration of unemployment. the unemployment rate, which is indifferent to the distribution of the duration of unemployment, does not incorporate this property, Second, drawing upon the literature on poverty and inequality, the measures suggested are also motivated by a notion of inter-personal equity (Sengupta, (1990), in particular). As Sen (2000) notes, prolonged unemployment might predispose the unemployed to nurture a sense of relative deprivation and exclusion towards the rest of the society.

1.1.2 Theoretical frame work

The study was guided by the systems theory proposed in the 1940’s by the biologist Ludwig von Bertalanffy and furthered by Ross Ashby (1956) in his Introduction to Cybernetics. Von Bertalanffy was both reacting against reductionism and attempting to revive the unity of science. He emphasized that real systems are open to, and interact with their environments, and that they can acquire qualitatively new properties through emergence, resulting in continual evolution. Rather than reducing an entity to the properties of its parts or elements, systems theory focuses on the arrangement of and relations between the parts which connect them into a whole.  Particular organizations determine systems, which are independent of the concrete substance of the elements. Thus, the same concepts and principles of organization underlie the different disciplines, providing a basis for their unification. Systems concepts include: system-environment boundary, input, output, process, state, hierarchy, goal-directedness, and information (Francis et al, 1992).

Systems analysis, developed independently of systems theory, it applies systems principles to aid a decision-maker with problems of identifying, reconstructing, optimizing, and controlling a system, while taking into account multiple objectives, constraints and resources. It aims to specify possible courses of action, together with their risks, costs and benefits. Systems theory is closely connected to cybernetics, and also to system dynamics, which models change in a network of coupled variables (Francis et al, 1992).

Poverty has a relationship with unemployment. In the systems theory there is an open and closed system. Poverty reduction as a system greatly relate to the elements of an open system. Poverty has an interface with the different ways how the government operates and what the society does to ensure that citizens are employed and able to get income to help them acquire the basic needs of life like food, shelter, clothing and education.

This theory will be relevant to this study for the fact that fighting poverty in the society is combination of many factors which work as systems, therefore poverty reduction can be achieved if all the key sectors of the economy perform their duties well as required within the law.

1.1.3 Conceptual Perspective

Poverty is not a self-defining concept. Experts and academics have suggested many definitions over time. For example, poverty could be the lack of command over commodities in general; alternatively, it could be the lack of command over some basic goods (e.g., food and housing). More generally, however according to Sen, (1985), argued that poverty is the lack of capabilityto function in a given society.

Poverty can be defined as “the lack of, or the inability to achieve, a socially acceptable standard of living.

Poverty is defined by poor people as having inadequate food and housing and having to rely upon charity (Guatemala 1997).

Employment is a relationship between two parties, usually based on a contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee. Employees work in return for payment, which may be in the form of an hourly wage, by piecework or an annual salary, depending on the type of work an employee does or which sector she or he is working in. Employees in some fields or sectors may receive gratuities, bonus payment or stock options. In some types of employment, employees may receive benefits in addition to payment. Benefits can include health insurance, housing, disability insurance or use of a gym. Employment is typically governed by employment laws or regulations or legal contracts.

Different communities have different definitions of poverty, In Philippines, in the Mindanao region, women the community defines poverty as the in ability to provides food for the family and also the, (Philippines 1999).

While the communities of South Africa, the poor are characterized as “those who do not have secure jobs, and poor communities are characterized by widespread absence of the formal employment.” Instead the poor have “numerous small, often dangerous jobs rather than one job” (South Africa 1998).

According to the World Bank “absolute” poverty level is based on minimum incomes needed for basic necessities in a number of low-income developing countries. It is equivalent to 1.25 USD7day, this is closely related to OECD, (2012) which defines relative poverty is defined as 60% of the median income; the OECD uses the threshold of 50%.

Other organizations like UNICEF, (2014) define poverty measuring a number of individual and household level resources children need and have a right to in order to grow and develop.

According to my understanding, Poverty is defined relative to the standards of living in a society at a specific time. People live in poverty when they are denied an income sufficient for their material needs and when these circumstances exclude them from taking part in activities which are an accepted part of daily life in that society.

Poverty reduction has been unanimously endorsed by the international community as the overarching goal of development. Less agreement appears to exist on what this poverty actually is and how it should be measured. Different understandings of poverty, different approaches and ways of thinking about poverty lead to different ways to tackle it.

Employment is a relationship between two parties, usually based on a contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee.

Employees work in return for payment, which may be in the form of an hourly wage, by piecework or an annual salary, depending on the type of work an employee does or which sector she or he is working.

In South Africa, the formal sector is defined as economic activity that occurs within the purview of state regulation and formal employment is defined as employment originating from a business or firm that is registered with the state. On the other hand, the informal sector is defined as economic activity that occurs outside the purview of state regulation and informal employment is defined as employment originating from a business or firm that is not registered with the state (South Africa Statistics, 2001 & 2007).

1.1.4 Contextual Perspective

Uganda’s rapid economic expansion in the last two decades has translated into significantly lower poverty levels. The recent poverty estimates show that the share of Ugandans in absolute poverty has reduced from more than half (56.4 percent) in 1992/93 to less than a fifth (19.7 percent) in 2012/13. Uganda has surpassed the first Millennium Development Goal (MDG) target of halving the proportion of the population living in extreme poverty by 2015, and is on track to achieve the Vision 2040 poverty target of 5 percent. The share of Ugandans in the middle class (37.0 percent) is more than that in absolute poverty. However, the majority of the population (43.3 percent) has escaped absolute poverty but remains at risk of falling back.

Despite prevalence of poverty in many parts of the world, there are contrasting views on what the concept of poverty entails. The general consensus is that poverty is a multidimensional concept and has alluded to a number of causes such as socio-economic, demographic factors, corruption and structural problems (Davids, 2010).

The house hold expenditure in Uganda experienced a 2.4% decline in monthly household expenditure between 2009/10 and 2012/13, Per capita expenditure registered a real increase of 15% in western rural, The proportion of the poor population reduced from 24.5 to 19.7% corresponding to about 6.7 and million people, · 46% of the household expenditure was on food, beverages and tobacco while Nationally, on average, income inequality reduced from 0.426 to 0.395 (UBOS, 2015).

The Coca-Cola Company, a retailer, manufacturer and marketer of non-alcoholic beverages, is a market leader in its industry currently offering more than 500 brands in over 200 countries or territories. The company operates a franchised distribution system dating from 1889 where the Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory (USSEC, 2009).

The world’s largest beverage company is the Coca-Cola Company which was set up in 1886 headquartered in Atlanta, Georgia, United States having consumers in over 200 countries. They re-launched in India in 1993 as

Hindustan Coca Cola Private Limited (HCCBPL) which is the leading beverage company of India. It manufactures and promotes various beverages which are branded like Coca-Cola, Minute Maid, Fanta, Nestea, Kinley, Diet Coke Thums Up, Georgia Tea & Coffee, Maaza, Limca, etc. In order to market their products they have made environmental policies and make usage of energy saving methods. The Coca-Cola Company invested nearly INR 5,500 million in India in order to establish bottling plants in Karnataka, India. Being one if the associate sponsor of Delhi Daredevils in Indian Premier League their marketing strategy has reached social networking sites like Facebook (having over 33,833, 491 followers), Twitter, Orkut, You Tube,

Flickr, etc. They have become the most popular and biggest selling soft-drink company.

Coca-Cola is a multinational company who started its business on May 1886 in Atlanta as a beverage (formal drink) industry. Dr. John Styth Pemberton made a cough syrup which he named “coke” on 8^th may 1886. Its price was 5 cent per glass and was available at the largest pharmacy of Atlanta known by the name of Jacob’s Pharmacy. Later on it was purchased by a well-known businessman Asa Griggs Candler who introduced it as a “carbonated soft drink” in the market and hid marketing tactics led coke to Coca-Cola and it dominated the market of carbonated soft drinks throughout the twentieth century (Vicky, 2010).

According to UBOS, 2010 income poverty headcount for Uganda was 31.1 % from 37.7% in 2002/2003. Poverty in urban areas increased from 12.2 % in 2002/3 to 13.7% in 2005/06 compared to rural areas which decreased from 41.7% in 2002/03 to 34.2% in 2005/06, the income of the ordinary Ugandans as well company employees is still low.

Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a glass. Early growth was impressive, but it was only when a strong bottling system developed that Coca-Cola became the world famous brand it is today.

In 1895 the company started to sell their product coke in bottles which was a strategy of the company to be recognized well in the International market. Their strategy worked and the bottled form of coke was successfully recognized all over the world in the beginning of 1896. Now a day’s Coca-Cola is the most famous and highly consumed brand in all over the world (Shetty, N. (May 4th, 2011). In Uganda coca cola is located in Namanve Kampala Uganda , it employs around 1000 people in Uganda , and has relatively a well paid work force which is better than for the other organizations in Uganda.

1.2 Statement of the problem

Coca cola is one of the major employers in Uganda with more than 1000 employees employed directly in the company’s operations, the Coca Cola, (2015) records further indicates that majority of employees in the organization earn more than five hundred shillings and by Uganda standards this is enough amount to meet basic needs like rent, clothing, food and meet the daily expenses of life.

However despite of the good salary package given by coca cola to its employees there has is still high levels of poverty among the employees, this is evidenced by the fact that most of the employees cannot meet the basic needs of life like a decent accommodation and clothing its upon that this study intends to investigate into the influence of employment on poverty reduction with specific reference to coco Cola Company, located in Kampala Uganda.

1.3 Objectives of the study

1. To investigate the Effect of contract employment on poverty reduction among coco-cola employees.
2. To examine the relationship between permanent employment on poverty reduction among coca-cola employees.

• To determine the causes of poverty among employees of coco-cola bottling company.

1.4 Research Questions

1. What is the effect of contract employment on poverty reduction among coco-cola employees?
2. What is the relationship between permanent employment and poverty reduction among coca-cola employees?
3. What the causes of poverty among employees of coco-cola bottling company.

1.5 Scope of the study

1.5 Subject scope

The scope of the study will cover the effect of employment on poverty reduction.

1.5.1 Geographical scope

The researcher will carry out research at coca-cola offices in Namanve Kampala Uganda.

1.5.2 Time scope:

The researcher will study the period from January 2013 to July 2016.

1.6 Significance of the study

1. The study will give future scholars information regarding the influence of contract employment on poverty reduction among coco-cola employees.
2. The study will also help the government have information on the relationship between permanent employments on poverty reduction among coca-cola employees.

• The study will also add more literature on the causes of poverty among employees of coco-cola bottling company.

1.7 Conceptual frame work

Independent Variable                                                                    Dependent Variable

Intervening  variable

                              Developed by the researcher

The conceptual frame work shows that that an average employee gross salary is affected by taxation, dependency level, inflation level, cost of living, pension scheme.

The taxation level in a country especially on the income of the employees this reduces on the earnings of the employees this affects their disposal income, however when their disposal income is low they cannot afford the basic needs this causes poverty to them.

The level of dependency in a given community affects the disposal income, most of the employees share their income with the family who are mainly parents, relatives and siblings, this reduces on the disposal income of the employee and this affects the standard of living, which leads to poverty among the employees of an organization.

Inflation level, the level of inflation in a given country affects the disposal income of the employees in formal employment this causes poverty among employees, however when the level of inflation is low the employees are able to have high disposal income, for which they are able to use in acquiring the basic needs of income.

The conceptual frame work indicates that when the Cost of living is high the level of disposal income reduces this causes poverty among the employees in formal employment and in organizations like cocal cola.

However other intervening variables like the level of economic growth, political situation, exchange rates and the price of imports have a direct effect on the independent and dependent variables

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

The studies will also further discus the literature basing on the findings from other scholars but in line with objectives of the study as below.

National Poverty Reduction Strategies and Programmes

The World Bank (2001) defines poverty reduction as designing, implementing and targeting appropriate methods to ensure that scarce resources are allocated to activities that are likely to yield the greatest impact on the poor and to decrease their levels of deprivation and vulnerability. Many governments and international agencies have made many attempts to alleviate poverty because it diminishes development.

The Heavily Indebted Poor Country (HIPC)

The ‘Heavily Indebted Poor Country’ (HIPC) initiative, launched in1996 by the World Bank and the International Monetary Fund (IMF), were meant to look for new ways to remove the debt of the poorest countries. Today, HIPC seeks to link debt relief to poverty reduction. Debt relief is considered as an integral part of broader efforts to implement outcome-oriented poverty reduction strategies using all available resources. To benefit from the initiative, debtor countries are required to follow strict procedures. Debt is reduced only when countries reach the completion point. One of the major inputs of the initiative is the principle that the development of a number of countries is severely constrained by debt,(World Bank, 2009).

People everywhere face risks and vulnerabilities but poor people, especially those living in rural areas dependant on agriculture and in tropical ecologies (Diamond, 1999), face more than others. This is true of a large proportion of SSA’s population. There are a number of risks and vulnerabilities that drive and maintain poverty in SSA, including harvest failure, market failure and volatility, conflict, and health shocks.

Harvest failure is a key risk for rural households in SSA (Sinha and Lipton, 1999). Africa’s geography and agro-ecology (prone to drought as well as in tense rain) combine with inefficient agricultural technologies and inadequate agricutural support and result in environmental degradation, unmanaged pests and poor access to inputs, which increase vulnerability. Harvest failure not only affects crop-dependent households, but the wider rural economy (including households dependent on non-farm income sources) as well as national well-being and stability. It also can have long-term affects as people sell assets as a coping strategy. National budgets are also destabilised as trade (and national income) is reduced and relief has to be imported.

The food crisis experienced in southern Africa in 2001-03 is a case in point. Heavy rains in the late growing season in 2001 triggered a harvest failure of maize, the region’s main staple (Wiggins, 2005). An immediate impact was felt by crop-dependent households. But harvest failure was not the only cause of this food crisis, for institutional weaknesses, political factors, donor policies, and economic inequalities also contributed (Booth et al, 2006: 58). Together they led to a significant increase in prices across the region (e.g., a four-fold increase in Malawi), causing acute problems for the poor. In fact, it is estimated that in late 2002 the lives and livelihoods of as many as 16 million people in Lesotho, Malawi, Mozambique, Swaziland, Zambia and Zimbabwe were threatened (Wiggins, 2005: 2; Maunder and Wiggins, 2007: 4).

2.1.2 Market failure and market volatility

Market failure and market volatility increase the prevalence of poverty in SSA. This is because, in many instances, the poor do not possess the level of assets (both physical and human capital assets) required to protect themselves from shocks resulting from markets. Market fragmentation

–Inadequate institutional and infrastructural linkages (e.g. railway, roads, landline and mobile telecommunications) between local, national and international markets –means that markets are poorly integrated, over both time and space. This not only affects physical markets but reduces producers’ and traders’ access to information that signals price changes, which limits their ability to change their patterns of production and trade to avoid economic shocks. The advantages of rural infrastructure and markets is seen in Tanzania, where households within 100 metres of a year-around road that has a regular bus service, earn on average one-third more per capita than the rural average (IFAD 2001: 164 in Bird et al., 2002: 12).

Market volatility is driven by international economic shifts or more localised market failures. International market volatility in key staples and commodities (e.g. coffee, sugar, cocoa, tea) can lead to higher prices (as in Uganda in the late 1990s) but also to low prices, which cause extreme hardship for producers. The catastrophic impact of the collapse of coffee prices in recent years in Ethiopia, Burundi and Uganda is demonstrative of this (CPRC, 2004: 45). But price volatility can also be a poverty driver for urban and net consumer households. This is because the cost of their basket of goods increases as the price of staples, including fuel oil, rises. Such price rises have a similar impact on national budgets as well, as the 1970s oil crisis did throughout SSA, and mass importations of maize had in southern Africa in the 1990s.

Conflict

A strong association is found between high levels of conflict and multidimensional poverty. For example, between 1997 and 2006, nearly 40% of low human-development states globally were found to be affected by armed conflict, compared with less than 2% of high and a third of medium human-development states (Ploughshares, 2007). This is significant because African countries are prone to conflict. In 2006 Africa, with 13% of the global population, had over 40% of the world’s violent conflicts; eleven countries were affected directly (Ploughshares, 2007).

Violent conflict has direct, immediate and devastating impacts, including injury, battlefield and civilian deaths, the destruction of household assets and displacement. It has indirect and long-term poverty impacts by increasing dependency ratios, resulting from an absence of men and an increase in the proportion of disabled and elderly, as well as women and children. It destroys public infrastructure and assets, disrupts livelihoods and reduces savings, undermines law and order and political processes, and causes social and cultural erosion and dislocation. It has generated millions of African refugees (over 3 million in 2006), which are costly for host countries as they put pressure on domestic resources, jobs, and services (see Stewart and Fitzgerald, 2000; Goodhand, 2001: 13-14).

Sudden or prolonged ill health often results in a downward spiral of asset loss and impoverishment as people are forced to abandon productive activities. The relationship between ill health and poverty is complex and works in both directions: illness can cause poverty and poverty can contribute to poor health (Grant, 2005).

Health statistics in SSA are alarming. The under-five mortality rate in 2005 was 166/1000 –a figure that has hardly improved in two decades and is twice the developing world’s average. Poor maternal health is a scandal, with the odds that a SSA woman will die from complications during pregnancy and childbirth at 1 in 16–compared with a developed-world rate of 1 in 3800 (United Nations Department of Public Information, 2007: 2). Life expectancy in SSA is today lower than it was three decades ago, with an average life expectancy of about 50 years in 2000-05 (UNDP, 2007: 265).

Untreated sickness contributes significantly to low life expectancy. For example, seasonal conditions (such as diarrhoea, water- and mosquito-borne diseases) result in poor health outcomes, and given that they commonly coincide with the rainy seasonand therefore the most highly labour-demanding agricultural season, such illnesses can have broader poverty implications.

The HIV/AIDS pandemic has reduced life expectancy and contributed to high levels of mortality. The number of people dying from AIDS in SSA continues to increase, reaching 2 million in 2006, as does the number of new cases and the number of people requiring treatment for advanced infection (United Nations Department of Public Information, 2007: 2). HIV/AIDS has an impact on households’ livelihoods and labour productivity and on the ability of households and communities to cope (Van de Waal and Whiteside, 2003). Households affected by HIV/AIDS commonly have less income, reduced food security and are more vulnerable to other shocks, such as drought (Harvey, 2004). Dependency ratios (dependents as a proportion of the working population) in SSA are the highest in the world, with the dependency ratio 0.8 (young) and 0.1 (old) in 2004 (World Bank, 2006a). This is partly driven by the

HIV/AIDS epidemic in SSA. HIV/AIDS is also putting considerable strain on public service delivery and government budgets, and on social cohesion and stability.

A different way of thinking about the causes of poverty is to think in terms of capabilities. These, according to Sen (1999), reflect a person’s freedom or ability to choose the way (s)he wishes to live. These include the capacity to be free from hunger, to become educated, and to earn a decent living and as such, they are interconnected and mutually reinforcing. People trapped in persistent poverty tend to experience multiple‘capability deprivations’ concurrently. That is, they are illiterate, have inadequate nutrition, poor human rights, and insufficient income and livelihood opportunities, which taken together drive and maintain their poverty and ensure it passes across generations (CPRC, 2004: 40). People in SSA suffer from capability deprivations in a range of dimensions. For example, in the conflict-affected communities of northern Uganda, livelihood and income-generating opportunities are extremely limited because people are forced to flee into internally displaced persons (IDP) camps.  Living conditions in these are cramped; water and sanitation facilities are inadequate. These poor living conditions, accompanied by the inadequate provision of public services lead to poor health, which affects, among other things, educational outcomes.

Poor health and education levels, combined with insecurity and weak governance, make it difficult to enact change (United Nations, 2006a; Brown, 2006; Boas and Hatloy, 2006). This multidimensional deprivation is not unique to Uganda. Indeed, it is found in a range of other conflict-affected regions of SSA (for example, Democratic Republic of Congo, Central African Republic, Chad, Somalia, Sudan) (United Nations, 2006b). It is also found to a lesser degree in states where conflict is more low level, such as Swaziland and Zimbabwe, where rights are not protected and services are not provided (education, health, agriculture extension, for example) and people have reduced capacity to improve their lives.

Inequality, exclusion and adverse incorporation

Inequality, exclusion and adverse incorporation are key drivers and maintainers of poverty. Inequality, which is generally defined as the proportion of, and gaps between, the rich and the poor, can exist and contribute to poverty in a range of dimensions. Inequalities in income and other economic indicators, such as asset ownership, are often persistent, deeply rooted and typically a result of political forces that enable powerful groups to protect their wealth, and of market imperfections that make it difficult for those who have low incomes and low savings to accumulate capital. Importantly, then, in any society there is a generally positive relationship between high levels of income inequality and low school enrolment, low life expectancy, high fertility, corruption, insecure property rights and macroeconomic instability, which demonstrates the multidimensional impact of income inequality (Inter-Regional Inequality Facility, 2006: 2).

In terms of income inequality, SSA is one of the most unequal regions in the world. The average Gini coefficient is 47.4 and the poorest 20% of the population earn only 5.3% of total income. Drawing on evidence from Kenya –where the country’s top 10% of households receive 42% of total income while the bottom 10% receives less than 1% , and real GDP has declined between 1980 and 2003 at a rate of 0.2% per year –Anderson and Bird (2006) conclude that levels of income inequality could be partially responsible for poor economic growth. In other words, low incomes reduce access to services and goods that can be used to increase earning power and generate national wealth. Inequalities in non-income dimensions (such as assets, education, health and access to public services and the labour market) are also high across SSA, particularly between regions and with stark differences between men and women (Okojie and Shimeles, 2006).

Exclusion from political, social and economic institutions is part of a vicious cycle that leads to low capability levels, which in turn reduces the ability of the people to escape poverty and ‘horizontal inequalities (inequalities between groups defined according to ethnicity, gender, region, religion, and so on) make up a significant proportion of overall inequality (Stewart, 2004 and World Bank, 2005: 40-43 in Inter-Regional Inequality Facility, 2006). Commonly, exclusion results from various forms of active discrimination, directed against certain people (e.g. who share ethnicity, religion, or culture). It may be reinforced by discrimination on the basis of personal characteristics, such as gender, age or impairment (CPRC, 2004: 37). This can lead to favouritism (e.g., the Chewa under Dr Banda in Malawi), to inequities such as the San face in Botswana, or inthe extreme cases, to violent conflict as in Rwanda in 1994.

Inclusion can also be problematic at times, for it sometimes drives and maintains poverty. For example, many of the poorest people are included in economic activity, but on unfavourable terms (CPRC, 2004: 37). This ‘adverse incorporation’ reinforces inequalities by, for example, forcing people to take low wage work, in bad conditions and on uncertain terms (CPRC, 2004: 38; see also Hickey and du Toit, 2007). This is seen on tobacco and other estates where people (even children) have little choice but to work for extremely low rates of pay and live in intolerable situations.

Inequality, exclusion and adverse incorporation play out in a number of sub-Saharan African countries. Because ethnicity is a key defining characteristic in Africa, it drives discrimination, conflict, state formation, political alliances, economic choices, etc. (Mamdani, 1996 in Hickey and Du Toit, 2007).

Ethno-territoriality (where ethnicity overlaps with territorial claims) plays a central role in determining wealth and poverty as well as access to resources and political power.

In places, state formation along ethno-territorial lines has created poverty traps for entire peoples and regions (Hickey and Du Toit, 2007: 9-10). Inequality, exclusion and adverse incorporation also play out in relation to gender in SSA. Certainly African women have far fewer political positions and senior business posts, a direct result of gender discrimination. Not only do aspiring women not reach their full potential, but gender discrimination ensures that women –particularly elderly women and female-household heads –bear the brunt of the shocks and costs that flow from the HIV/AIDS crisis (du Toit and Neves, 2007 in Hickey and Du Toit, 2007).

Limited livelihood opportunities

Unemployment in SSA was nominally 9.8% in 2006 and the number of unemployed had risen by 35.3% in the previous ten years (ILO, 2007: 2). But in reality because of the size of the agricultural and informal economies, significant numbers of un- and under-employed people are never counted.

Furthermore, the working poor make up a significant portion of the population. According to the ILO, in 2006 80% of Africans did not earn enough to lift themselves and their families above the US$2/day poverty line and one-half lived in extreme poverty (less than $US1 a day) (ILO, 2007: 3). In other words, people remain poor because they haven’t sufficient productive and profitable work to do. This is especially true in rural areas. A range of factors contribute to limited livelihood opportunities in rural areas, including distance from markets, poor agro-ecology and sub-marginal land, low levels of public investment in service delivery and infrastructure, and conflict. These constrain market development and hinder savings and private sector investment, which limit the potential for productivity gains, increases in real wages and expanded job opportunities. This has significant poverty implications. For example, in Nigeria a strong association has been noted between living in a rural area and being poor (Hillhorst and Ogwumike, 2003:15). There are also limited, or at least inadequately productive, livelihood opportunities in the agriculture sector, resulting in rural households migrating to urban centres as part of their livelihood strategies (DFID, 2004 in Bird, 2005: 5).

Taken together, risk and vulnerability, low capacities, inequality, exclusion, adverse incorporation and limited livelihood opportunities combine to keep many Africans poor. An organised, visionary, consistent and determined effort to reverse these and other contributors of poverty is therefore needed. Going beyond that, development initiatives and pro-poor economic growth is necessary to raise income levels, provide all people with the capacity to aspire and improve their lives, and to reduce inequalities and vulnerability to risk. This requires commitment by leaders, policy formulation, an effective civil service, the rule of law and other governance reforms. Donors have attempted to kick-start this development process where it is weak, and to support it where it exists, but with mixed results. Before analysing the role of donors, though, we will explore the role that domestic governance plays in maintaining high levels of poverty in Africa.

Corruption

The abuse of public office for private gain is the normin such states. This is manifest in a number of different ways. Certainly bribery and kickbacks for public procurement and for escaping taxes and customs charges are common. The embezzlement of government funds, and the sale or misuse of government property are seen frequently. For instance, civil servants will establish small supply companies simply to provide goods at inflated prices to the ministries where they work. On a larger scale, public licenses are doled out to political favourites so they can monopolise telecommunications networks or IT services (ARTICLE 19, 1998). Such practices slow the development of public services (mobile phone networks, for instance) and raise their costs. Privatisation of state companies in the last decade or so has benefited insiders everywhere, sometimes at the expense of more equitable growth.

A‘moral economy of corruption’ exists in much of SSA. When a ruler’s wealth was not separated into public and private coffers historically, any leader who was not generous with his resources was considered illegitimate. So today the act of stealing government funds and handing out some to favourites is not necessarily viewed as corrupt or illicit. Not surprisingly, then, corruption appears to be more prevalent in countries with poorly functioning formal institutions and weakly integrated accountability mechanisms, i.e., where traditional.

African national boundaries are largely a colonial heritage; they were laid down with little regard for the local residents’ identities. This has resulted in countries that are marked by ethnic and religious diversity, which has been transformed into ethnic and religious conflict (at local or national level) by unscrupulous politicians, resource constraints, and discrimination. The Rwandan genocide is a case in point, but so are conflicts in Darfur and northern Nigeria. In many countries, large territories are outside the control of the central government, and warlords rule through force of arms, which they often acquire by selling‘ blood’ resources (diamonds, coltan, timber, etc.).

This is the case today in the Democratic Republic of the Congo, and in the previous decade inseveral west African countries. In other words, in many African states the process of nation-building is incomplete. Moreover, legal-rational state institutions are weak in countries where they compete with vibrant informal institutions or where they are deliberately emasculated to serve a political or economic agenda (Medard, 1982). There are in fact few political or economic incentives for the elites to relinquish control to formal state structures and institutions, and this in turn stalls economic development. ‘informal’ ways of thinking and behaving remain more vibrant and where rational-legal institutions are not yet embedded. When corrupt behaviour becomes predatory –such as it did under Frederick Chiluba in Zambia, when millions of dollars were diverted to the President and his associates (Smith, 2007) –it affects economic growth, the delivery of services, and poverty-reduction. Corruption with impunity at that level begets corrupt practices throughout the civil service and society.

Weak civil society

Most Africans live rurally. Many know little of the world outside their villages, except what they hear on the radio. Getting to schools, clinics, towns and the capital city is difficult due to poor roads and transport links. In many countries people living in one region have little contact with, or knowledge of those living in other areas. Taken together this creates a society that prioritises local connections (family and clan, tribal, religious, regional) rather than a shared national identity. It is also difficult for them to relate to the problems of those hundreds ofmiles away, or if they do, to organise for change. This is what is meant when analysts speak about African civil society being‘ weak’. The citizenry’s voice is rarely heard, it has few locally based but nationally influential organisations, and it cannot hold the distant, relatively powerful central government to account. Donors support NGOs, most of which are based in the capital city and run by people living there. They may have linkages in the rural areas, but rarely do local-level communities set NGO agendas or decide how to spend their funds. Finally, as noted before, rural people still relate to local‘ notables’ and patrons as they have for generations, and may not actively seek alternative ways of accessing goods or services. In much of SSA they certainly cannot depend on the state to deliver them.

Human rights

Development is often linked to human rights as multiple rights denials can cause and shape poverty. Multidimensional poverty may be expressed as a denial of specific human rights, e.g., the right to education, health, livelihoods, etc. Social, economic and cultural rights are particularly relevant in this context (United Nations, 1966a; United Nations General Assembly, 1986). But so too are civil and political rights, for as we have noted above, the denial of rights of expression, organisation, participation can undermine local attempts to change systems that contribute to, and perpetuate, poverty (United Nations, 1966b). Discrimination has been tackled by various UN conventions and agreements (for refugees in 1951,on racial discrimination in 1966, for religious intolerance in 1967, for women in 1979, etc). Also, special protection for children was adopted in 1989. The international human rights framework also sets out all states’ legal obligations in guaranteeing the human rights of their citizens. Many of these rights have been enumerated in regional agreements; of most relevance here is the African Charter on Human and People’s Rights (1981), which reflects African communal values as well as international rights standards. It has been operationalised by the African Commission on Human and People’s Rights.

A human rights approach to poverty reduction expresses the needs and interests of the poor in terms of their rights. Central to poverty-reduction policies and processes are the values of empowerment, participation and accountability. Many Poverty Reduction Strategies adopted in Africa already have features that reflect international human rights norms. Further, the introduction of social safety nets reflects people’s rights to a reasonable standard of living, food, housing, health protection, education and social security. Anti-poverty strategies that demand transparent budgetary and other governmental processes are consistent with the right to information, while the insistence that strategies be ‘country-owned’ corresponds with the right of peoples to self determination. A human rights approach places the voices and experiences of the poor at the heart of policy and programming. It makes the poor active participants in the development process, rather than passive recipients, and as such accords them dignity and status that is otherwise denied them.

While these socio-political issues independently affect poverty and poverty reduction, it is easiest to see their impact when we speak about the resource curse. Resource endowments –such as oil, gas, coltan, diamonds, hardwoods can become a‘ curse ’ in the face of the political incentives and policy failures they generate (Robinson et al., 2005). Indeed, ‘policy failure [is] the prime cause of the underperformance of the resource abundant countries’ (Lal and Myint, 1996). As these resources are commonly owned by the state, the government decides the extraction level, timeframe and expenditure of the rents. It is easy to see that some governments would wish to benefit economically and politically from the resource as quickly as possible, which leads to over-extraction and short-term policy-making.

Furthermore, the wealth these resources produce for the state heightens political competition, and the ruling party may well be driven to use resource rents to maintain and expand its influence. Offering public-sector contracts and employment is one of the key patronage mechanisms available in such states, and there is evidence that resource-rich countries with stagnant economies have an over-expanded state (Auty, 2001). For instance, in copper-rich Zambia, between 1966 and 1980 the average yearly growth rate in public sector employment was, while private employment on average contracted by 6.2 percent each year, (Gelb, Knight and Sabot, 1991).

How the government chooses to invest and spend resource rents is often influenced by the quality of their state institutions. Institutions that are competent, transparent and accountable are able to manage resource rents in a manner that is separated from patrimonial practices, and are allocated according to rational and independent criteria. Even as poverty increased, President Chiluba’s illicit earnings, for instance, were funnelled through non-transparent, ‘secret’ (security and presidential) accounts that profited from Zambia’s state-owned copper mines. On the other hand, Botswana’s success in managing its diamond wealth has been attributed to its ‘good governance’ and in particular its stable institutions (Iimil, 2006). In particular, voice and accountability, government effectiveness, market-friendly policies and regulatory framework and effective anti-corruption measures have had the most impact.

Generally, then, poor governance, rights abuse, corruption, clientelism and other ‘informal’ practices combine with structural constraints to generate and maintain poverty. They also make it difficult for people to initiate and carry through reforms that would improve their livelihoods. It is for this reason that western development specialists tackle poverty on two levels: at one level by attempting to strengthen economic development and growth and the other by improving local and national governance. Both strategies focus on putting into place or reforming state and social institutions.

Poverty focused policies for development and poverty reduction

Development aid has responded to poverty, slow economic growth and poor governance in SSA in a wide variety of ways. In Sections 5 and 6 we focus on two overlapping strands of western aid policy respectively, both concerned with improving conditions for the poor: the first with a strong poverty focus, directly tackling the causes and consequences of poverty, and the second with a strong focus on economic growth, as an indirect means of addressing poverty. It is important to note that few African governments have poverty policies that are separate from donor poverty frameworks, as they have been designed in tandem. Where states are particularly weak, and politicians are distracted from development by domestic political issues (Booth, 2006), donors have actually (unsuccessfully) attempted to step into the breach and make policy. One aim of the reforms agreed in Paris (outlined below) is to encourage aid-recipient states to take more control of their poverty agendas and aid policies, Six initiatives with a strong poverty focus are elaborated in this Section: structural adjustment programs and poverty reduction strategies, MDGs, building capabilities, pro-poor growth, social protection and inclusion, empowerment and anti-discrimination.

Structural Adjustment Programmes (SAPs) and Poverty Reduction Strategies (PRSs) Aid, in the form of grants and concessional loans, usually comes with a number of donor-imposed conditions regarding how it should be spent; this is generally referred to as ‘conditionality . The conditionality used by international financial institutions (IFI) known as the Bretton Woods institutions –the International Monetary Fund (IMF) and the World Bank –is of particular importance, both because of the total size of their aid and because many other donors also rely on their assessments as a ‘signal’ before deciding whether and how much aid to provide. Throughout the 1980s and early 1990s, the centrepiece of the conditionality of aid delivered by the IMF and World Bank was the Structural.

Adjustment Programme (SAP). However, following extensive criticism of the SAP approach as being anti-poor (charging user-fees for health services and closing down marketing boards, for instance, and focusing on macroeconomic stability and fiscal balance rather than poverty), it was replaced by a new aid paradigm in 1999 –the Poverty Reduction Strategy (PRS) approach. The introduction of a PRS was set as a precondition for countries to become eligible for debt relief under the Enhanced Highly Indebted Poor Countries (HIPC2) Initiative, which included 33 countries in SSA.

The PRS approach aims to enhance the poverty focus of World Bank and IMF concessional lending (IMF, 2005a). The PRS process was also developed in response to a number of other concerns, including the poor record of poverty reduction in the 1990s and a new focus on poverty-reduction results; a rowing understanding that traditional aid delivery undermined recipient government capacity; the lack of ownership of, and limits to, conventional forms of conditionality and the development process more broadly; and the need to justify an increase in multilateral funding through debt relief (GTZ/ITAD/ODI, 2007: 1). PRSs typically describe a country’s macroeconomic, social and structural policies and programmes to promote and reduce poverty over a three year time horizon, as well as with associated external financing requirements. They usually also have an associated monitoring and evaluation (M&E) framework that sets quantifiable and time-bound targets to guide PRS implementation (World Bank, 2006b)

PRSs are prepared by governments in consultation with their civil societies, and lay out their development priorities. At the time of the last major review forty-nine countries had prepared PRSs. Of these, just over half were in SSA, with ‘second generation’ PRSs being developed in Burkina Faso and Tanzania. Uganda, the first country to use the PRSP approach, was already developing its third strategy (Driscoll and Evans, 2005: 5). The first PRS in Uganda made valuable progress in three areas: it contributed to a much stronger poverty-reduction focus inside government; engaged civil society in poverty-reduction policy debates at an unprecedented level; and focused attention of donor harmonization and alignment at both the international and country level. Second generation processes look more promising than the first because they are no longer directly linked to the HIPC-approval

Critics note though, that the PRS ‘experiment’ has been based on overly simplistic assumptions about political change, which as we have seen above, is complicated by the logic of Africa’s hybrid-state politics. PRSs assume that simply by committing to do things in a participatory way with stakeholders, governments will be more likely to be called to account for their actions and results by those stakeholders. Not surprisingly, evidence suggests that this does not work well in practice (Booth, 2005). Again, not surprisingly onsidering the African context, recent advice has stressed the importance of Domestic political incentives and greater national ownership as essential for successful PRS implementation. For example, a recent World Bank (2007a) survey emphasises the need to establish linkages between PRSs and existing national processes for policy-making and resource allocation, and in particular the budget. The survey highlights the importance of such linkages in promoting‘ domestic accountability’ . That is, since the executive and parliament tend to pay much more attention to budgets and their formulation, and since PRS processes tend to have more civil society engagement than budget processes, linking the two helps to ensure deeper buy-in to PRS objectives from domestic political actors. Overall it is too early to provide a clear verdict on the PRS process. There are serious limitations to the process in terms of its ability to change those deeper social determinants of government commitment to poverty reduction that we have described above. Indeed, it is questionable if any externally initiated process can have a far-reaching impact on underlying domestic political incentives in the long term.

Establishing the MDGs has had a positive impact on the international development agenda. For example, it has enabled bilateral and multilateral actors in the international development community and aid recipient governments to move away from the narrow macro-economic stability focus of the Washington Consensus, typified by SAPs, towards a more multidimensional view of human development (Braunholtz, 2007). The MDGs have weaknesses, however. For example, they do not explicitly address some of the most important global issues facing the world today–conflict, climate change, human rights, inequality (Braunholtz, 2007). They also impose a one-size-fits-all set of targets (with their associated priority areas of public expenditure) on an incredibly diverse set of national contexts, with different problems.

Just after the 2007 mid-point of the MDGs the record for SSA is bleak: the region as a whole is not on track to achieve any of the goals. Although there have been some major gains in several areas–such as primary education enrolment, where there was an increase from 57% in 1999 to 70% in 2005, and the goals remain achievable in many African nations not even the best-governed African countries have been able to make sufficient progress in reducing extreme poverty (United Nations, 2007b: 1). Reaching the MDG target of halving the extent of extreme poverty by 2015 requires a doubling of the current pace of progress (United Nations, 2007b). Progress towards meeting the target of halving the extent of hunger (represented as the proportion of under-fives who are underweight) is unlikely as the proportion has declined only marginally, from 33% in 1990 to 29% in 2005.

Millennium Development Goals

Alarmed at growing poverty in the midst of plenty, the international community, on September 8, 2000 made was referred to as the Millennium compact which was aimed at reducing poverty by one half within fifteen (15) years, ending 2015. The compact involved the attainment of specified poverty reduction objectives through the combined efforts of rich and poor countries within a specified time period. Several global commitments had been made in the past with limited results. The Millennium Development Goals (MDGs) included poverty reduction targets for employment, maternal and child health, education, water and sanitation, gender and aid. Africa remains the only continent in which most of these targets were not attainable by 2015.

Growth and Poverty Reduction Strategy (GPRS II) 2006-2009

The Growth and Poverty Reduction Strategy (GPRS II) succeeded the GPRS I with the emphasis on macro-economic stability and poverty reduction programmes and projects. The National Medium Term Development Policy Framework of Ghana from 2006 to 2009 was also guided by the Growth and Poverty Reduction Strategy (GPRS II) with the overall goal of emphasizing on growth-inducing policies and programmes as a means for wealth creation and sustained poverty reduction. The GPRS II was based on the following thematic areas:

(i) Private sector competitiveness

(ii) Human resource development

(iii) Good governance and civic responsibility

(Ghana Poverty Reduction Strategy (GPRS II 2006-200).

2.1 Effects of contract employment on poverty reduction

Contract employment is perceived as resulting from continuous changes in the working arrangement around the world and has become a key concern in the last three decades (Foote, 2004). The effects of contract employment for the employees and the organization have not been fully established yet, because there are many variables that can affect the observed outcomes.

Some firms use the short term employment condition as a pseudo-probationary period to preview workers from whom they screen out those who fail to meet performance criteria or do not otherwise “fit” the organization, or extend an offer of long-term employment to desired individuals, (Druker and Croucher, 2000).

Such firms may find significant benefit in developing a stronger, more meaningful employer-employee relationship with their short term workers. Individuals‟ inspiration to enter the short term labor market vary broadly and at times include the inability to secure more desirable or permanent work, or a desire or need for retraining or for greater choice in when and where to work. On the other hand, a large number of them do so with the implied hope of obtaining an offer for longer-term employment (Foote and Folta, 2002).

Due to the rapid innovativeness in science and the ever increasing competitiveness, companies have established policies of flexibility and adaptation to the economic changes in order to keep profits as high as they can (Kalleberg, 2000). Given that employment situations all over the world has become more competitive and unstable, many companies and organizations have inclined to present more flexible employment conditions, focusing on prospective tribulations (such as lower demand of the market) and the possibility of lay-offs (OECD, 2002). Most companies experience variable demands of work. When demand is high, the usual response is overtime work sometimes augmented by the recruitment of temporary employees (Graham &Chamber’s (1983) notion of poverty centers on the dual clusters of political economy and physical ecology. He views the concept in terms of the deprivation of many at the expense of the affluent few on one hand, and the reduced standards of living resulting from population explosion and poor resource management on the other hand (Benett, 1995).

Expatiating on some of these notions, Sen (1984) explained the concept through three major approaches. These are the biological approach, the inequality approach and the relative deprivation approach. Whilst the relative deprivation and inequality approaches are related to the views expounded above by Townsend and Chambers, the third, that is biological approach, provides an additionally useful and expanded insight.

The Ghana Living Standards Survey (GLSS) defines poverty using an economic index, characterizing the poor as those subsisting on a per capita income of less than two thirds of the national average. The hard core poverty line is defined as income below one third of the mean. An analysis of the 1998-99 GLSS data found that half of the rural households in Ghana are poor (Ghana Statistical Service, 1999).

According to the GLSS, the majority of the poor are engaged in food crop cultivation as their main economic activity, in contrast to those engaged in private formal and public sector employment that are the wealthiest. Extreme poverty is concentrated in certain rural areas (rural savannah and most parts of forest belts) whereas the wealthiest sector of the population are located in the larger urban centers, particularly in Accra and Kumasi.

The multi-dimensionality of poverty clarified by the Nkum and Ghartey (2000) reflects the broader work carried out by the broader ‘Voices of the Poor’ exercise across several countries, where poverty was identified as being complex and interwoven, including a material lack and need for shelter, assets, money are often characterized by hunger, pain, discomfort, exhaustion, social exclusion, vulnerability, powerlessness and low self-esteem (Narayan et al, 2000). Poverty is identified as a composite of both personal and community life situations where on the personal level, poverty is reflected in an inability to gain access to basic community services.

Poverty in one community may be characterized by different indicators than poverty in another community; a decentralized system may also increase efficiency of access to public goods and services by allowing local authorities to determine the local eligibility criteria. Therefore contract employment given to employees has the responsibility to help the employees be in position to provide for them.

Some also agree with Rowntree (1901), quoted in Sen (1984) who is said to have described families in poverty as primarily those whose total earnings are insufficient to obtain the minimum necessities for the maintenance of mere physical efficiency. This view is supported by the fact that income is prominent in almost all definitions on the level and extent of poverty. Some also agree with Rowntree (1901), quoted in Sen (1984) who is said to have described families in poverty as primarily those whose total earnings are insufficient to obtain the minimum necessities for the maintenance of mere physical efficiency. This view is supported by the fact that income is prominent in almost all definitions on the level and extent of poverty.

Reduction of Costs to an organization, and as an individual it is easy to plan, A key benefit in utilizing short term employees is the reduction of recruitment costs (Allan, 2002; Gunderson, 2001). This is especially noticeable with agency workers actively recruited by employment agencies, rather than by their eventual employers (Forde, 2001). Indeed, recruitment services by the employment agencies are sometimes extended to the recruitment of permanent personnel (Autor, 2001) and in the United Kingdom represent 7 per cent of invoiced sales turnover within employment agencies (REC, 2003). Decreasing employee costs within an organization is a critical aspect of strategic human resource management with regard to competitive global market (Allan, 2002).  Ease of Dismissal by an organization and also individual level the contract employees feel flexibility and therefore they can change their profession anytime; another advantage of using short term workers was the ease of their dismissal (Allan, 2002). In the United States of America, Gunderson (2001) suggested that due to the lack of costs linked with lying off short term workers, they were an attractive option. It was noted within organizations that operated in the unpredictable market of workload (Allan, 2002). Indeed, in the UK, a strategic use of short term workers was to adjust the workforce to match demands. This gave organizations an advantage in terms of numerical flexibility employing “just in time” workers to cope with increased or decreased demand without resorting to making permanent employees redundant. Although the ability to bring people to work at short notice and let them go again gives organizations tighter control on their payroll costs, this may be to the long-term disadvantage of the organization. Short term workers may be less productive due to their time spent in learning new tasks (Allan, 2002). Historically, short term employees have been used to substitute for employees who are on leave, to fill in for a short time while the company screens applicants to hire a new core employee, and to expand a company’s short-term ability to handle an increased volume in jobs that are peripheral to core activities. This picture is changing in that, more often, short time employees are being used in what previously were core organizational jobs. This can have an effect on morale because both short time and core employees may be working side by side on the same job, but under different compensation and benefits terms. In addition, short time workers may not get the same training, thereby affecting the risk level in some jobs (Bourhis and Wils, 2001).

A contract of employment is an agreement on the employment conditions made between an employer and an employee. The agreement can be made orally or in writing and it includes both express and implied terms. Employers and employees are free to negotiate and agree on the terms and conditions of employment provided that they do not violate the provisions of the Employment Ordinance. Any term of an employment contract which purports to extinguish or reduce any right, benefit or protection conferred upon the employee by this Ordinance shall be void.

The Organization for Economic Co-operation and Development (OECD) in 2001 viewed poverty as an unacceptable human deprivation in terms of economic opportunity, education, health and nutrition, the lack of empowerment and security and argues that poverty is the inability of people to meet economic, social and other standards of wellbeing. For the United Nations (UN) as stated by Gordon (2005), “Fundamentally, poverty is a denial of choices and opportunities, a violation of human dignity. It means lack of basic capacity to participate effectively in society. It means not having enough to feed and clothe a family, not having a school or clinic to go to; not having the land on which to grow one’s food or a job to earn one’s living, not having access to credit. It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, and it often implies living on marginal or fragile environments, without access to clean water or sanitation”.

High levels of unemployment: An economic condition marked by the fact that individuals actively seeking jobs remain unhired; Unemployment is expressed as a percentage of the total available work force. The level of unemployment varies with economic conditions and other circumstances. Unemployment rate is very high in developing countries although is becoming a canker throughout the world. It is a serious economic problem which has a causal relationship with poverty.

Sanderson (2003), believed that empowerment creates motivation and energy in workforce to do their work efficiently and effectively (Amin. et al, 2010). Kuo et al. (2010), recommended that together the job characteristics of career revamp and employee empowerment are imperative characteristics in giving greater employee dedication and trustworthiness toward the organization and increased level of motivation (Reena et al, 2009). More the loyalty towards the organization and higher the motivation works best for the effectiveness and growth of a business.

Due to globalization in the modern employment today there has been a change in the, The employment contracts have now changed due to global need for quality employees for firms to ensure that there is competitiveness  management process is now increasing in importance as employees are supposed to deliver quality and value to their employers. Some organizations are using process capability maturity models to assess, measure, and improve critical core processes, such as software development and project management. Although, the application of capability maturity models to the contract management process is just beginning to emerge as a best practice (G. Rendon, 2006).

Contracts are the basis for all activities in every enterprise and in almost every department of an enterprise. Having no contracts means there are no employees, no clients, no IT systems, no material and no partners. However the mere presence of a contract is not sufficient. It is the content of a contract that determines the future of an enterprise: What will my enterprise have to pay for and how much wills that cost me? How much will we receive or what are our expected deliverables? How will I work together with my partners? Are there any risks or (unknown) opportunities related to the contracts? When will the contract be terminated or in which circumstances can it be cancelled and when? (Mockler, 2010).

Still (2005), argues that employees are the life blood of the modern business. Without well trained employees in an organization this vital legal glue, entering into arm’s length commercial deals would be fraught with peril yet for medium to large sized organizations contract management brings challenges of its own. This means that in order to rely on contracts, managers must ensure that their terms and conditions are largely defensible. According to the survey by the international association for contract and commercial management of 2008, there are fewer high value global contracts coming to the market and an increasing number of ‘second tier’ companies entering the market and seeking to secure smaller but potentially more complex  contracts.

In the long run, the effects of compensation and benefits diminish as employees begin to feel a sense of loyalty and organizational commitment. When employees begin to feel they are an indispensable part of the organization, they often become dissatisfied with their compensation and benefits. Finally, when employees feel they are a superior part of an organization, they typically believe that the organization owes them much more than what they are already receiving (MacDonald and Gabriel, 2013). At this point, compensation is simply the glue which holds many dissatisfied employees in place.

Posti (2005) inclines that people need motivation just as pieces of equipment need fuel and operators. This is highly demanded to ensure that they are always at their optimum working condition. In turn, this will absolutely lead to optimum productivity. People are one of the most important assets in business. They have unlimited potential to contribute in the achievement of objectives. Their aggregate productivity propels the operations of the company. It dictates the overall performance, which creates an attractive corporate culture.

Employers and owners need to create organizations where excellent performance leads to competitive compensation for people throughout the organization. Without rewards, a company is planting seeds for high turnover, low productivity and long-term failure. However, to reward employees that are not performing saddles an organization with higher payroll costs and encourages poor performers to stay while discouraging the employees that go above and beyond expectations (steers et al 2012).

Typically, most employees respond to increases in pay and benefits with a positive and more productive attitude. However, the opposite is true as well. Sometimes, employees only notice rewards of a salary increase the day the increase is communicated to them, and the day they receive the first paycheck that includes the salary increase.

Dems (2010) said that the value of human resource productivity is a managerial concern. Employee motivation is the classic response on this matter. This has been utilized for ages by many different entities, small- and large-scale businesses alike. It fosters mutual growth in an employer-employee relationship. Indeed, motivation increases productivity. In the study (Wood, 2000), he examined the role of active exploration in an adult training program. Their results indicated that participants who were trained to actively explore the environment during training had higher intrinsic motivation levels, as well as higher performance on transfer tasks.

Compensation is one of the primary reasons for employees to seek employment. They are rewarded for their services and efforts that they exert for their organizations. They can be compensated in many ways for example salaries, holidays, bonuses etc. There are two basic compensation models; performance based pay and components based pay. In the former paradigm, employee’s compensation is either tied to the way he performs; if he performs better he would be rewarded accordingly (performance based pay) and on the other hand, non- performance based pay; where, employee’s performance is not tied to getting rewards, rather the employee is paid or rewarded even if its performance is not up to the mark for example fixed pay and salaries (Taylor, 2005).

The relative importance of various factors used to measure the performance of employees should be related to how well each measure informs the principal about the employee`s actual performance (Lambert and Larcker, 1987; Banker and Datar, 2013). For decade`s employees measure have been used as primary indicators of managerial performance with prior research documenting a significant relation between employees based performance and financial compensation (Antic and Smith, 1986, Ittner, et at., 2013). Moreover, both the annual cash bonus and the sum of the cash bonus plus stock based compensation have been linked to employees based performance as well as numerous other attributes of the firm’s governance structure (Core, et al, 2011).

The relationship between employment and poverty reduction is to the effect that when employees are properly motivated, it creates delight in their day to day work. Various studies and research have also proven that delighted employees give out their best in the workplace. However, many employers and managers do not value the impact of motivation on employee performance. As such, in trying to increase performance and thus productivity, they ignore motivation and resort to other factors such as employee competencies, process efficiency and effectiveness, technology deployment, innovation, organizational learning, and others (Dems 2010).

Evidence of the value of supporting education to achieve development is convincing. A more equitable distribution of education correlates with reduced economic poverty and inequality and faster economic growth (Birdsall and Londoño, 1998 in Bruns, Mingat and Rakotomala, 2003:1). Education for girls has positive impacts on women’s empowerment and lowers women’s risk of being poor. It also generates indirect benefits in terms of the health of their infants and children, family nutrition, immunisation rates and educational attainment for their children (World Bank, 2001 in Bruns, Mingat and Rakotomala, 2003). It has been found in SSA that education for boys and girls may be the single most effective weapon against HIV/AIDS (World Bank, 2002b in Bruns, Mingat and Rakotomala, 2003).

Primary education also contributes to improved natural resource management (Godoy and Contreras, 2001 in Bruns, Mingat and Rakotomala, 2003). Education, especially at secondary and tertiary levels, is fundamental for the construction of democratic societies and globally competitive economies. In short, education is a powerful instrument for reducing inequality and poverty and for laying the foundations for sustained economic growth, effective institutions and sound governance (Bruns, Mingat and Rakotomala, 2003:1).

Gaps identified

However in the literature there is still not much not known as to how specifically contract employment leads to poverty reduction this is because Contract employment is perceived as resulting from continuous changes in the working arrangement around the world and has become a key concern in the last three decades, Some firms use the short term employment condition as a pseudo-probationary period to preview workers from whom they screen out those who fail to meet performance criteria or do not otherwise “fit” the organization and Such firms may find significant benefit in developing a stronger, more meaningful employer-employee relationship with their short term workers, therefore most organizations give their employees contracts to assess them before giving them long term contracts , however it is not very clear how contracts in employment have led to poverty reduction this is the gap that this study intends to investigate.

2.2 Relationships between permanent employments on poverty reduction

The argument for developing and implementing strategies to reduce poverty by increasing productive employment opportunities in both urban and rural areas is compelling. Persistently high level of poverty is attributed partly to the jobless growth of economies, and has led to an emphasis on small businesses development as a catalyst for job creation and poverty reduction (Okpara, 2011) and also as a key strategy for economic growth.

The World Development Report 2005 argues that “jobs are the main source of income for people and the main pathway out of poverty for the poor” (World Bank, 2004).

Poverty reduction continues to be one of Uganda’s key National development objectives. The National

Poverty is defined as a lack of sufficient income “required to meet the expenditure for  purchasing a specified bundle of basic requirements” (Kimalu, Nafula, Manda, Mwabu, & Kimenyi, 2002, p.2). According to the Word Bank (2009a), 72% of Africa’s youth population lives on less than $2.00 a day. Besides earning low-income, poor people die premature deaths, get married at a young age, and have large families, and experience malnutrition and ill health  (Kimalu et al., 2002). Mudavadi (2002) adds that the poor lack safe drinking water, secure shelter, and adequate health-care (p. i).  The World Bank (2009b) characterizes poverty as “powerlessness, a lack of representation and freedom, a situation people want to escape” (p. 1).

Sadly, a significantly large proportion of young people in Africa are growing up in social environments where chances “of living decent lives are negligible and in which many find themselves stuck in positions of inadequate life chances and bleak prospects” (Christiansen, Utas & Vigh, 2006, p.11). These widespread challenges are “breeding frustration, anxiety and despair, culminating in crime, drug addiction and alcoholism” (Wanjohi, 2004, p. 30). Hopelessness and desperation has made young people easy recruits in armed rebel or insurgent movements experienced in some African countries today.

Current economic world structures combined with Africa’s meager economies have only served to alienate young people further, Since young people have the most potential, physical strength, and energy, plus constitute the largest proportion of the educated population, it is only appropriate that the various development and socioeconomic programs throughout Africa be designed with them in mind.However, Africa is facing the challenge of how to empower the youth and channel their efforts, intellect , and energy for constructive outcomes that will benefit both the individual and the nation at large.

Given that young people are the main actors in their own empowerment, the first step of any potentially successful strategy would therefore be incomplete if it did not involve listening to them and understanding their needs, concerns, and aspirations and drawing on their intelligence to draft viable solutions to their everyday problems.

As a result of many factors, including greater competition and the lower wages offered in other places around the globe, organizations believe that they are compelled to reduce their costs in order to remain competitive. Many times, employment expenses are the largest costs for employers and hence are the first expenses to be cut. As a result, employers are requiring greater amounts of work for less compensation (Fraser 2001). Though these decreases in compensation may come in the form of decreased pay,there are other less overt methods used to reduce overall compensation. These include fringe benefit reductions, longer working hours, less paid time off and the greater use of part time employment.

This perception of cost reduction underscores the current organizational environment and how success is measured. The primary concern and focus of employers is short-term profits and growth. Consequently employers have evolved away from how Chester Barnard, in The Functions of the Executive, defined an organization as, that kind of cooperation among men that is conscious, deliberate, purposeful, (Barnard 1950). Barnard further argued that the goal of organizations is not “profit nor power nor political ideology and certainly not personal gain. The common purpose of an organization must always be a moral purpose” (Perrow 1972). These ideas, reminiscent of exchange theory, essentially contend that in order for an organization to be successful, there has to be cooperation between the leaders of an organization and the employees

High rates of youth unemployment also represent a wasted resource for developing economies. Poor youth labor market participation limits the inputs available for urgently needed growth and makes it harder for developing countries to realize the benefits of labor -intensive growth strategies. Developing countries pass through a unique demographic “window” where the youth population is maximized before birth rates begin to fall toward a more “developed economy” pattern –their success or failure in realizing the economic potential of young people during this “low dependency ratio” period can make the difference between sustained and faltering long-term development. (Dhillon and Yousef, Inclusion: Meeting the 100 Million Youth Challenge, 2007).

In addition, persons who experience extended unemployment in youth are at increased risk for other social pathologies: direct poverty effects on unemployed young people’s families include “considerable cognitive, health, nutrition and psychological deficits” for children raised in poverty (Sum, 2002). Chronic unemployment is associated with increased incidence of criminal behavior (ILO, 2000; Kotloff, 2004). As these young people grow older and raise families, their own failure to accumulate economic and social capital perpetuates the same cycle for their children.

Organizational managers attempt to maintain the lowest costs of employment through policies of providing the lowest wages (Hage 1980). One way in which employers execute these polices is by reducing the non-wage benefits provided to employees and therefore their total compensation. This means of compensation reduction is evidenced by the relative decrease in non wage benefits that has occurred since 1979 (Fraser 2001; Mishel, Bernstein, and Schmitt 2001). This phenomenon essentially means that employees are working for less compensation (Fraser 2001).

Lockwood, (2006) argues that low wage strategies may be appropriate if work is simple and repetitive and requires little training. These distinctions are very general in nature and do not necessarily provide a clear rule of application to actual companies. Companies in highly competitive local labour markets may well find that they need to pay highly competitive rates against some industry or geographic benchmark in each of their job classifications, even for semi-skilled or unskilled positions

While there is general agreement about the importance of competitive compensation for employee retention, there is also a growing consensus that competitive, or even generous compensation will not single-handedly guarantee that a company will be able to keep its most valuable mployees, Lockwood, (2006) maintained that, the key issue in retention is the amount of total compensation relative to levels offered by other organizations. “Organizations that have high levels of compensation,” he wrote, “have lower turnover rates and larger numbers of individuals applying to work for them.” Furthermore, he argued, high wage workplaces may create a “culture of excellence.”

It is worth remembering that building “affective commitment” (Muchinsky, (1977) involves much more than paying well, and that retention based on the principle of “compensation-based commitment” is of course sensitive to changes in compensation within the company. Employers that base their retention on compensation-based commitment will always be vulnerable to the possibility that their competitors will be able to offer better wages and thus lure away their employees.

Staw (1980) argues that “money gets employees in the door, but it doesn’t keep them there.” Aquino, Griffeth, Allen, Hom, (1997). classify money as a “satisfier,” meaning that it is a necessary but insufficient factor in employee retention, while Collins,(2007). agree that money is not the primary motivator for employees. In fact, many companies have done a very good job of retaining their employees without any pay-based retention incentives (Collins,(2007)

Workers in the cities where industrial establishments are concentrated may be more likely to move to the competitor even for very modest wage differentials. Companies situated in more isolated areas know that their workers are less likely to move for small increments in compensation. The message is that companies that wish to develop a successful retention plan that includes compensation and benefits must always understand their own  unique characteristics and circumstances.

Whatever their circumstances, companies that successfully incorporate compensation and benefits into their retention efforts have a clear understanding of their business objectives and use compensation as a tool for influencing organizational and employee behaviour For example, pay systems and practices can have a major impact on employee retention by motivating membership-oriented behaviour (commitment). Pay systems may also affect knowledge sharing and transfer if sharing, teamwork, suggestions, etc. are rewarded or recognized (Collins, (2007).

Finally, it is important to distinguish between what might be called normal or standard compensation like wages, salaries, benefits, etc. and what is commonly referred to as performance-based compensation, that is, specific forms of compensation that are paid for workers or groups of workers who attain certain objectives vital to a company’s business strategy. Performance-based compensation or ‘pay for performance’ is becoming an increasingly popular form of compensation, particularly since its various forms are closely tailored to very specific company objectives, including employee retention (Collins,(2007).

Benefits can demonstrate to employees that a company is supportive and fair,and there is evidence to suggest that stable benefits are at the top of the list of reasons why employees choose to stay with their employer or to join the company in the first place (Aquino, Griffeth, Allen, Hom,(1997). However, it is often the case that many employees do not realize the “true value” of the benefits they receive. Nor are they always sure what motivates the employer to provide these benefits. Thus, the link between benefits and employee commitment is not always strong. Adequate communication with employees is, as with most other retention practices, essential (Trevor,(2001)

Development Plan (NDP) for the period 2010/11-2014/15 identifies poverty as one of the constraints to growth and development. In order to address the prevailing poverty concerns, it is important that mechanisms are instituted to frequently monitor the changes in the welfare of the population overtime. One of the approaches is to estimate the income or expenditure of households/individuals and establish thresholds below which one is considered poor or non-poor, The UNHS V and earlier surveys use household expenditure rather than income to measure the living standards of the Ugandan population.

The demand for flexible labor has grown steadily during the last decades. Labor markets have undergone considerable changes mainly due to production market developments, such as increased competition and global interdependence of economies, asking for rapidly responding organizations (Allen, 2002). It is assumed that the replacement of permanent workers with temporary, on-demand workers creates a flexible workforce that can respond quicker and more cost efficient to changing business conditions (Tan & Tan, 2002). Temporary employment contracts allow employers to respond cost effectively to fluctuating markets by laying off and rehiring employees (Sprigg, & Wall, 2002).using temporary employment contracts is attractive for employers because they have to spend less money on recruitment, training, fringe benefits, and severance of the contract (Koster, 2002).

Leonardi (1998) argues that while segmented labour markets are by now an “established fact,” it “remains to be proven” along what lines segmentation exists. The exact pattern of segmentation is of course context specific and cannot be dictated a priori. But while conceptions of dual or multiple labour markets will differ in their details, they share common features: the existence of two or more sectors with different wage setting mechanisms, with limited upward mobility for workers in the “less productive” sectors. In addition to the institutional barriers to mobility generated by the rationing of “more productive” jobs, there may be geographical barriers (for instance, poor infrastructure connecting urban and rural areas), legal barriers (such as weak enforcement of property rights), or barriers due to discrimination based on ethnicity, race or gender, which make it particularly difficult for the poor to participate in sectoral growth. Figure 1’s characterization of women as concentrated mainly in the “less productive” jobs tiers of the informal sector is all too familiar in many developing countries (Chen et al., 2005) and indicates that certain groups among the poor may face even greater barriers to mobility than their peers.

As shown in Gutierrez et al. (2007), the sectors of the economy which constitute repositories of “more productive” jobs will vary by region and country. Steps one and two of the three step framework enables analysts to shed the assumption that a particular sector (for example, manufacturing) must automatically be equated with “good” jobs. Instead, “more productive” jobs are any jobs in which employment intensive growth is correlated with poverty reduction, whether in services, manufacturing, agriculture or even certain segments of the informal economy.

Once a link between poverty reduction and employment-intensive growth has been established for a particular sector, an obvious question becomes: are there any feasible policies to expand employment in this sector? For instance, country-based analysis for Argentina, Burkina Faso, Chile, Tunisia, and Ukraine, among others, has pinpointed the growth of small and medium enterprises (SMEs) as a potential source of poverty reduction.2 Among the policies to expand the employment base in this sector, Burkina Faso has strengthened development and support services for SMEs.

Balancing Macroeconomics in an economy, Saudi Arabian monetary agency, (2003) [31] argues that the main causes of the problems faced by Saudi banks arises from the macroeconomics imbalances which are mainly created by lacked adequate credit assessment and monitoring procedures in relation to lack of required technical expertise and that all this therefore made banks so difficult to recover their cash from the borrowers. However no remedies were advanced to counteract the situation of poor credit assessment in banks.

Accepting deposits in banks, many deposits, According to the International Monetary Fund, (2003) a key feature of the Ugandan banking sector is the high degree of concentration on both the loan and deposit sides. When loans to the top five borrowers for each bank are aggregated, they represent about 40 percent of all loans with deposit concentration having a smaller percentage. Banking sector’s exposure to a small number of borrowers and depositors means that a cyclical downtown or terms of trade shock affecting these borrowers could translate quickly into asset quality problems for banks. I agree with IMF simply because a loan is a major asset of a financial institution so if it is not properly managed, there are few chances of survival..

Extending credit to low income earners, People living in poverty, like in Ethiopia, need a wide range of financial services for consumption smoothing, running their business and building assets. But due to collateral problems, poor people in most cases have no credit access from Banks. Microfinance offers financial services such as loans, savings and micro insurance to the poor people either in individual or in a group basis. Lending to the poor usually means that a lender will not be able to get any collateral to secure the loan (Njoroge, et al, 2009). Moreover, Kimentyi et al. (1998) argues that the most difficult aspects of lending to poor clients are borrower selection and repayment enforcement.

High level of risk in lending, Dejene, (2003) argues in his study on the economic importance of the informal institutions in Ethiopia that the poor are often marginalized in the formal credit markets. This can be explained partly in terms of: 1) a lack of collateral, which makes lending to the poor a risky venture; 2) transaction cost of lending to and borrowing by the poor is often high; and 3) utility loss from repayment is higher for the poor as compared to the rich. So the poor don’t have access to the formal financial sources. Lack of access to institutional credit is one of the crucial factors impeding the poor from involving in operating small business and in particular and economic development in general.

Speculation in the financial market is one of the , another publication (kalyan-city.blogspot.com) identifies speculation: i.e. investing in high risk assets to earn high income and also fraudulent practices such advancing loans to ineligible persons or advances without security or reference as some of the causes of failures in loan management. It also cites internal reasons such as labor agitation/shortage and market failure as some of the causes of the incidence of NPLs. External factors such as recession in the economy and natural calamities/disasters were also cited by the same publication as some of the factors accounting for loan default. (Barth et al., 2004).

Paying of clients deposits in future (Kay Associate Ltd), 2005). Because of this risk of default in loan repayment, lenders needs to project into the future and make sound judgment that will ensure that repayment is effected at the agreed date. Available literature places so much importance on the lender‟s role in ensuring good decisions relating to the granting of loans in order to minimize credit risk. The lender must always aim at assessing the extent of the risk associated with the lending and try to reduce factors that can undermine repayment. The lender should therefore assemble all the relevant information that will assist him/her in arriving at a sound credit decision. In view of the possibility of non payment which leads to NPLs, MFIs have adopted a standard loan request procedures and requirements usually contained in credit policy manual to guide loan officers and customers. Some of the factors that the MFIs consider before granting loans include the following which are often referred to as the canons of good lending:

Maslach et al (2001) constructed a connection between increased job engagement and the management of the six work-life areas. Engagement is facilitated by, a sustainable workload which challenges the individual without negatively impacting them mentally and/or physically. Goal-setting theory (Locke 1968),can be utilised in relation to the achievement of realistic workloads in order to enhance engagement levels. Feelings of choice and control, suitable reward and recognition, the presence of a supportive work community, fairness and integrity and mean ingful and appreciated work will foster personal engagement. May et al’s (2004) findings in relation to meaningful and valued work reiterated Maslach et al (2001) belief that meaningful and valued work is associated with engagement and thus the concept of „meaning‟ is an important consideration when looking at the engagement generation process.

Individual employee‟s perceptions of „meaning‟ are a pre-determinant of their engagement levels and ultimately their level of performance (Holbeche & Springett 2003). Holbeche & Springett (2003) propose that employees pro-actively seeks out to clarify meaning within their work, organisations need to enable this clarification to take place or the employee will become actively disengaged and is likely to leave the organisation. According to Holbeche & Springett (2003) high levels of employee improving the access and quality of primary health care and also on the broader health implications of water and sanitation, housing and education for girls and women (WHO/World Bank, 2002 in Bird and Busse, 2006: 35). The other is a vertical programmatic response, targeting specific issues, such as HIV/AIDS, malaria, sexually transmitted diseases, child health, etc. Not surprisingly, budgetary constraints, combined with inadequate governance and accountability structures, hinder the access (particularly for those in remote areas), type (primary health care services to improve population health versus secondary and tertiary clinical services for people with serious and chronic illnesses) and quality (particularly trained staff, available drugs, etc)of health care available in SSA. The result is high levels of morbidity and mortality.

2.3 Causes of poverty

Poverty is one of the major problems facing human kind today. Poverty has been associated with suffering, diseases, and deaths (Seimenis, 2012:1). A report by the United Nations (2012) concluded that more than three billion people in the world were living under extreme poverty. Haydar (2005:240) mentioned that a large part of the world’s population lack the basic commodities for survival, such as food, shelter, clothing, energy and medicine. Although the challenge of poverty has been dominant in both developed and developing countries, it is more common in sub-Saharan Africa (Gafar, Adeyani&Raheem 2009, Human Development Report, 2012). Based on $1.25 per day poverty line, about 65% of Sub-Saharan Africa’s population was said to be living in poverty in 2011 (World Bank, 2011). The Human Development Report (2012) found that the majority of poor countries are in Sub-Saharan Africa. Some of the countries mentioned in the report include Zimbabwe, Uganda, Rwanda, Malawi and Burundi.

Despite prevalence of poverty in many parts of the world, there are contrasting views on what the concept of poverty entails. The general consensus is that poverty is a multidimensional concept and has alluded to a number of causes such as socio-economic, demographic factors, corruption and structural problems (Davids, 20104).

Poverty is attributed to many causes, such as overpopulation, environmental degradation, lack of education and economic and demographic trends, shortage of job opportunities and individual responsibility and welfare dependency, Gafar et al., (2009) found that Africa is mainly affected by a shortage of skilled labour, scarcity of natural resources and location disadvantages, structural adjustments, a change in economic policies and natural disasters, such as wars and earthquakes. Moreover, in South Africa poverty cannot be divorced from the non-default apartheid system, which brought unequal distribution of resources (Bhorat&Kanbur, 2003).

Relative poverty has two characteristics, namely; social exclusion and relative approach (Lotter, 2007). Social exclusion is experienced when a poor person cannot participate in certain activities in a society. For example, in a society where cycling is considered as a major activity some individuals in such a society who cannot afford bicycles are excluded from that major activity, Thus those excluded individuals are identified as poor within that society, this

Poverty is a multifaceted phenomenon, this means that by its nature, explanations and understanding of poverty differ from country to country and from one individual to another. Individuals may have different perceptions on the causes of poverty (Wilson, 1999). According to Baldwin (2006) perception is a concept which has to do more than observing poverty. This means that from observing an opinion is formulated. Sometimes a perception depends on the experience of an individual. Noel (2003) mentioned that perceptions are open for arguments that an individual has a view on a certain issue.

Individualistic perceptions deal with the individual failures and blames individuals for being poor (Davids 2010). An individualistic approach puts the main emphasis on behavioral and cultural factors. These factors include undesirable behavior, inappropriate life style and lack of mental capabilities (Buzet al., 2012). It is in these factors that an individual puts the blame on themselves for their poverty situation. As a result, such individuals are characterized by intergenerational transfer of poverty (Buzet al., 2012). This means that poverty is transferable from one individual to another.

In the view of Ellis, 1998, livelihood encompasses income, both in cash, as well as the social institutions (such as family and relatives), gender relations, and property rights required to support and to sustain a given standard of living. A livelihood also includes access to and benefits derived from social and public services provided by the state such as education, health services, road and water supplies (Blackwood and Lynch, 1994).

The second class is the culture of poverty where many individuals get used to their conditions of being poor, adopt it and live with it for their entire lives (Davids, 2010). Wilson (1987) further explained that the culture of poverty is characterized by lack of ambition, lack of work ethics and self-reliance. Such a culture is generational in nature and tends to affect the whole family including the upcoming generations once it comes to existence. Moreover, an individualistic approach is attached to many explanations why individuals are poor. Wilson (1993) mentioned that poor people are poor due to reasons that they do not maintain their moral standard and do not put much or no effort to improve themselves, Davids (2010) alluded that people lack the ability to improve themselves; they spend their income on non-basic commodities and they do not seek to improve themselves.

Poor people are disproportionately affected by poor health. Health problems facing the poor include communicable diseases (such as HIV/AIDS and tuberculosis), childhood illnesses (such as measles and polio), reproductive health problems, preventable diseases (such as diarrhoea and malaria) and impairments. At the same time the poor are more likely to experience extreme difficulty accessing appropriate care, especially if they live far from health posts or if clinics charge fees. There are two streams of policy responses: the first is a broad-based, public health response, which focuses on

Shek (2004) described structural causes of poverty as caused by unfairness within the society or the system. The structural explanations accounts for external forces which individuals cannot control. In addition, David (2005) alluded that structural perception causes of poverty are caused by economic disorders. Structural perceptions are attached to external explanations (Buzet al., 2012).

People can complain of the unfairness in the society as caused by exploitation by capitalist and lack of social opportunities (Shek, 2004). David (2010) alluded to economic disorders as social and economic injustice. Social injustice accounts for factors such as lack of opportunities and the poor living in under-resourced conditions. Economic injustice accounts for factors such as unequal distribution of resources as the rich exploits the poor (David, 2010).

Davids (2005) mentioned that education has an impact on how people perceive the causes of poverty. The education level of an individual has both positive and negative effects on how they perceive poverty (Davids, 2005). A study done by Hunt, (1996) observed that highly educated participant’s perceived poverty in a positive way compared to those who are not educated. The educated blamed themselves for being poor while the uneducated put the blame on external forces and unforeseen factors.

Geographical location plays a role in perceptions causes of poverty. Perceptions tend to differ according to geographical location. Literature shows that that each geographical location has its opinions about what causes poverty (May 2005). Urban areas showed that few individuals lack basic necessities, while traditional rural formal and informal urban areas may lack basic commodities.

Energy Crises: In Uganda, the increase in the price of crude oil brings down the value of the incomes of the people, while transportation fares, food prices utility bills and even health and educational bills increase. In situation of price upsurge cost of living increases and low income people would be affected most, (World Bank, 2009).

Unemployment: Apart from energy crises which also generate poverty, the high rate of unemployment contributes a lot to poverty. Most rural people are unemployed or under-employed. Most of the youth always graduate from school without jobs. Some stay at home so long that they give up on their job hunting process, and concentrate on menial occupations, which may be below their qualification, or outside their profession to earn very little incomes, (IMF, 2010).

Corruption: Corruption often accompanies centralization of power, when leaders are not accountable to those they serve. Most directly, corruption inhibits development when leaders help themselves with money that would otherwise be used for development projects, (World Bank, 2009).

Social Inequality: Another source of poverty throughout the world is social inequality that stems from cultural ideas about the relative worth of different genders, races, ethnics groups and social classes. Inequality works by placing individuals in different social categories at birth, often based on religious, ethnic or racial characteristics.

Outside MFI Controls are controls that are found outside MFI regulation and they include enabling macro economy and some degree of political stability (no hyper inflation or continuing serve warfare), appropriate regulatory environment, public supervision. Within M.F.I control; these are controls that operate within the microfinance institutions and they include good track record of accountable ownership, effective governance, consistently good management of funds and allocation of full time high level committed management plus a financially sound with a high rate of loan recovery and consistently good returns.

The system of financial intermediation can affect economic performance and growth directly through the role it plays in savings mobilization. Pride microfinance has played this vital role of savings mobilization especially in the rural areas. It offers various savings accounts and it is a deposit taking institutions. It has facilitated the growth and empowerment of women who have been beneficiaries because it offers a wide range of appropriate instruments. According to Winiwiski, (2009) financial instruments play a vital role in facilitating savings because of appropriate instruments.

Savings play a crucial role in financial management strategies of the poor. Deposit facilities make it easier for poor clients to turn small amounts of money into ‘useful lump sums’, enabling them to smooth consumption and mitigate the effects of economic shocks,( Rutherford, 2008). Secure savings also can provide a measure of independence to socially and economically vulnerable individuals, notably women and children and unlike credit; the benefits of savings are not limited to the economically active. Although significant research has document the benefits of savings to the poor, the microfinance sector remains focused largely on credit delivery. Funders and government often don’t realize how vital asset- building policies and that savings mobilization can bring many benefits to the poor clients and microfinance providers (e.g. stable funding and protection from the foreign exchange risk.

Savings are fundamental to sustainable economic development. Savings are by far the most frequent source of funding to microfinance startup and expansion. They also enable households to build for the future and better prepare for unexpected emergencies. Woccu credit union savings mobilization profit in Latin America have demonstrated that lower income people will substantially increase their savings deposit if provided with convenient service, market returns and security for their savings. Yet millions of people throughout the region lack access to safe, reliable and convenient savings services,(www.woccu.org/education/savings).

According to www.woccu.org/education/savings the following key principles and is developing operational guidelines and tools to be utilized by all microfinance institutions for mobilizing savings. Preconditions for savings mobilization include legal deposits: is there an appropriate legal framework in place to identify which institutions are able to receive deposits and what recourse savers have to recover their deposits? Are you authorized to capture savings? Do you have a charter and by laws established? Is an effective system of supervision in place?

External analysis; under this one has to consider the following, is there a market for saving products in your geographic location? Which institutions are capturing savings now? Also one has to look at prudential a discipline that’s to say do you understand the minimum standards? Have you established the core financial disciples of delinquency control, loan loss provisions, liquidity reserves and capital reserving to protect client savings? To mention a few

Savings can be defined as income not spent on consumption. In case of salaried worker, it’s that proportion of income not spent on consumption. People save for a variety of reasons including putting aside money for a rainy day, out of plan habit and targeting of some big purchase in future. As borrowers with a good track record receive better credit offers, all borrowers have a strong incentive to sustain their reputation by repaying their debt (Orebiyi, 2002). Therefore, by repeatedly interacting with the same borrower, lenders establish long-term relationships that enable them to condition their credit terms on the past repayments of their borrower in such a situation a financial institution is able to observe the saving pattern of its client and conclude on their financial behavior.

As only a good reputation leads to attractive credit offers from the incumbent lender, borrowers have strong incentives to repay. With respect to Centenary Bank, the major problem facing the bank has been identified as failure to manage loan default (Centenary Bank Annual Proposals, 2005, 2006, 2007). The management of the bank depends on incentives to repay on time; instant arrears information and delinquency tracking; immediate action to enforce repayment; and rigorous recovery in case of defaulting to achieve loan repayment (Annual Proposal, 2005).

Almost all people who live in what the World Bank defines as absolute poverty are affected by hunger and starvation. In fact, child malnutrition results in 15 million children deaths across the world every year.

A significant portion of cases of people succumbing to poverty related health conditions every year are traced to the continents of Asia and Africa. As in case of hunger, poverty and homelessness are also associated with each other. The statistics reveal that a significant portion of people below the poverty line cannot afford to have a proper dwelling, and thus have no option but to resort to ‘rough sleeping’ (Naik, 2010).

According to Naik (2010) around one-third of the total number of deaths in the world (which roughly amounts to 18 million people every year) are attributed to the diseases of poverty. This and other factor highlights the relationship between poverty and poor health. A newly coined term, the ‘diseases of poverty’ refers to various diseases which are more likely to affect poor people as compared to their affluent counterparts. It also includes those diseases which can result in poverty for people. Some of the most prominent examples of diseases which are more likely to affect people below the poverty line include AIDS, malaria, tuberculosis, measles, pneumonia etc. Most of these diseases are attributed to lack of basic health care facilities. On the other hand, those diseases which can result in poverty for the individual include a range of mental illnesses which tend to hinder the ability of a person to work.

The children living in absolute poverty cannot afford basic education those in relative poverty are forced to dropout half way into their elementary or middle schooling. There may be many reasons for dropout, ranging from inability to pay fees for further education to shouldering family responsibilities. The relationship between poverty and education also works the other way round, with lack of education being one of the most important factors in the world. The effects of poverty on child development are also seen in the classroom, (ibid, 2010).

Most innovations in the area of benefits appear to be focused on the concept of flexibility. Many companies are responding to the increasingly diverse needs of their employees by introducing a greater element of choice in the range of benefits from which their workers can choose. Thus, the introduction of flexibility in benefits packages can be a key ingredient in ensuring good retention, particularly since it affords greater responsiveness to the specific needs and circumstances of individuals (Milman,(2003)

Some companies have become more creative in the types of benefits they offer their employees, and many such initiatives are focused on allowing employees to strike a better balance between their working and non -working lives. Examples are numerous and include: earned time off, on-site child care, paid paternity leave, sabbaticals, tuition reimbursement, etc (Milman,(2003).

In the interest of facilitating a better work-life balance, DiPietro, & Milman,(2004) advise employers to make it easier for employees to transfer from full time to part-time work and vice versa, introduce pro-rated benefits for part time workers, guarantee a return to full time status for those who elect to work part-time, and protect employee seniority when shifting from full to part-time work, and vice-versa.

Hunter, & Hunter,(1984) offer the general principle that “What get rewarded gets done,” and they emphasize that the principle must be connected to the organization’s core culture. (Staw,1980)  suggest that recognition and rewards are strongly tied to the ‘culture’ ofa particular workplace, they support that culture, and they are consistent with that culture whether or not that culture is something consciously managed or iterated by the company. Rewards must, in other words, ‘fit in’ with people’s perception of their employer and their workplace. In workplaces where labour-management relations are strained or where workers are distrustful of management’s intentions, people will often react with skepticism when rewards are suddenly introduced.

Water and sanitation Clean water and sanitation are extremely important for positive changes in human development (UNDP, 2006: 5). However, in 2004 only 42% of people in rural areas of SSA had access to clean water and 63% of the population lacked access to basic sanitation facilities (United Nations, 2007b: 2). Progress on improving health and sanitation in SSA is slow and the region is far from meeting the MDGs (UNDP, 2007b: 2). This can be partially explained by the poor representation of water and sanitation in many PRS processes, resulting in limited state support and financing. It can also be explained by the over-estimation of the role that the private sector can play in addressing ‘gaps’ in the water and sanitation sector. Further, returns on past water and sanitation investments are poor, sustainability remains a challenge and sector-wide reforms designed to improve effectiveness and efficiency face various implementation obstacles. While under-funding is a significant constraint, the efficiency of expenditure and appropriateness of technology also contribute to water and sanitation failures (WaterAid, 2006 in Bird and Busse, 2006). It is here too, that we see the impact of poor governance on policy: as the 2006 Human Development Report cknowledges, the ‘global water crisis’ does not exclusively relate to water scarcity, but centrally to power, politics, poverty and inequality (UNDP, 2006: 2). The poor are systematically excluded from access to water by their poverty, limited legal rights or by public policy that limits access to infrastructure that provides clean water. In short, scarcity is manufactured through political processes and institutions that disadvantage the poor (UNDP, 2006: 3).

Evidence from across countries and time periods demonstrates that economic growth and improved productivity are necessary for widespread and sustainable poverty reduction. Indeed, economic growth is often the main factor in reducing income poverty (Bird and Busse, 2006: 6). While economic growth is necessary for poverty reduction, it is far from sufficient (Wiggins with Higgins, 2008). The extent to which growth can reduce poverty depends on a number of context-related variables. Specifically, to harness growth for poverty reduction countries must have certain policies in place so that poor people can participate in growth (Bird, 2008). Three groups of policy issues are critical in this context: agriculture and rural development, market development and trade, and the enabling and complimentary environment.

As noted before poor people are disproportionately concentrated in rural areas, which means that agricultural growth and rural development are key to growth and poverty reduction (Wiggins, 2005: 1; Dorward et al, 2004: 1). In fact, agricultural growth in some countries is responsible for 40-70% of poverty reduction (World Bank, 2005: 38 in Bird and Busse, 2006: 11). Broad-based agricultural growth can increase the income of poor farmers, as well as landless labourers reliant on agricultural employment. Agricultural growth can also have a strong impact on food prices and as the poor usually spend a high proportion of their incomes on staple foods, productivity increases which result in declines in food prices benefit the poor. However, findings from case studies in Malawi and Zimbabwe (Dorward et al, 2004) suggest that only high-yielding and appropriate technologies, combined with extension services and improved access to markets will enable the increasing productivity necessary for pro-poor growth (Bird and Busse, 2006: 11).

In recent decades, though, there has been less emphasis on agriculture and rural development in PRSs and other initiatives. There are two reasons for this. First, was a shift in the global orthodoxy on development which, driven by the Washington Consensus, led powerful donors to focus attention on market liberalisation and the development of the private sector, and to moves to liberalise agriculture markets and reduce government involvement in the agriculture sector. Second, there was a significant reduction in public investment in agriculture, in part driven by a perceived failure of earlier agriculture investment and an increased emphasis on non-farm rural livelihoods (Dorward et al, 2004: 1). To some extent this is being turned round and more importance is being placed on coordinating the activities of those engaged in the agriculture sector (Evans et al, 2006:13). The World Bank’s World Development Report for 2007 titled Agriculture for Development demonstrates this renewed interest (World Bank, 2007b).

In low-income SSA countries, low levels of market access and high transaction costs have been identified as two of the most important constraints to expanding agricultural earnings. Improving market access, and lowering transaction costs, is therefore central to giving farmers and agricultural workers a clear sense of market opportunities at home and abroad (Wiggins, 2005: 1) and increasing the agricultural earnings of poor and smaller farmers (Bird and Busse, 2006: 12). Public investment in transport and transport links, and the development of market policies and marketing chains, are critical to the development of more effective markets (Wiggins, 2005: 1; Bird and Busse, 2006: 12).

Attention to trade-related policies can also have a beneficial impact on the poor. This can be achieved in a range of ways, including lowering import tariffs (to stabilise domestic prices); developing export promotion strategies (to encourage the emergence of domestic traders, improve price transmission, stimulate local supply responses and local demands for unskilled labour, and drive up relative wages for the poor); and relaxing quantity restrictions on imports (resulting in theincreased availability of inputs and the variety of goods for consumers).

It must be noted that trade policies do not automatically translate into benefits for the poor. A wide range of policies are required to ensure these benefits are realised, such as mechanisms for ensuring price signals are transmitted effectively from international to sub-national markets (Nguyen et al., 2007: 1). As we noted earlier, there are structural constraints in SSA that make this difficult to achieve.

Social protection can be best understood as policies and programmes which ‘aim to help poor and vulnerable people manage risk and overcome deprivation, through direct cash or in-kind transfers’ (Marcus, 2007a: 2). These include cash transfers (for example, pensions, disability grants, child benefits, social assistance), input distribution programmes (for example, agriculture ‘starter packs’), employment guarantee programmes, subsidised access to services (for example, health insurance subsidies and user fee exemptions), nutritional supplements and school feeding programmes (Marcus, 2007b: 2-3). Social protection programmes can reduce people’s vulnerability to the shocks and stresses that might otherwise push them further into poverty. They can also help poor people build assets, promote and protect the capacities and well-being of people who are currently poor, help challenge and transform inequitable social relationships that keep people in poverty and contribute to reducing inequality (Marcus, 2007a: 1-2). Social protection takes the form of unconditional payments or payments with conditions attached, and can be universal (for example a statutory minimum wage) or targeted (focused on age, resulting in programmes that deliver child benefits, for example, or impairment, resulting in disability pensions). While tight targeting enables society to transfer resources to a particular beneficiary group, the targeting process itself is resource intensive, commonly excludes too many of the target group or includes too many of the non-target group, requires highly effective systems of management and administration (particularly because the target group is likely to be both mobile and fluid) and can distort the behaviour of the excluded group (as they try to meet the criteria for payments) (Bird and Busse, 2006: 43-44). To be most effective, social protection measures must be complemented by wider policy reforms, legislation and actions that help reduce risks and promote social inclusion and equity (Marcus, 2007: 2).

Increasingly, the role of social protection in development is recognised by donors and African governments as key to poverty alleviation and economic growth (Holmes, 2007: 10). The African Union has pledged its support for social protection programmes, while individual governments, such as Mozambique and Lesotho, have financed their own cash-transfer programmes (African Union, Government of Zambia and HelpAge International, 2005 in Marcus, 2007b: 6). Zambia’ s cash-transfer programme (which is only $6-8 per month) has been found to make notable impacts on food security (enabling people to eat twice a day instead of once) and on access to health care and education (Schubert, 2005 in Marcus, 2007b: 2).

Successfully tackling inequality, social exclusion and adverse incorporation can be achieved by creating legal, policy and regulatory frameworks that ensure that socially excluded groups benefit from public expenditure as much as other groups, that they gain access to good-quality services and economic opportunities, and that they are fully able to participate politically (DFID, 2005a: 9). Attempts can be made to reduce inequality, social exclusion and adverse incorporation legislatively, by creating laws that enshrine universal rights and legislate against discrimination. Strategies to empower excluded or discriminated-against groups can also be adopted (Luttrell, 2007). The problem though, as noted above, is how to ensure that such laws and policies are implemented when there are incentives working against it.

Where such programmes have been adopted, they have had success. In Uganda, for example, the policy of Universal Primary Education, introduced in 1996, has had a positive impact on access to education for girls and other previously excluded groups (Bategeka et al., 2004: 30 in Braunholtz, 2006). Total primary enrolment more than doubled, the ratio of girls to boys increased, and it aided other excluded groups (IDPs, orphans, etc) to at tend schools (Braunholtz, 2006: 11). All over SSA school feeding programmes supported by the UN’s World Food Programme have targeted female pupils in upper-primary school –just about the time they would stop attending classes by providing incentives for their parents (bags of maize,for example) for keeping them in school.

Trade policy for economic development typically centres around the question of how far developing countries should pursue trade liberalisation or ‘open up ’their economy to foreign trade (Winters, 2000). Where liberal trade theorists argue that openness enhances growth others have noted that historically many countries developed behind protectionist barriers (Winters, 2004; Chang, 2002) –indeed, it is arguable that Singapore is the only country to have made the transition from LDC to developed economy under a wholly liberalised trade regime. Moreover, it is now understood that the priority given to trade reform may generate expectations that are unlikely to be met without complementary measures, and may delay other institutional reforms which would have a greater impact (Rodriguez and Rodrick, 2000). Indeed, trade-policy reform cannot substitute for a comprehensive development strategy: it is a mistake to look for a simple relationship between trade liberalisation and economic growth, because trade liberalisation has never been advanced or implemented as an isolated policy, and the only useful question is how it fares as part of a package, including sound macroeconomic and fiscal policies (Baldwin, 2002). For example in East Africa trade-related taxes have accounted for a large proportion of total revenues, and tariff reform has affected revenue flows, at least in the short term, in some states. This has implications for social spending (to alleviate poverty), though region-wide reforms may boost production over a longer period, while institutions are restructured, and jobs created, thus helping the poor (Booth, 2006).

Other growth-enhancing policies must be part of trade liberalization if it is to confer benefits. The fight against corruption is one vital ingredient, with liberalization –especially rationalizing the regulatory system –reducing the scope for ‘rent-seeking behavior. Greater openness can also be a safeguard against inflation and a stimulus to investment. But investment requires incentives, adequate financing mechanisms, a framework of property rights, political stability and peace –all of which are in short supply in SSA. In the final analysis, many of the beneficial effects of trade liberalization depend on other policies and institutions being operationalised. So while there is a fairly strong case for using trade liberalization to promote growth, it must be part of a holistic and properly timed and sequenced development strategy (i.e. introduced over a period of many years) that is ‘owned’ by government.

Industrialization has long been considered the substance of economic development: producing new goods with new technologies and transferring resources from traditional activities to new ones (see Imbs and Wacziarg (2003) for empirical evidence of this pattern). Industrial policy (IP) is therefore more than a narrowly defined group of policies focusing on manufacturing, but is a set of policies to stimulate specific economic activities and promote structural economic change (Rodrik, 2007). The question then becomes what types of policy interventions are best, and what role the state must take in determining these.

Drawing on the East Asian experience, Rodrik (2007) argues that‘ good governance’ has to be seen in part as the ability to generate and implement the policy initiatives needed to alleviate the consequences of market imperfections. Countries such as South Korea, Taiwan and China have developed not by suddenly perfecting their institutions, but by coming up with policies that overcame the market obstacles that their investors faced in modern tradable industries. In any case, almost all governments do use IP in practice to reallocate public resources to specific economic actors, whether or not they explicitly recognise it as such. Provision of tax incentives to foreign investors and the establishment of Export Processing Zones are some common examples in SSA, as in the case of Tanzania for example (World Bank, 2005a).

Economic growth and poverty reduction, for example through rural development, pro-poor growth and pro-poor trade, cannot happen–or at least, will not be effective –without the support of enabling and complementary measures. While there is debate over the precise extent to which governments should be intervening in the economy, it is accepted that they have a role to play in establishing and maintaining conditions conducive to economic growth. This involves appropriate government involvement in enterprise regulation (including anti-corruption measures and corporate governance), taxation policy (to ensure progressive tax policies that place a greater tax burden on the rich than the poor), and financial services and insurance (to ensure that the poor can access the financial services necessary to invest in enterprises and insurance to protect them from risk). Such an environment promotes foreign investment and productivity.

Motivated mainly by the need to cut fiscal deficits, the 1980s saw the emergence of a strong privatisation agenda as part of the‘ Washington Consensus’. This promoted an increased role for the private sector in the delivery of services, and the opening of markets to competition (Estache et al., 2006). This vision involved a transition from taxation to user fees as the principal source of financing and left only a residual regulatory role for governments, which included managing the privatisation and restructuring of public utilities and services, and subsequently regulating the remaining monopolies.

The latter is particularly important, since most services provided through networks (e.g. electricity, water, rail) are natural monopolies, in that it is cheaper to have a single provider in a given area rather than several.

This means that governments cannot be sure at private operators will pass on some or most of the savings that result to users in the form of lower prices or better service. They therefore regulate prices (through tariffs), service quality and coverage, in an attempt to protect consumers from potential monopoly abuse and advance common social interests. Reformers also promised improved efficiency and social benefits, such as wider access, more affordable services, and better service quality. Finally, it was argued that privatisation would lower corruption by reducing the control of government over the rents offered by its direct operation of public services (Shleifer and Vishny, 1993).

However, the private provision of large-scale infrastructure services in particular, has neither been as successful nor as widespread as initially predicted and the state is again seen as a more prominent actor in infrastructure development.

The high costs involved of infrastructural development and limited capacity of users to pay also give the donor community a central role in financing public investment. Regarding public utilities, part of the rationale for their privatization was that self regulation by the state or by the public enterprises themselves was open to conflict of interest and political interference at the expense of users. This implied the creation of autonomous regulatory agencies which would enjoy their own sources of revenue and be operated by industry experts recruited on merit for fixed term contracts. This was also seen as a means of increasing transparency in decision making and signalling to markets that governments were willing to cut regulatory risks. However, evidence suggests that the results of privatising and regulating utilities has been mixed.

Political and bureaucratic corruption are key barriers to economic development and poverty reduction (Rock and Bonnet, 2004; Dreher and Herzfeld, 2005). As a result they have received significant attention since the 1980s, including a deeper analysis of its origins in the last ten years. In those decades significant progress has been made on measuring it and understanding its implications. The most widely used measures of corruption are quantitative aggregates and include Transparency International’  Corruption Perception Index (CPI) and the World Bank’s Kaufmann, Kraay and Zoido (KKZ) indicator on ‘Control of Corruption’. These are not objective measures, but are instead perceptions- based, reflecting the overall degree of corruption perceived to exist in a country based on aggregates of data from different sources. They provide only a degree of cross-country and inter-temporal comparability. As such, these indicators should be treated with great caution.

Most types of reforms that have been advocated –whether narrowly focused on corruption, such as anti-corruption commissions, or broader reforms, such as pursuing public financial management (PFM) reforms, democratisation, and privatisation–have not brought the hoped for results. African anti-corruption commissions are notoriously weak; they are undermined by political manipulation that takes a number of forms, including by the government appointing commissioners, under-funding, and refusing to prosecute well-connected individuals.  In recent years it has been recognised that transformational processes, such as democratisation and privatisation, may actually lead to more corruption. This is because such reforms (often transplanted directly from established liberal democracies) neglect the informal norms and practices common in SSA that underpin corruption and may legitimise it, and undermine formal institutional incentives. Thus, despite anti-corruption efforts supported by donors, much of SSA is characterised by high levels of corruption. This is reflected in available indices which show no aggregate improvements over the past 10 years (Kolstad et al.,forthcoming).

Low levels of productivity (in manufacturing and agriculture) and lack of capital are key causes of poverty in Africa. As a result, access to finance (including loans, savings accounts and insurance services) is receiving ever greater attention from policy makers. There is growing evidence regarding the positive contribution that finance makes toward growth (Levine, 2005) and for escaping from poverty (see Demirg üç-Kunt (2006) for an overview). Finance also exerts a disproportionately large positive impact on the poor and thus reduces income inequality (Beck et al., 2004). Not surprisingly, though, small enterprises and poor households find it much harder to access finance than others do, largely because of high costs and risk. The lack of agricultural credit has often been attributed to the inability of local financial institutions to diversify the high risk stemming from agricultural activity. But financial institutions have only limited control over their costs and risks because of ‘state variables’ that do not change in the short-run and affect all financial sector activity, such as macroeconomic fundamentals and the costs of doing business generally. Again, the role of the state and its leadership in creating the right environment is evident, for instance, in dealing with regulatory distortions and creating market-development policies. Meanwhile, private sector and non-governmental organizations have had some success with small credit schemes, especially in aiding women to start small businesses. A ‘ladder’ is necessary for such micro-entrepreneurs, which enables them to invest, accumulate assets and then borrow more securely.

In principle international assistance has always sought to promote capacity development. Unfortunately, western donors have often provided their own one-size-fits-all prescriptions, which may not be in tune with country priorities, and do not take sufficient cognisance of the deep social forces constraining change and maintaining poverty. Thatsaid, improving capacity is key to development. As we have seen above, building the capabilities of poor people (particularly through education and health) and reducing discrimination (i.e. distortions in labour and investment markets) are crucial if growth is to be pro-poor –otherwise poor entrepreneurs cannot identify and respond to opportunities and poor labourers are likely to remain stuck in adverse labour conditions. Moreover, efforts to do so have been successful in some instances, for example in Burkina Faso, where a redesigned Health and Nutrition Project succeeded in developing a participatory planning and budgeting process that involved communities and other stakeholders in setting priorities and in providing direct central government funding to local districts, coupled with adequate autonomy and flexibility in the use of resources (World Bank, 2005b).

In the last fifty years Asia’ s economies have ‘taken off’ while Africa has stagnated. Between 1960 and 2005, real income per head in the 48 countries of SSA rose on average by 25%. As we have seen such increases were not enough to tackle poverty and in East Asia, real income rose 34 times faster. In the 1950s, South Korea was as poor as Ghana and Kenya. Now, South Korea is the world’s ninth-largest economy. This economic stagnation in SSA has occurred in spite of the‘ third wave’ of democratisation (Huntington, 1991) washing over SSA and the many billions in foreign aid and investment put into Africa since 1990. These facts have led to deep reflection by western donors about their aid policies, specifically about how better to deliver assistance (aid modalities and aid architecture), the amount of money needed –and in which sectors –to really make a difference (Commission for Africa, 2005), and the deep structures and processes within African society that arrest reform and undermine the effective use of aid.

While the Paris Declaration focuses on a fairly narrow definition of ‘aid effectiveness’ related to aid delivery and management, there is less said about ‘aid quality’ and whether the delivery of the Paris indicators would actually result in better development outcomes. A recent survey of stakeholders in a number of recipient countries indicates that they regard speed of disbursement, flexibility in the types of funding provided, extent of national participation in programming and transparency as important aid-effectiveness criteria (Burall etal., 2007). Some authors have sought to expand the concept of aid effectiveness beyond the Paris Declaration agenda. In keeping with a new emphasis on local context, Booth (unpublished) stresses that the quality of institutions, defined as the ‘rules governing economic and political action’, are key determinants of the ability of poor countries to make good use of aid. Given this importance, he argues, ‘it makes no sense to have a concept of aid quality that does not include in a central way the ability of aid to exercise a positive influence on institutional change. ’The principal standard of aid quality might be summarised, then, as its ability to contribute to institutional changes that enable resources to be put effectively to developmental purposes. How exactly to do this should be the basis of future research.

The externality is the social consequences of poverty for the rest of the society. This implies that poverty is a societal problem. This latter viewpoint however, contrasts sharply with those of Morril, et.al (1973) who have reasoned that poverty is the outcome of the inability of certain sections of the society (at individual levels), to compete successfully in a competitive world.

Because poor governance is so detrimental to poverty reduction and because the ‘spill-over’ effects of poverty-related instability are global, state building has become an important development objective for most bilateral and multilateral doors, particularly those working in‘ fragile states’ (Cammack, et al., 2006). The growing commitment of donors to state-building is reflected in the expanding sets of activities being carried out in unstable areas from Central Asia to Latin America (Fritz and Rocha Menocal, 2007). New ways of looking at sovereignty, and the role of the international community in ensuring stability (i.e., on the right and duty to intervene) are being debated as well. The growing donor interest in building more effective states is also arecognition that poverty reduction is most intractable in fragile, conflict-affected and post-conflict states and a general acceptance that good institutions are crucial for sustained development progress. State building carries with it many inherent tensions in that not all the desired outcomes are compatible and some must be prioritised and a sequence of reforms established, according to individual national context. In state building hybrid-state politics becomes an important determinant of success as well.

Development aid has responded to poverty, slow economic growth and poor governance in SSA in a wide variety of ways. This paper focused on two overlapping strands of poverty reduction policy: the first with a strong poverty focus, directly tackling the causes and consequences of poverty, such as poverty reduction strategies, the Millennium Development Goals (MDGs), building capabilities, pro-poor growth, social protection and inclusion, as well as empowerment and anti-discrimination. The second has a strong focus on economic growth, as an indirect means of addressing poverty, with strategies including trade, investment, industrial policy and infrastructure. Both sets of policies require the state to establish enabling and complementary measures to support them. While there is debate over the extent to which governments should be intervening in the economy and society, it is accepted that they have a role to play in establishing and maintaining conditions conducive to economic growth and poverty reduction.

Exclusion from political, social and economic institutions is part of a vicious cycle that leads to low capability levels, which in turn reduces the ability of the people to escape poverty and’  horizontal inequalities’ (inequalities between groups defined according to ethnicity, gender, region, religion, and so on) make up a significant proportion of overall inequality (Stewart, 2004 and World Bank, 2005: 40-43 in Inter-Regional Inequality Facility, 2006). Commonly, exclusion results from various forms of active discrimination, directed against certain people (e.g. who share ethnicity, religion, or culture). It may be reinforced by discrimination on the basis of personal characteristics, such as gender, age or impairment (CPRC, 2004: 37). This can lead to favouritism (e.g., the Chewa under Dr Banda in Malawi), to inequities such as the San face in Botswana, or inthe extreme cases, to violent conflict as in Rwanda in 1994.

Inclusion can also be problematic at times, for it sometimes drives and maintains poverty. For example, many of the poorest people are Included in economic activity, but on unfavourable terms (CPRC, 2004: 37). This ‘adverse incorporation’ reinforces inequalities by, for example, forcing people to take low wage work, in bad conditions and on uncertain terms (CPRC, 2004: 38; see also Hickey and du Toit, 2007). This is seen on tobacco and other estates where people (even children) have little choice but to work for extremely low rates of pay and live in intolerable situations.

Inequality, exclusion and adverse incorporation play out in a number of sub-Saharan African countries. Because ethnicity is a key defining characteristic in Africa, it drives discrimination, conflict, state formation, political alliances, economic choices, etc. (Mamdani, 1996 in Hickey and Du Toit, 2007).

Ethno-territoriality (where ethnicity overlaps with territorial claims) plays a central role in determining wealth and poverty as well as access to resources and political power. In places, state formation along ethno-territorial lines has created poverty traps for entire peoples and regions (Hickey and Du Toit, 2007: 9-10). Inequality, exclusion and adverse incorporation also play out in relation to gender in SSA. Certainly African women have far fewer political positions and senior business posts, a direct result of gender discrimination. Not only do aspiring women not reach their full potential, but gender discrimination ensures that women –particularly elderly women and female-household heads –bear the brunt of the shocks and costs that flow from the

HIV/AIDS crisis (du Toit and Neves, 2007 in Hickey and Du Toit, 2007).

Taken together, risk and vulnerability, low capacities, inequality, exclusion, adverse incorporation and limited livelihood opportunities combine to keep many Africans poor. An organised, visionary, consistent and determined effort to reverse these and other contributors of poverty is therefore needed. Going beyond that, development initiatives and pro-poor economic growth is necessary to raise income levels, provide all people with the capacity to aspire and improve their lives, and to reduce inequalities and vulnerability to risk. This requires commitment by leaders, policy formulation, an effective civil service, the rule of law and other governance reforms. Donors have attempted to kick-start this development process where it is weak, and to support it where it exists, but with mixed results. Before analyzing the role of donors, though, we will explore the role that domestic governance plays in maintaining high levels of poverty in Africa.

Decisions that affect development are often made by informal networks of influential people (though some of these may have formal positions in government) according to their highly personalised logic. Public bureaucracies in such states are subject to tests of loyalty rather than appointed and retained on merit; implementation of polices that run counter to elite interests is likely to stall as a result. In such an environment it is difficult for the voices of the poor to be heard, or their interests to be considered fairly. Discriminatory practices based on religion, regionalism or tribalism may help the elite retain support (and win votes in preferred areas) but hurt whole groups of people and impede their climb out of poverty. Such behaviour is most obvious at election times when incumbents use these ‘informal ‘practices to win support even when they haven’t created a state capable of delivering goods and services or of producing an environment where economic ‘winners ‘can emerge. Such behaviour is also seen in states suffering from a ‘resource curse’, where management of valuable public goods, such as hardwood forests and minerals, is self-serving and non-developmental.

The poor are able to achieve short-term gains from this system by supporting a patron who shares some of his wealth. This strategy is most visible at election time when leaders are hoping to win support by delivering goods (and promises of development) to voters. For instance, the incumbent in Malawi’s 1994 presidential campaign distributed relief maize, while the President in 1999 handed out seed and fertilizer –none of which alleviated poverty over the long run. President Museveni created new districts partly to appease local ‘notables’ during the run-up to elections in Uganda, though this process did little or nothing to improve service delivery or reduce poverty levels in rural areas (Cammack, et al, 2007). Land-invasions in Zimbabwe were permitted for followers when Mr Mugabe was faced in 2000 with the real possibility of losing an election –a move that has brought famine to his country.

The abuse of public office for private gain is the normin such states. This is manifest in a number of different ways. Certainly bribery and kickbacks for public procurement and for escaping taxes and customs charges are common. The embezzlement of government funds, and the sale or misuse of government property are seen frequently. For instance, civil servants will establish small supply companies simply to provide goods at inflated prices to the ministries where they work. On a larger scale, public licenses are doled out to political favourites so they can monopolise telecommunications networks or IT services (ARTICLE 19, 1998). Such practices slow the development of public services (mobile phone networks, for instance) and raise their costs. Privatization of state companies in the last decade or so has benefited insiders everywhere, sometimes at the expense of more equitable growth.

Amoral economy of corruption’ exists in much of SSA. When a ruler’s wealth was not separated into public and private coffers historically, any leader who was not generous with his resources was considered illegitimate. So today the act of stealing government funds and handing out some to favorites is not necessarily viewed as corrupt or illicit. Not surprisingly, then, corruption appears to be more prevalent in countries with poorly functioning formal institutions and weakly integrated accountability mechanisms, i.e., where traditional ‘informal’ ways of thinking and behaving remain more vibrant and where rational-legal institutions are not yet embedded. When corrupt behaviour becomes predatory–such as it did under Frederick Chiluba in Zambia, when millions of dollars were diverted to the President and his associates (Smith, 2007) –it affects economic growth, the delivery of services, and poverty-reduction. Corruption with impunity at that level begets corrupt practices throughout the civil service and society.

African national boundaries are largely a colonial heritage; they were laid down with little regard for the local residents’ identities. This has resulted in countries that are marked by ethnic and religious diversity, which has been transformed into ethnic and religious conflict (at local or national level) by unscrupulous politicians, resource constraints, and discrimination. The Rwandan genocide is a case in point, but so are conflicts in Darfur and northern Nigeria. In many countries, large territories are outside the control of the central government, and warlords rule through force of arms, which they often acquire by selling‘ blood’ resources (diamonds, coltan, timber, etc.).

This is the case today in the Democratic Republic of the Congo, and in the previous decade inseveral west African countries. In other words, in many African states the process of nation-building is incomplete. Moreover, legal-rational state institutions are weak in countries where they compete with vibrant informal institutions or where they are deliberately emasculated to serve a political or economic agenda (Medard, 1982). There are in fact few political or economic incentives for the elites to relinquish control to formal state structures and institutions, and this in turn stalls economic development.

Most Africans live rurally. Many know little of the world outside their villages, except what they hear on the radio. Getting to schools, clinics, towns and the capital city is difficult due to poor roads and transport links. In many countries people living in one region have little contact with, or knowledge of those living in other areas. Taken together this creates a society that prioritises local connections (family and clan, tribal, religious, regional) rather than a shared national identity. It is also difficult for them to relate to the problems of those hundreds of miles away, or if they do, to organise for change.

This is what is meant when analysts speak about African civil society being ‘weak’. The citizenry ’s voice is rarely heard, it has few locally based but nationally influential organisations, and it cannot hold the distant, relatively powerful central government to account. Donors support NGOs, most of which are based in the capital city and run by people living there. They may have linkages in the rural areas, but rarely do local-level communities set NGO agendas ordecide how to spend their funds. Finally, as noted before, rural people still relate to local ‘notables ’and patrons as they have for generations, and may not actively seek alternative ways of accessing goods or services. In much of SSA they certainly cannot depend on the state to deliver them.

At the start of the new Millennium, the prospects for African development seemed bleak. With few exceptions, economic indicators were discouraging, corruption, civil conflict or dictatorial states were prevalent, and infrastructure was dilapidated or non-existent (Bertocchi & Canova, 2002: 1853; Moyo,2010: 3). In the last decade, however, there have been signs of marginal improvement across the continent. Many African economies have achieved annual growth rates exceeding 5 percent consistently (OECD, 2014: 22). The majority hold some form of democratic elections and have improved in holistic indices such as the inequality adjusted Human Development Index (HDI)  (UNDP, 2014: 2).

There are three features that have facilitated the potential opportunities suggested by these indicators in the past fifteen years. First, the price of raw commodities such as oil, copper, coffee and rare minerals has risen, fuelling exports in African economies that have benefitted from foreign investment in ‘extraction’ infrastructure and a higher demand for luxury consumer goods from the burgeoning middle classes in other developing regions (OECD, 2014: 34l; Broadman, 2007: 3-4). Second, and contrary to the “hopeless “label which accompanies Africa’s social indicators, there have been some noteworthy advances, with the rate of HIV falling across the region and rising primary education attainment (Economist, 2011;Barro & Lee, 2013: 43). Third,

Democratization in sub-Saharan Africa has increased, with 600 million Africans expected to elect their own leaders in 2014-15(Mozaffar, 2002: 86; OECD, 2014: 18).

Persistently high poverty indicators suggest that Africa’s economic performance has “decoupled” from the development trajectory of the rest of the world (Kose et al, 2012: 512). Given the historical origins of Africa’s extraverted political and economic relationship with international actors and the intrinsic role that the IMF and World Bank have played in the last thirty years of Africa’s development, acritical understanding of the origins of the contemporary Poverty Reduction Strategy is required

With conditional debt-relief from the IMF and World Bank, African governments adopted the new reform agenda readily : dismantling State marketing boards, reducing inflation, removing trade protections, and divesting and privatising more than half of the state-owned enterprises and industries in the region (Oyejide, 1997: 12; Nellis, 2003: 113).

The extent to which economies were integrated within global accumulation circuits was often seen as synonymous with ‘development’ which was entrenched in a causal logic of participation in the global market, facilitating growth and thereby increasing the prosperity of the participants (Rist, 2002: 211).

Such was the political impetus behind these reforms that Williamson (2000: 251) himself protested, particularly over the extent and rapidity with which financial liberalisation was pursued in the developing world. Nevertheless, the implementation of market reform as a conditionality of debt-relief and concessional finance was perceived by critics of the International Financial Institutions (IFIs) as an overtly ideological promotion of ‘market fundamentalism’ and a universal ‘neoliberal’ solution to the challenges faced by developing countries (Rodrik, 2006: 982).

The predominance of a‘neoliberal consensus’ in development policy cannot be understood solely in terms of the prevalence of fundamentalist neo liberal ideas such as privatisation, deregulation and marketisation in development discourse. It is also (and arguably primarily) a result of the changing social relations between capital and labour in a trans-nationalised structure of production and accumulation (Cahill, 2013: 81; Harvey, 2005: 110).

The increasingly ‘globalised’ composition of the capitalist system was presented by the IFIs as a remote and inexorable phenomenon which required heavily-indebted African countries to implement ‘pragmatic’ structural and sectoral adjustments to ‘participate’ and benefit from global markets (World Bank, 2001: 25; OECD, 2014: 18).

The fragmentation of production structures precipitated by technological innovation since the 1970s has, in some accounts, determined the predominance of ‘neoliberal’ policy responses designed to utilise the mobility of capital and enhanced export

Networks as a means of enhancing Africa’s position in the international market (Kotz & McDonough, 2010: 93; Garrett, 2000: 941).

IMF have been instrumental in designing and imposing a framework and context that facilitates and extends access to, and participation in, global accumulation circuits for African political economies (Gilpin, 2001: 331; Gill, 1995: 400). However, the IFIs are not driven solely by the imperative of capital to continually expand to new markets. As institutions, the World Bank and IMF are social structures, within which and through which social forces act upon the world (Rückert, 2007: 96). The predominance of neoliberal policies and strategies of global accumulation that are manifest in the SAP and PRS are actually the product of a historically conditioned moment of global capitalist social relations and are a contingent product of contestation between states, capital and social movements (Taylor, 2005: 154).

The neo liberal structure of globalised accumulation is a non -hegemonic system, and has increasingly been maintained by the use of coercion to condition social relations and resolve social conflicts (Ferguson, 2006: 43; O’Brien, 2000: 218). This non-hegemony manifested itself in sub-Saharan Africa in the resistance of African governments and social movements to the IFI’s strict conditionality on debt-relief that were perceived to exacerbate worsening social and economic indicators (Prempeh, 2006:93; O’Brien, 2000: 218).

By the mid-1990s, structural adjustment had proved an ineffective or incomplete solution to Africa’s economic performance and debt crisis, with widespread poverty becoming an entrenched feature of the African economic landscape (Kingston et al, 2011: 114)

The international contestation of the IFIs legitimacy in promoting development reform (most notably in ‘IMF riots’) necessitated a transition to a revised strategy for delivering debt-relief and alleviating poverty in Africa (Sahn, 1994: 21).

Debt-relief was re-designed to ensure that the financial aid channeled to impoverished governments was utilized for increased social pending targeted at alleviating poverty. Under the Enhanced Heavily Indebted Poor Country Initiative (HIPC2), countries were required to complete anex ante conditionality of three years compliance with IFI-approved macroeconomic policy before reaching a ‘decision point’ as to whether it would be eligible for debt-relief. When this condition was met the country composed a Poverty Reduction Strategy Paper (PRSP) setting out a wide-ranging summary of macroeconomic and social policies as well as an estimate of debt-relief required to fund a plan for social services over three years.

The notion of ‘country ownership’ became a central facet of the PRS for two interrelated reasons. On the one hand, the difficulty of enforcing reform on sovereign political actors, even heavily-indebted ones, demonstrated that the IFIs lacked the means to effectively enforce their development strategy unilaterally (Craig & Porter, 2006: 23). On the other, there was a perceived need to emphasize the specificity and legitimacy of the PRS in a way which necessitated approval from national governments. Through national ownership, the PRS aimed to ‘re-territorialise’ development policy, emphasizing a commitment to displacing universal solutions with more contextualized and nationally-owned approaches involving consultation with a broad range of stakeholders, (Hickey, 2012: 684).

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This section presents the research methods that were used to carry out the study. It covered the research design, Area of study, target population, sample design, sample size, research instrument, and measurement of variables, Data Collection Procedure, data analysis and anticipated problems of the study.

3.1 Research Design

A case study design was adopted for this research.  They provide an in depth study of a particular situation. The study also used qualitative and quantitative methodologies for data analysis. Quantitative and qualitative methodologies was used in examining the influence of employment on poverty reduction; Quantitative research consists of those studies in which the data concerned can be analyzed in terms of numbers while qualitative describes events, persons and so forth scientifically without the use of numerical data. Quantitative research was based more directly on its original plans and its results are more readily analyzed and interpreted. Qualitative research is more open and responsive to its subject. (Christina Hughes, 2006)

3.2 Area of the Study

The study was conducted at the Namanve industrial area, a Plant of Century Bottling
Company Limited located at 4042 Jinja road Kampala (u).

3.3 Target population

Sekaran (2003) defines a population as the entire group of people, events or things that a researcher wishes to investigate. The entity comprised of 239 employees, while the researcher targeted total of 149 employees using krecie and Morgan technique of sample size determination.

3.4 Sample Size, Techniques and Selection

Mugenda and Mugenda (2003), argue that it is impossible to study the whole targeted population and therefore the researcher shall take a sample of the population. A sample is a subset of the population that comprises members selected from the population.

The study will use solvin’s formula

It is computed as n = N / (1+Ne2).

whereas:

n = no. of samples

N = total population

e = error margin / margin of error

Coca cola Kampala Uganda has 239 employees in managerial positions using solvin’s formula,

n=       239/(1+239(0.05)²

n =      239/1.5975

n  =149

There researcher will therefore choose a total of 149 employees.

This sample population was chosen because the organization has a large number of workforce and the use of solvins formula was necessary to enable the researcher easily arrive at the sample population which could be manageable this was necessary.

Table 1: Population, Sample size and Sampling technique

3.5 Data Collection methods

The major instruments for data collection were questionnaires and interview guide. Surveys were just one part of a complete data collection and evaluation strategy. The major method of data collection for the study were the survey, which was done using selected instruments like questionnaires. The questionnaire provided respondents with ample time to comprehend the questions raised and hence, they were able to answer factually.

3.5.1 Questionnaires

The questionnaire was used to collect quantitative data. The researcher administer the questionnaires to respondents in different departments, which was designed basing on study objectives and questions. Respondents read and wrote the questionnaires themselves. The questionnaires were close ended and was considered convenient because they were administered to the literate and its anonymous nature fetched unhindered responses.

3.5.2 Interviews

Qualitative data was collected from the informants using interviews. The interview guide was structured. The interviews were held with administration and finance staffs, and took approximately thirty to sixty minutes. This was used since it’s the best tool for getting first-hand information /views, perceptions, feelings and attitudes of respondents. Both formal and informal interviews were used to get maximum information from the different respondents to participate in the research.

3.6 Research Instrument

Questionnaires were used to obtain the necessary primary data to answer the research questions and achieving the research objectives. The questionnaire was designed in a manner that motivates respondents with simple structured questions with the option of providing any addition information to the structured questionnaire as an option to obtain relevant data from them. Secondary data was obtained through reading and reviewing existing records of related information to the influence of employment on poverty reduction, reports, published articles, and journals.

Validity and reliability tests were carried out to ensure accuracy and usability of the instrument.

3.7 Measurement of Variables

A five point Likert ordinal scales ranging from; strongly agree which was assigned 5, strongly Agree, 4 agree, Not Sure assigned 3, disagree allocated 2 and strongly disagree allocated 1 to obtain responses on the variables. The Likert ordinal scale has been used by numerous scholars who have conducted similar studies such as Bowling, (1997).

3.8 Validity and Reliability

The data collection tools were pre-tested on a smaller number of respondents from each category of the population to ensure that the questions are accurate clear and in line with each objective of the study.

3.8.1 Validity

It is the degree to which results obtained from the analysis of the data actually represents the phenomenon understudy, (Mugenda& Mugenda, 2003).  To ensure validity of instrument close guidance of the supervisor was adopted. This helped to identify ambiguous questions in the interval and be able to re-align them to the objectives.

3.9 Data Collection Procedure

The researcher obtained an introductory letter from the University to enable easy access to information by the researcher from coca-cola. The procedure of data collection was based on the research objectives and questions.  A review of related literature was done.  Questionnaires were pre-tested and review of the questions was done when necessary to ensure reliability and suitability.

3.10 Data Sources

Source of data was from both primary and secondary sources.

3.10.1 Primary Data

Primary data was obtained from well-designed questionnaires structured to obtain relevant data and to gain opinions and practices on the influence of employment on poverty reduction.

3.10.2 Secondary Data

Secondary data is data which has been collected by individuals or agencies for purposes other than those of a particular research study. It is data developed for some purpose other than for helping to solve the research problem at hand (bell, 1997). Secondary data was obtained from company reports, published articles, journals and company publications relating to the influence of employment on poverty reduction.

3.11 Data Process and Analysis

Data analysis involved the use of both quantitative and qualitative techniques.

Data processing was done by entering the data into a statistics package for social sciences (SPSS) in line with the research questions. Data analysis was done by also using this statistics package for social sciences (SPSS) to formulate frequency tables where the mean, variance and standard deviation were obtained.

3.12 Limitations

The researcher lacked adequate resources for some of the research activities. In addition, the information required in the study was hard to be extracted from the respondents as it may be viewed as confidential.

CHAPTER FOUR

PRESENTATION AND ANALYSIS

4.0 INTRODUCTION

This chapter presents the results in reference to objectives in chapter one, Gender of respondents, Age of respondents, Education level of respondents, Range of years worked at coca-cola by respondents, The Effect of contract employment on poverty reduction among coco-cola employees, The relationship between permanent employment on poverty reduction among coca-cola employees and the causes of poverty among employees of coco-cola bottling company.

4.1 FINDINGS ON GENERAL INFORMATION

4.1.1 Findings on the educational level of respondents

In relation to the sampled offices of interest for data collection, below is the table showing their responses or representation.

Table 2: Showing educational level of respondents

Source: primary data

According to the findings in the study majority 53% of the respondents assert that they have a bachelor’s degree, 28% of the respondents had a postgraduate qualification, 7% were diploma holders and 3% were certificate holders this indicates that most of the respondents in coca-cola were well educated and therefore could comprehend the study topic and give correct answers.

Figure 1: Showing educational level of respondents

According to the table above the results indicates that most of the respondents were degree holders, the second largest percentage were bachelors, post graduate diploma, diploma, certificate holders and the remaining percentage of the respondents did not have any academic qualification.

4.2 Findings on the duration employees of employees

Table 3: Showing the duration of employees

Source: primary data

According to the findings in the study 36% of the respondents had worked for 4 years and above this indicates that most of the respondents have knowledge regarding the poverty level of the employees at coca-cola, this study results therefore indicates that the researcher was able to get information from experienced employees.

The results in the study indicates that 26% of the respondents have stayed at coca-cola for years of 2-3 years, 24% of the respondents had worked at coca-cola between 3-4years, 8%  of the respondents in coca-cola had worked for 1-2 years while only 5% of the respondents had worked for less than 1 year.

Figure 2: Graphical representation of on the duration employees of employees

Source: primary data

The findings in the study shows that 37% of the respondents have worked for less than one year, 24% have been at coca cola between 3-4 years, 26% have worked for 2-3 years only.

Figure 3: Showing the duration of employees have been working

Source: primary data

The pie-chart above indicates that most of the respondents have worked for four years and above showing that they have the skills necessary for the answering of the questions asked by the researcher.

This response further indicates that most of the employees in coca cola are well informed of the organization and therefore they have well detailed information regarding the subject topic.

Table 4: Showing findings on the role of employees at coca-cola

Source: primary data

Table above shows that 41% of the respondents were accounting officers, 22.3% were managers, 27.7% were technical managers and only 8.8% of the respondents were middle managers in the organization this shows that the organization was able to get information from the right respondents.

The results further indicate that the study was able to get information from the right respondents who have enough information regarding the study topic.

Graphical representation on the findings on the role of employees at coca-cola

Table 5: Showing findings on Effect of contract employment on poverty reduction among coco-cola employees.

Source: primary data

According to the results in the study, the mean value of 3.7 indicates that most of the respondents agree with the fact that Employees who work on contracts are paid fully, this results also indicates that employees of coca-cola are paid fully their salary this view is also shared by  Foote, (2004) who states that Contract employment is perceived as resulting from continuous changes in the working arrangement around the world and has become a key concern in the last three decades , however when employees work on contracts they are paid their salary fully as stated in the contract.

According to the findings in the study most of the respondents disagreed that the salary given to employees is not enough, this results in the study indicates that employees are not happy with the salary they earn at coca-cola, this is also in line with Druker and Croucher, 2000) who states that  Some firms use the short term employment condition as a pseudo-probationary period to preview workers from whom they screen out those who fail to meet performance criteria or do not otherwise “fit” the organization, or extend an offer of long-term employment to desired individuals, however in the beginning part of the contract when the employees are still in probation they are paid a smaller amount of salary.

The findings in the study indicate that most of the respondents strongly agreed that employees who sign contracts feel secure with their jobs , this is also in line with Foote and Folta, (2002) who states that firms may find significant benefit in developing a stronger, more meaningful employer-employee relationship with their short term workers. Individuals‟ inspiration to enter the short term labor market vary broadly and at times include the inability to secure more desirable or permanent work, or a desire or need for retraining or for greater choice in when and where to work.

The findings in the study indicates that most of the respondents agreed that Employees in permanent employment have high income , this is shown with a mean value of 3.52  indicating that employees in permanent and managerial position earn a slightly high income that other employees this view also shows that most of the employees that employees in permanent position are well experienced have worked in the organization for longer time therefore they have been given to earn higher salaries than the other.

The mean value of 3.92 in the table shows that most of the respondents hold the view that there is significant relationship between employees and management, when there is a good relationship between the employees in an organization and the management then there is increased out put and productivity (Kalleberg, 2000) who states that Due to the rapid innovativeness in science and the ever increasing competitiveness, companies have established policies of flexibility and adaptation to the economic changes in order to keep profits as high as they can Given that employment situations all over the world has become more competitive and unstable, however organizations also ensure that they can keep relationship between employees at their best.

According to the findings in the study the results shows that Employees feel contented with their salary at their work place, this results indicates that coca-cola pays employees decent salary for their survival  and it also further indicates that  employees that they are given a good salary for the good work done at coca cola.

The results in the study indicates most of the respondents disagreed that coca-cola company pays salary basing on the level of  inflation in the country, these results indicates that the company does not consider the level of inflation in the country while paying employees which may affect their standard of living this is also in line with Narayan et al, (2000) also states that Poverty is among the employees in an organization because of inflation when the inflation is high and the salary remains stagnant the poverty level of the employees is high.

According to the table above the mean value of 3.66 shows that most of the respondents hold the view that the per capita of employees on permanent employment is above the national average, this shows that the coca-cola employees are living better lives than ordinary citizens in the country this view is also shared by Nkum and Ghartey (2000) who states that the majority of the poor are engaged in food crop cultivation as their main economic activity, in contrast to those engaged in private formal and public sector employment that are the wealthiest. Extreme poverty is concentrated in certain rural areas whereas the wealthiest sectors of the population are located in the larger urban centers, among the people engaged in formal employment.

The results in the study indicate that most of the respondents strongly agreed that Employees in contract employment can afford their daily meals, this shows that the poverty levels among the employees in coca-cola is low  this is also in  line with  Rendon, (2006) who states that Due to globalization in the modern employment today there has been a change in the, The employment contracts have now changed due to global need for quality employees for firms to ensure that there is competitiveness  management process is now increasing in importance as employees are supposed to deliver quality and value to their employers. Some organizations are using process capability maturity models to assess, measure, and improve critical core processes, such as software development and project management.

According to the findings in the study most of the respondents assert that Standard of living of employees at coca-cola is above the national average 3.94, these results show that most of the respondents hold the view that standard of living of employees is necessary.

According to the findings in the study most of the respondents in the study strongly agreed that Employees feel motivated to work daily, this indicates that employees feel good about what they do this is also in line with Sanderson (2003) who states that empowerment creates motivation and energy in workforce to do their work efficiently and effectively , while Kuo et al. (2010), recommended that together the job characteristics of career revamp and employee empowerment are imperative characteristics in giving greater employee dedication and trustworthiness toward the organization and increased level of motivation.

Relationship between permanent employment and poverty reduction

Table 6: Relationship between permanent employment and poverty reduction

Source: primary data

Relationship between permanent employment and poverty reduction

The results in the table shows that the mean value of 1.79 shows that majority of the employees disagreed that permanent employees are many in the organization, these results shows that there are few permanent employees in coca-cola , it further proves that coca-cola does not give most of its employees permanent contracts this is also in line with (Okpara, 2011) who states that The argument for developing and implementing strategies to reduce poverty by increasing productive employment opportunities in both urban and rural areas is compelling. Persistently high level of poverty is attributed partly to the jobless growth of economies, and has led to an emphasis on small businesses development as a catalyst for job creation and poverty reduction however the poverty is still among the employed people due to low salaries and poor productivity.

The mean value of 1.33 in the table above indicates that most of the respondents  disagreed that employees in  permanent employment are rich, the findings further proves that employee are not rich this shows that most employees are paid salaries that is enough form them to use in meeting their daily needs and therefore they cannot save for investment.

According to the findings in the study the results indicates that most of the respondents disagreed with the fact that Employees in permanent employment can save part of their income, these results further indicates that employees in coca-cola cannot save part of their income this is also stated by Tan & Tan, (2002) who states that it is assumed that the replacement of permanent workers with temporary, on-demand workers creates a flexible workforce that can respond quicker and more cost efficient to changing business conditions.

While Sprigg, & Wall, (2002) further states that Temporary employment contracts allow employers to respond cost effectively to fluctuating markets by laying off and rehiring employees.

According to the results in the table above most of the respondents hold the view that it is hard for employees in permanent employment to find jobs elsewhere, this shows that the level of unemployment in Uganda is high and affects everybody this indicates and therefore employees in coca cola may not be willing to change their jobs to another company due to high level of uncertainty in jobs.

According to the findings in the study most of the respondents disagreed that Employees in permanent employment can set up business, this shows that employees in coca-cola do not have enough capital to start up a business and therefore they cannot start up a business.

According to the results in the study majority of respondents disagreed that Permanent employees are happy with their jobs, this shows that employees are not happy with their jobs and therefore they are at work because of lack of opportunities elsewhere.

The results in the study indicate that most of the respondents disagreed that there is high standard of living amongst employees, this results shows that most of the employees of coca-cola live a modest life.

According to the findings in the study most of the respondents agreed that employees of coca-cola have high levels of productivity of employees, this shows that employees in the organization work hard to achieve the results desired.

According to the findings in the study most of the respondents hold the view that Dependency ratio on employees is high, this shows that there is high levels of poverty among majority of the population in the country.

According to the findings in the study most of the respondents hold the view that Poverty levels is low on employees in permanent employment, this results indicates that employees have some of level of income unlike the general population which is unemployed.

Causes of poverty among employees of coco-cola bottling company

Table 7: Causes of poverty among employees of coco-cola bottling company

Source: Primary Data

According to the findings in the study most of the respondents assert that most of the employees at coca-cola are well educated, these results indicates that the employees of coca-cola are well educated this is also in line with Bhorat&Kanbur, (2003), who stated that Poverty is attributed to many causes, such as overpopulation, environmental degradation, lack of education and economic and demographic trends, shortage of job opportunities and individual responsibility and welfare dependency, while Gafar et al., (2009) found that Africa is mainly affected by a shortage of skilled labour, scarcity of natural resources and location disadvantages, structural adjustments, a change in economic policies and natural disasters, such as wars and earthquakes. Moreover, in South Africa poverty cannot be divorced from the non-default apartheid system, which brought unequal distribution of resources.

The results in the table also states that employees at coca-cola are individualistic, this could because they don’t have enough to share with the others, this is also in line with (Lotter, 2007), who states that Relative poverty has two characteristics, namely; social exclusion and relative approach. Social exclusion is experienced when a poor person cannot participate in certain activities in a society. For example, in a society where cycling is considered as a major activity some individuals in such a society who cannot afford bicycles are excluded from that major activity, Thus those excluded individuals are identified as poor within that society, while (Wilson, 1999), states that poverty is a multifaceted phenomenon, This means that by its nature, explanations and understanding of poverty differ from country to country and from one individual to another. Individuals may have different perceptions on the causes of poverty.

The study also further indicates that organizational culture at coca-cola is unfair to the employees; this was indicated by the mean value of 4.05, this shows that some of the employees at coca cola feel that the organization does not represent their interest.

The table further shows that most of the employees hold the view that coca-cola does not have segregation at the company this response also showed that coca cola gives employees promotion and salary fairly and professionally therefore there is no favoritism at coca cola.

The findings in the study show that the price of food at the market affects the living standard of employees this is because it is expensive this view is also shared by World Bank, (2009) which states that due to rising inflation most organizations have not adjusted their payment to meet the expenses of the employees which affects their standard of living.

The findings also indicate that the living standard of employees has been affected because of long working hours Winiwiski, (2009) who states long working hours by employees in an organization affects their health and rights therefore an organization should fix time appropriately so to enhance employee productivity.

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS OF THE STUDY

5.0 Introduction

This chapter includes the summary, conclusions and recommendations of the study;

5.1 Summary of the study

5.1.1 Effects of contract employment on poverty reduction

Most of the respondents agree with the fact that Employees who work on contracts are paid fully, this results also indicates that employees of coca-cola are paid fully their salary this view is also shared by Druker and Croucher, (2000), who state that  contract employment for the employees and the organization have not been fully established yet, because there are many variables that can affect the observed outcomes, Some firms use the short term employment condition as a pseudo-probationary period to preview workers from whom they screen out those who fail to meet performance criteria or do not otherwise “fit” the organization, or extend an offer of long-term employment to desired individuals,

According to the findings in the study most of the respondents disagreed that the salary given to employees is not enough, this results in the study indicates that employees are not happy with the salary they earn at coca-cola, this view is also shared by (Foote and Folta, 2002) who states that Such firms may find significant benefit in developing a stronger, more meaningful employer-employee relationship with their short term workers. Individuals inspiration to enter the short term labor market vary broadly and at times include the inability to secure more desirable or permanent work, or a desire or need for retraining or for greater choice in when and where to work. On the other hand, a large number of them do so with the implied hope of obtaining an offer for longer-term employment, while Kalleberg, (2000) states that Due to the rapid innovativeness in science and the ever increasing competitiveness, companies have established policies of flexibility and adaptation to the economic changes in order to keep profits as high as they can.

The findings in the study indicates that most of the respondents agreed that Employees in permanent employment have high income , this is shown with a mean value of 3.52  indicating that employees in permanent and managerial position earn a slightly high income that other employees, this is also shared by Rowntree (1901), quoted in Sen (1984) who is said to have described families in poverty as primarily those whose total earnings are insufficient to obtain the minimum necessities for the maintenance of mere physical efficiency. This view is supported by the fact that income is prominent in almost all definitions on the level and extent of poverty.

5.1.2 Relationship between permanent employment and poverty reduction

The results in the table shows that the mean value of 1.79 shows that majority of the employees disagreed that permanent employees are many in the organization, these results shows that there are few permanent employees in coca-cola , it further proves that coca-cola does not give most of its employees permanent contracts, this view is also shared by (Okpara, 2011) who states that argument for developing and implementing strategies to reduce poverty by increasing productive employment opportunities in both urban and rural areas is compelling. Persistently high level of poverty is attributed partly to the jobless growth of economies, and has led to an emphasis on small businesses development as a catalyst for job creation and poverty reduction

The mean value of 1.33 in the table above indicates that most of the respondents  disagreed that employees in  permanent employment are rich, the findings further proves that employee are not rich, this is also in line with (Tan & Tan, 2002), who states that the demand for flexible labor has grown steadily during the last decades. Labor  markets have undergone considerable changes mainly due to production market developments, such as increased competition and global interdependence of economies, asking for rapidly responding organizations .It is assumed that the replacement of permanent workers with temporary, on-demand workers creates a flexible workforce that can respond quicker and more cost efficient to changing business conditions and Koster, (2002) further says that using temporary employment contracts is attractive for employers because they have to spend less money on recruitment, training, fringe benefits, and severance of the contract.

5.1.3 Causes of poverty among employees of coco-cola bottling company

According to the findings in the study most of the respondents assert that most of the employees at coca-cola are well educated, these results indicates that the employees of coca-cola are well educated this is also in line with Bhorat&Kanbur, (2003), who stated that Poverty is attributed to many causes, such as overpopulation, environmental degradation, lack of education and economic and demographic trends, shortage of job opportunities and individual responsibility and welfare dependency, while Gafar et al., (2009) found that Africa is mainly affected by a shortage of skilled labour, scarcity of natural resources and location disadvantages, structural adjustments, a change in economic policies and natural disasters, such as wars and earthquakes. Moreover, in South Africa poverty cannot be divorced from the non-default apartheid system, which brought unequal distribution of resources.

The results in the table also states that employees at coca-cola are individualistic, this could because they don’t have enough to share with the others, this is also in line with (Lotter, 2007), who states that Relative poverty has two characteristics, namely; social exclusion and relative approach. Social exclusion is experienced when a poor person cannot participate in certain activities in a society. For example, in a society where cycling is considered as a major activity some individuals in such a society who cannot afford bicycles are excluded from that major activity, Thus those excluded individuals are identified as poor within that society, while (Wilson, 1999), states that poverty is a multifaceted phenomenon, This means that by its nature, explanations and understanding of poverty differ from country to country and from one individual to another. Individuals may have different perceptions on the causes of poverty.

This is also further shared by (Davids 2010), who states that Individualistic perceptions deal with the individual failures and blames individuals for being poor; an individualistic approach puts the main emphasis on behavioral and cultural factors.

5.2 Conclusions

The indicates that Employees who work on contracts should be paid fully their contractual salary to motivate them and to help in reduce of poverty among employees at coca cola.

The study also concludes that employees should be given salary that is enough for them to meet their daily needs to enable them grow this is because if the organization doesn’t pay employees enough salary they will not be able to meet their daily expenses and be able to overcome poverty.

The salary given to employees is not enough, this results in the study indicates that employees are not happy with the salary they earn at coca-cola therefore employees salary at coca cola should be reviewed.

The results show that most of the employees at coca cola are not in permanent employment and therefore the coca cola keeps employees on temporary.

The employees in permanent employment are not rich this is because the employees payment at coca cola only enables them to pay for the few utilities that they can afford.

According to the findings in the study most of the respondents assert that most of the employees at coca-cola are well educated this is because coca cola hires only well qualified and educated employees for the job.

5.3 Recommendation

The management of Century Bottling Company Limited should do regular planning and evaluating of employee compensation and performance appraisal systems. Because compensation is visible and important to employees, it is critical to consistently communicate a clear message regarding how pay decisions are made. In short, a solid pay-for-performance strategy requires that employee pay matches the organization’s message

The management of Century Bottling Company Limited should not wait for dire circumstances, such as a pay inequity lawsuit, to write down or update their employee compensation policy. All organization leaders should create a written policy document or refresh their existing one for legal protection, and as a guideline or framework for the company’s compensation program.

With a highly competitive employment market, employers need to offer their employees a compensation package that would enable them attracts retain and motivate employees.  This exploratory study has shown that compensation has a direct influence on employee productivity and it will help the employees to fight poverty and improve on their standard of living

The management of Century Bottling Company Limited should try to maintain a fairly direct linkage between the performance management and compensation programs. A high percentage of organizations pay for achievement against objectives in the base salary program versus a bonus/incentive program, and there is a relatively small percentage of organizations paying in base salary for competencies or skill acquisition, which are strong indicators of long-term performance and fighting poverty among employees.

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QUESTIONNAIRE

Dear Respondent,

You have been selected to participant in this study. Please kindly spare your time and fill this questionnaire. The aim of the study seeks to examine the effect of employment on poverty reduction in coca-cola.

The information provided shall be used for academic purposes only thus total confidentiality is guaranteed for all information provided.

Please indicate by ticking in the provided boxes provided what best represents the category in which you lie.

Section A:      Respondent Details:

Names (Optional)…………………………………………  Gender: Male   Female (Circle)

Level of Education:

Postgraduate            Bachelor Degree             Diploma              Certificate           None of These

How many years have you been working in this organization?

Less than 1 year    1-2 years   2-3 years   3-4 years   4 & above

Please state your Role in this organization.

Accounting officer manager Technical manager

Regional member’s                  Casual laborers

…………………………………….…………………………………………………

…………………………………….…………………………………………………

…………………………………….…………………………………………………

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Section B: Effects of contract employment on poverty reduction

Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree, A-Agree, NS- Not Sure, D- Disagree, SD-Strongly Disagree

Section C: Relationships between permanent employments and poverty reduction

Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree, A-Agree,         NS- Not Sure, D- Disagree, SD-Strongly Disagree

Section D: Causes of poverty among employees of coco-cola

Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree, A-Agree, NS- Not Sure, D- Disagree, SD-Strongly Disagree

Please suggest any other recommendations for elimination of poverty in a country like Uganda.

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Thank you

APPENDIX I: BUDGET ESTIMATES

APPENDIX II: TIME PLAN