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Analysis of socio economic logics

underpinning formal and informal

strategies for coping with economic

shocks in South Kivu

Sminaire GRIASS

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Analysis of the socio-

economic logics underpinningformal and informal copingstrategies with economic

shocks in the DR CongoAn exploratory study

Mat le Polain, Marthe Nyssens (UCLouvain, CIRTES)with the collaboration of Guillaume Bidubula (UCBukavu) for the

collection of the empirical data

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Outline of the presentation

1. Context2. Research questions and methodology

3. Sources of economic shocks and strategies for

coping4. Analysis of socioeconomic logics through

Polanyian lenses

5. Conclusions and future research

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1. Context South Kivu (Democratic Republic of Congo)

> 5 million people and half of it is younger than 15 years old.

Two successive wars (1996-97 and 1998-2003), followed by shorter

periods of violence

In 2011, last in the UNDPs Human Development Index
http://upload.wikimedia.org/wikipedia/commons/b/ba/Democratic_Republic_of_the_Congo_-_Sud-Kivu.sv

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2. Research questions

Identify the sources of economic shocks:significant variation in household expenses

and/or incomes

Describe the diversity of risk management and

strategies for coping

Analyze their underpinning socio-economic

logics in the light of Polanyis framework

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2. Methodology

Selection of 6 settings: Bagira, Mushinga, Kalehe,Uvira-centre, Kalundu and Kiliba. Rural, semi rural

and urban.

Semi directed interviews were conducted with menand women from the active population.

Focus groups sought to uncover beliefs or attitudeswith a likely impact on coping strategies.

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3. Sources of economic shocksSummary of the common and idiosyncratic shocks

exerting financial pressure on households

Predictability Frequency

IDIOSYNCH

RATIC

SHOCKS

School fees High High

Illness Low High

Birth of a child High Medium

Wedding of a child Medium/ High Low

Death of a relative Low Medium

COMMON

SHOCKS

EconomicLow Medium

Political Medium Medium

Environmental Low Low

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Self Insurance mechanisms

Savings

In kind: land and livestock such as cattle, goat and

poultry In cash: at home in a cash box

Income smoothing strategies

Diversification of income generating activities

4. Strategies for coping (I)

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Collective informal strategies

Savings through Likirimba (= tontines or ROSCAS(Rotating savings and credit association )

Borrowing from kinship relations MUSO Mutuelles de Solidarit (Solidarity Credit

Unions): insurance fund ( pot of the red box ) and

accumulation and credit (pout of the green box )

5. Coping strategies (II)

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Collective formal strategies

MUSA - Community based health insurance groups

COOPEC Coopratives dpargne et de credit

(Savings and Credit Cooperative)

5. Coping strategies (III)

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6.Analysis through Polanyian lenses

The substantive meaning of economic derives from a mansdependence for his living upon nature and his fellows

(Polanyi, 1957)

Market: exchange of goods and/or services through the mechanism ofprice determination, which makes the demand and the supply of these

goods and services converge.

Redistribution: production is collected by a central authority, whichhas the responsibility to distribute it amongst the agents submitted to it.

Reciprocity: Based on the gift as a basic social fact

(Household administration):Autarchic production of aninstitutional unit (as the family).

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Household administration In kind saving

kept in the domestic unit

offspring and/or by-products generated (eggs, milk) servesthe familys needs

people living in town, even if they have access to bank

saving accounts, save in land and livestock in the home

village to fulfill their social obligations


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Reciprocity

Semi voluntary reciprocity : derived from social norms withinkinship relations

birth, wedding, death

Despite the social obligation and prestige associated, gift is

subject to individual willingness


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Reciprocity Voluntary reciprocity : some people choose to form or join informal

groups. This choice is often motivated by the perception of a stronger,

easier and fastersolidarity

Likirimba (ROSCAS)

MUSO Embedded in local communities

Collective and autonomous decisions

Economic and social functions

No price system

Supervised by NGOs which provide technical support Reciprocity characterizing MUSO grassroots groups are supported by

redistribution (money coming from international donors)

Blurred frontiers between reciprocity and redistribution (already

highlighted by Polanyi and Mauss)


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COOPEC and MUSA: A mix of reciprocity, market

and redistribution

Exogenous impetus: COOPEC and MUSA seek to improve accessibility

to health care or microfinance among poor population

Aim of providing members or the community a service, rather than

generating profitHOWEVER

Their survival relies, most often, on sufficiently large group of members

Expansion and professionalism necessary for sustainability may

weaken the reciprocity logic and threaten the survival of the

organization perceived as usual business Members consider fees as prices, services embedded in a market logic

and NOT in a logic of symmetries between the members requiring

voluntarily complementary and interdependent relationships

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Market

Very low prevalence of market logic in identified strategies for coping

Maybe explained by the low level of financial means among the poorpeople

Local money changers and lenders seem to operate under this logic

Diversification via multiplication of small informal businesses is a market

logic to minimize the income variations.


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5. Conclusions

Economic order embedded in social order: reciprocity logics, bothsemi voluntary and voluntary, dominate the landscape

Transactions can not be solely reduced to their economic functions

as they mediate and maintain social relationships

Trust: a success factor in economic practices

Members are originated from the same community, surrounding Emergence of collective norms shared by the group (bottom-up)

Threat of social shaming reduces the risk of defection

Formal social economy organisations (MUSA and COOPEC)

Low level of trust

Top-down norms: risk of free-ridding

Perceived as a market logic

Lack of generalized trust, a key institutional component of societies

both for redistribution and market

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Merci!

Documents

GRIASS 30Oct2012