IMM

DFID CARE OXFAM

IFAD
BASIXS

Collection of SLA Framework diagrams at the end of the document

S.Rengasamy – Understanding & Analyzing Livelihood Framework

Analyzing Sustainable Livelihood Framework
Framework means a set of assumptions, concepts, values, and practices that constitutes a way of viewing reality.. a particular set of beliefs, ideas, or rules referred to in order to solve a problem:
The Sustainable Livelihoods Framework (SL Framework) is a schematic view, model, diagram or visualization tool that should help us to understand the different components of a livelihood and how different elements in people’s livelihoods interact. The livelihoods framework can be used to help us analyze livelihoods but it does not attempt to provide an exact representation of reality. It is a simplification and it should be adapted for use in different circumstances. Real livelihoods are complex and varied, and can only be properly understood through direct experience. As with the Sustainable Livelihoods Approach as a whole, there is no “definitive” Sustainable Livelihoods Framework – different frameworks need to be developed in different settings to reflect local realities. The important thing is to create some kind of framework and to make sure that it includes certain basic elements. Different organizations and agencies have developed their own frameworks to reflect their own priorities, but all of these tend to have these basic elements in common. A key aspect of any SL Framework is that the people or agencies working with the Sustainable Livelihoods Approach need to construct the framework themselves. The process of developing a Sustainable Livelihoods Framework forces people: to think about livelihoods and thoroughly appreciate what factors contribute to the livelihoods of the people they work with. It also helps people to acquire a greater sense of ownership over the framework and ensures that they fully understand all its different components and how they are related to each other.

Human Capital
5 4 3 2

Existing Situation Desirable Situation

Physical Capital

1

Social Capital

Financial Capital

Natural Capital

2

S.Rengasamy – Understanding & Analyzing Livelihood Framework

Understanding the Livelihood Framework for Analyzing Livelihood Intervention Choices
While making a livelihood intervention, livelihood promoters are continuously engaged in making choices. These choices include decisions on the 1. Objectives, the livelihood promoters want to achieve, 2. the communities, groups or individuals livelihood promoters seek to help, 3. the sector in which livelihood promoters work in, 4. the scale of impact livelihood promoters desire, 5. how livelihood promoters organize the livelihood activity, and so on. The livelihood framework that helps livelihood promoters to think analytically and systematically about the choices and The Sustainable Livelihood Approach (SLA) uses a help design a livelihood strategy. Sustainable Livelihoods Framework to understand
better the livelihoods of people, and in particular the poor. It also consists of a set of Sustainable Livelihood Principles which give guidance about how to respond to the learning about livelihoods that the framework helps us to achieve and how to initiate action for positive change. The approach also makes use of a range of Sustainable Livelihoods Tools, which are not exclusive to the Sustainable Livelihoods Approach but tools that are widely used in other contexts as well. The Sustainable Livelihoods Approach seeks to “add value” to these tools by using them within a more comprehensive framework of understanding and action, so that different tools complement each other and can be used most effectively. Even these three basic elements in the approach – framework, principles and tools – are not fixed and they need to be modified and adapted to suit local circumstances and priorities. In particular, all three elements need to be adapted to the capacities and priorities of the people involved, including the people or agencies who are “using” the Sustainable Livelihoods Approach and, most importantly, the people who are the “subjects” of the approach.
Sustainable Livelihoods Approach SL Principles
PEOPLE

The livelihood framework is not a planning or evaluation tool - its utility lies in the fact that, it helps livelihood promoters to be more conscious and thoughtful about the choices that they are making. When planning for a livelihood promotion, livelihood promoters need to reflect on what choices they have made in the past, why they made them, and whether they were the best choices in the given context is crucial. All too often, organizations do not believe they have choices, and are not conscious of the implicit choices they are constantly making. Real learning from the framework will emerge after it is applied to cases or to livelihood promoters own organization’s experience. Choices in one element of the design may depend on choices made in another part. This means that when we are designing an intervention we may need to go back and forth to different design elements, as one choice influences another.

SL Tools

SL Framework

Elements of Design of Livelihood Intervention
There are three elements of design of a livelihood intervention. These are: 1. the objective of the intervention, 2. the nature of the intervention and 3

S.Rengasamy – Understanding & Analyzing Livelihood Framework

3. the design of the livelihood activity. Livelihood intervention could be done with an objective to hold migration, as was in the case of PRADAN Lift Irrigation, or for assuring a regular market, as in NDDB, or for ensuring that people got what they were entitled to by law, as in SEWA. In other words, there could be different objectives of a livelihood intervention. As most livelihood interventions evolve around some economic activities, there is also an element of design of the livelihood activity. Interventions of different nature, such as introduction of a technology, or treatment of a watershed, or making credit available could have significant impact of the livelihoods of people. Further, the Nature of Intervention proposed and the Design of the Livelihood Activity depends on the chosen Objective. This relation can be depicted schematically as follows: Three Elements of Design of a Livelihood Three Elements of Design of a Livelihood
Objective of the Intervention

Nature of Intervention

Design of the livelihood Activity

Livelihoods Framework Implications A livelihood comprises the capabilities, assets, and activities required for a means of living; a livelihood is deemed sustainable when it can cope with and recover from stresses and shocks and maintain or enhance its capabilities, assets, and activities both now and in the future, while not undermining the natural resource base • The livelihoods approach is based on evolving thinking about poverty reduction, the way the poor and vulnerable live their lives, and the importance of structural and institutional issues; they suggest development activities that are people-centered, responsive and participatory, multilevel, conducted in partnership with both the public and private sectors, dynamic, and sustainable • The livelihoods approach helps to organize the factors that constrain or enhance livelihood opportunities and shows how they relate to one another; it aims to builds on strengths; it is more than an analytical it aims to builds on strengths; it is more than an analytical framework Livelihoods Framework Implications The livelihoods approach encourages thinking out of the box; it frees development practitioners from conventional approaches that are often restricted to identifying problems and finding solutions • The livelihoods approach invites development practitioners to look at contexts and relationships so that development initiatives can become more process-oriented • The livelihoods approach represents an important shift away from the focus on project inputs and outputs and the assumed mechanical links between them. The livelihoods approach compels development practitioners to look for multiple entry points and to move beyond a homogenous ‘community’ view and a narrow sectoral perspective • The livelihoods approach stresses the importance of understanding institutions by mapping the institutional framework and linking the micro to the macro and the formal to the informal • The livelihoods approach calls for a new style of policy appraisal that moves from

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

However, choices of these elements of design are made within a Context: The External Context and an Internal Context. Context of Livelihood Intervention Design External Context
Institutional conditions Objective of the Intervention

Demand condition

Intervening Agency Mission Capacity Funding People’s Livelihood Portfolio Capacity Strategy

Factor condition

Assets Awareness Ability Access

Nature of Intervention

Design of the livelihood Activity

Industry condition

Understanding the internal context of intervention
There are two elements of the internal context that livelihood promoters need to keep in mind while designing a livelihood intervention. These are: • People, whose livelihoods are to be promoted • Organization, which is going to promote/ support livelihoods. These two elements are further explained in details

Internal context: the people
Livelihood promotion/ support efforts are always around a set of people. It is a set of people whose livelihoods livelihood promoters are trying to promote. Therefore, it is essential to get to know the people and their livelihood patterns before livelihood promoters design any intervention. Though there may be inadequacies in their livelihood options, they are not bereft of any livelihood activities. Therefore, whatever new activities are proposed will have to be incremental to their present livelihoods. It is therefore, important for livelihood promoters to know: their livelihood portfolio and their livelihood strategy.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

As have been mentioned earlier, poor households are involved in a set of activities to maintain their livelihoods. This constitutes their diversified livelihood portfolio. Therefore it is important for us to understand: What is the livelihood pattern of the people, Existing mix of activities in which different members of a household are engaged in, At different parts of the year.

• • •

However, the livelihood portfolio of a household depends on their livelihood capacity. Livelihood capacity of a household is determined not only by the number of people in the family, but also on the skills and knowledge set of the people, their attitudes towards new activities, their asset base, and their opportunities, as well as cultural and social conditions of the area. Therefore it is important to know: What are various sets of skills and knowledge that the people have Shortfalls in a household’s income and buffers from Livelihood which these are met. Capacity • Opportunities that are accessible to them as a family in the area, including barriers posed by the social and cultural conditions. • Finance, including credit available throughout the year, to make investments as well as to even out cash-flows at different seasons
• •

Livelihood Strategy

But even to use these capacities, different households Livelihood use different livelihood strategies. Some work in Portfolio other people’s land, while some others chose to Livelihood Profile of a Household migrate. If there is some additional income some chose to expand the existing activity, while some others chose to diversify. Different people use different strategies for coping with the risks and shocks. Thus it may also be useful to understand: The preferences of the families in choice of different livelihood strategies The risks and shocks they face Their ability and coping mechanism to Risks are patterns of uncertainties in income/ cash flow from an activity. For example, if once in five meet these risks and shocks years there is a drought, it can be said to have a • Entrepreneurial ability of the people: risk of 20%. Shocks are unpredictable shortfalls in both in terms of their ability to take income/ cash flow due to event such as ill-health, risks and their attitudes towards taking cost of marriages, death of earning member, accidents. new initiatives.
• • •

These features of the livelihood patterns of people that we need to look at have been discussed in the following chapter on identification of livelihood opportunities.

Internal context: the intervening agency
The other important element of the internal context is provided by the organization making the intervention. Livelihood promoters should look at what are the various aspects of an organization they need to pay some attention to.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Mission:
While intending to get involved in livelihood promotion, one need to understand what the mission of an organization is. How does the intervention fit with the organizational mission? How core is livelihood promotion to the mission of an organization? Is it one of the many things an organization does? What competences do an organization have for such an intervention? Where will the funding come? Context analysis
Context analysis seeks to analyze the context within which we operate. The context shapes and gives meaning to many things, and can explain dynamics of poverty that a specific to a given context – or different from another context. The context can be taken to be very local, regional, national or global. External Context The external context that affects the organization provides the forces to which we must react. It will include Historical, Political, Economic, Social, Technological, Legal and Environmental factors. Each of these may lead to the need for change, for example declining economic conditions or new legislation. Internal O Context As well as the external context, there are many contextual factors within organizations that can lead to the need to change or decide upon our programs and strategies to address poverty. These might include our strengths, weaknesses, competencies, identity (our credibility and legitimacy in a given context). Broad Scale Impact The program must define what "broad scale" means, but, in general, we mean at least at national scale or for a whole marginalized population group. Impact should occur across three areas of unifying framework (human conditions, social position, enabling environment) and impact should be seen and evaluated over an extended period of time. Enabling Environment Enabling Environment can be defined as the structural environment that recognizes and reinforces mutual rights and obligations. It is made up of interrelated conditions necessary for fostering just societies. Some of the interrelated conditions include: (a) good governance -elected national and local governments which are responsive to constituents and are empowered to serve them; (b) sound legal, regulatory, political and institutional frameworks; (c) pro-poor policies; (d) institutionalized mechanisms for transparency and accountability; (e) conducive private sector social accountability mechanisms; (f) strong civil society participation (freedom of expression, association and negotiation); (g) freedom from conflict, etc. Unifying Framework The Unifying Framework for Poverty Eradication & Social Justice is developed around three upper-level outcome categories that provide a holistic Unifying Framework that focuses on improving people’s social position and social equity; on improving the people’s conditions and well-being; and on creating an enabling environment that promotes equity and livelihood security for all. Together, these three outcome categories ensure that we analyze and address underlying causes from both needs- and rights-based perspectives.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Competencies:
Livelihood promoters need to remember that livelihood promotion is a difficult task and it is better to understand what they are getting into, before jumping in. It is important to be aware of an organization’s core competency, as it is likely to have serious implications on what intervention one would take up. For example: Aga Khan Rural Support Program -India (AKRSP -I) addressed the problem of migration in parts of Gujarat through a watershed intervention, as the core competency of AKRSP(I) was in making techno-managerial interventions, which is necessary for effective management of watersheds. SEWA chose to organize the beedi-rollers of Gujarat to assert their rights as their core strength was in their trade union activities, which is necessary for asserting the rights. Often livelihood intervention necessitates getting involved in commercial business activities by default. Therefore, it is important to access our strength in that area too.

Source of Capital:
Livelihood interventions need substantial capital investment that may come from different sources. The source could be a donor, or a government program, or investment made directly in the activity. The more one engage in livelihood promotion, the more funding one will need. Grants may be great to get started, but the total fund available is likely to be limited. A large volume of capital can be mobilized from capital markets if, and only if, adequate returns on investments can be generated. Different funding sources may also influence the objectives and the implementation strategy. Whether one receive funding from donors or from government, the missions of those agencies are likely to play a major role in design of the intervention.

Legal Form of Organization:
Livelihood activities are commercial in nature. While promoting livelihood activities, one needs to remember that all organizational forms are not permitted to undertake all types of commercial activities. Certain part of the intervention may be charitable in nature, like giving training, skill building or building people’s organizations; but these often are only a part of the intervention. Some commercial activities can be taken up in small scale without really violating the law (like any NGO can take up micro-finance activities in a small way, many NGOs do marketing of handicrafts and handloom items). But once the activity scales up and volumes are large, legal complications related to taxation, capital mobilization, licenses might arise. Therefore, it is advisable to look at one’s own organization form, as this would also help us in taking decisions on our strategy for scaling up. (See the table)

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Comparative Analysis of the Legal Provisions for Various Organization Forms in India
Type of Not for profit Organization registered as Societies/ Trust Applicable Laws Purpose Registration of Societies Act 1860, Indian Trust Act 1882 Service to others: other than promoters Section 25 Company Companies Act 1956 Service to others: other than promoters Elected board of directors (sec 25 company) No restriction Mutual Benefit, MACS, Producers’ Self-help Groups, Company Coop Bank State Co-op acts, Banking Regulation Mutually Aided Co-op Act 1949,NBFC Societies Act Guidelines 1987 Mutual help: Enhancing benefit to users of service (self) Members are Owned by only shareholders and owners; primary producers managed by the elected board of directors Area of operation is No restriction. restricted to within the Deposit taking state unless regd. under restricted to state of the multi-state coregd. office (if net operatives act. worth is below Rs. 50 crores) RBI licenses under RBI act 1934, NBFC banking regulation act, rules 1949 and cooperative societies rules for UCB Coops can accept deposits from members UCB can accept deposits from general public with the permission and under supervision of RBI May accept public term deposits minimum investment grade, subject to permission from RBI

Ownership No owners; control and controlled and management managed by the board of trustees Area of No restriction operation

Licensing No licensing provided No licensing regulation provided for banking activity Deposits Deposit taking not allowed Deposits may be accepted only after obtaining permission from the RBI .The companies (acceptance of deposits) rules would apply. Yes Yes Yes

Equity Borrowing Indian Grants and donation Foreign direct Investment

No Yes Yes

Yes Yes Yes

Yes, min. Rs. 2 Crores Yes No

No

Yes

No external equity

External No Commercial Borrowings Foreign Grants/ Donations Subject to FCRA registration

No

Subject to FCRA registration

Yes, proposal routed through FIPB; RBI and SEBI approval reqd. On a case-to-case basis. No permission reqd. up to 50 million US Dollars; Beyond need ECB clearance Subject to FCRA Subject to FCRA registration registration

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

The External Context There are four elements of the external environment: namely, the Factor Conditions, the Demand Conditions, the Industry Conditions and the Institutional Condition, which influence the livelihood choices. Elements of the External Context External Context
Institutional conditions

Demand condition

Factor condition

Assets Awareness Ability Access

Industry condition

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Let us look at each of these conditions: Factor Conditions Livelihood activities utilize various accessible resources. These resources that go into production of goods and services constitute the Factor Conditions. For example, land, water, agro-climatic conditions, availability of skilled people, the prevailing political economy, conditions of roads, availability of electricity, general development indicators of the place define what activities can support large number of livelihoods in that area. These are the Factor Conditions we need to understand. Presence of different Factor Conditions lead to adoption of different livelihood intervention strategies. For example, the organization PRADAN, made intervention in promoting Lift Irrigation in the Ranchi-Lohardaga area, while worked on Leather Sub-sector in BarabankiUttar Pradesh, because of different favorable factor conditions (many of the resources) in these two locations. Department for International Development (DFID) of the UK Government has developed a framework, which helps us look at the factor conditions for sustainable livelihoods systematically.
Factor Conditions: Five Types of Resources that Define the Boundaries of Livelihood Choices A. Natural resources Land: terrain, quantum, quality, distribution and uses Water: annual rainfall, groundwater levels, sources of irrigation Humidity Forests: quantum, tree species and usage Livestock Mineral wealth Energy sources Are there any environmental threats to these natural resources? B. Physical resources Irrigation infrastructure: Tanks, Canals, Bore wells Shandies, Haats, Market yards Warehouses Electricity Roads, Railway lines Transport facilities Post Office, Banks Health facilities C. Human resources Population No. of households and family size No. of earning members per family Labor availability and skill levels – manual, craft, service and knowledge base Entrepreneurial ability of various communities in the population Education profile of population Health profile of population Gender division of all the above D. Social resources Relationships of trust and reciprocity within and between communities Gender relations Caste relations Agrarian relationships E. Financial resources Available sources of credit – formal and informal Interest rates and collateral requirements on different credit sources Credit requirements of different income/occupational groups of people Savings mechanisms Other financial services

However, while looking at the factor conditions, livelihood promoters must remember that just presence of the factor conditions in the area is often inadequate to make them useful. For a factor condition to actually enable livelihood opportunities, it must have the 4-A’s: Asset: The asset, physical or otherwise must exist. Awareness: People must be aware that such an asset exists. Ability: People must have the ability to use that asset. Access: People must have access to the asset. 11

S.Rengasamy – Understanding & Analyzing Livelihood Framework

Unless these are also present with the resources, they are not useful for any livelihood intervention effort. What are other resources limit one’s livelihood choices? One may like to look at some of these resources described in the box. Which of these are available in the area? Which of these can act as constraints for livelihood promotion? Context of livelihood Intervention design

External Context
Institutional conditions Objective of the Intervention

Demand condition

Intervening Agency Mission Capacity Funding People’s Livelihood Portfolio Capacity Strategy

Factor condition

Assets Awareness Ability Access

Nature of Intervention

Design of the livelihood Activity

Internal Context
Industry condition

Demand conditions Whatever be the chosen livelihood activity, there is some output of goods / services. These goods / services are bought by some people that constitute the demand for them. Try to find: who is demanding them? Is the demand local? Is it increasing, decreasing or stagnant? Such things determine the Demand Conditions, which in turn determines the number of livelihoods that can be supported, the kind of income that can be generated from the activity. Demand Conditions play a significant role in determining livelihood intervention strategy. For example, MEADOW could be promoted by MYRADA because there was a scope of promoting ancillary units in that area. Similarly with the introduction of lift irrigation by PRADAN, people started growing vegetables for which there was a growing demand.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Industry conditions The third element of this external context is the nature and status of the industry, of which, the livelihoods activity is a part. Here we use the word ‘industry’ in a broader sense, to include all economic activities. For example, production of paddy is a part of cereal food industry. (for detailed discussion see tools and techniques for designing livelihoods promotion) Thus, it is important to assess what is the status of the industry, in which we are going to promote livelihoods. Is it growing and vibrant? Is it stagnant and dying? Are there other related and supporting industries that extend services? These related and support industries often play a critical role in the chosen livelihood activity. Their presence or absence creates conditions for making one livelihood intervention more effective than the other. Institutional conditions All livelihood activities, for that matter, all economic activities are bound by some institutional context. Apart from state policies, tax laws that govern the activity there are local norms, social arrangements that also infringe upon the livelihood choices. Presence of various institutions such as promotional, research and training institutions, producer associations, also has significant influence on the choice of livelihoods. These together define the Institutional Condition of the livelihood choice. Therefore, Institutional Conditions form the fourth element of the external context, which influence the choices in a livelihood intervention. Therefore, livelihood interventions are made in a context, which has an internal and external facet:

Making livelihood intervention design choices
Having taken a close look at the context within which the livelihoods intervention is going to be made, let us now focus on the three elements of the design of our intervention:

Three Elements of Design of a Livelihood
Objective of the Intervention

Nature of Intervention

Design of the livelihood Activity

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Framing objectives for livelihood promotion Livelihoods can be enhanced in many ways. (See Box) Although achieving one objective sometimes leads to fulfilling the other objectives, this is not always so. Thus, unless one is clear about which is the prime objective of one’s intervention, it may become difficult to Types of Livelihood enhancement make the right choice. Livelihood • Enhancing income intervention strategy will vary • Creating assets or wealth depending on what one want to achieve. • Increasing food security Creating Assets • Reducing risk In most contexts, creating assets (like • Reducing variances in income savings, or supply of credit as seen in • Reducing rural to urban migration cases of most micro-finance • Organizing producers to have greater control institutions) may be more important over their livelihoods than enhancing incomes. For, income • Enhancing the money that circulates within from wages may fluctuate from year to the local economy year, but assets generate a steady stream of income over more than a year. They can also act as a buffer against future risk, fall in income and shocks to the household. Food Security Increasing food security in regions where families do not have sufficient food to eat may be another livelihood objective. Emphasis on food security also protects producers from the vagaries of the market (where demand and prices fluctuate), as their own families will eventually consume whatever they produce. Reducing risk Reducing risk is an important livelihood-enhancing objective. Many poor households may prefer to engage in livelihoods which generate lower incomes but which involve less risk, as a sudden drop in income might throw them even deeper into debt. For example, livelihood support may actually aim to reduce risk in existing livelihoods; for instance, providing access to irrigation, which will protect the monsoon crop in years when rainfall is scarce. Creating assets
A household’s most important livelihood assets are the labor and skill of family members. They are of course important because they provide people with a means of earning income in the first place. The home, which can double up as a business premises, is often another very important asset. In contrast, poultry sheds or lift-irrigation infrastructures are examples of enterprise assets outside the home. The common fund of savings and credit groups is another example of an asset created through a livelihood intervention. Pooling savings within a group, and then lending it to members of the group, is also a means of circulating resources within the community. If creating assets is our objective, we need to consider: • Who will own the assets? • What rights and responsibilities will individuals have, if the community owns the asset? • What rights will users have if an individual entrepreneur owns an asset?

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Reducing variations in income Reducing variations in income due to seasonality or shocks is important to reduce the vulnerability of poor families. One way of doing this may be by encouraging people to save or to invest in assets, which may be sold during lean periods. Reduce Rural to Urban Migration Another objective of livelihood promotion may be to reduce rural to urban migration (such as BAIF- DHRUVA, case 1). Migration frequently involves tremendous stress and displacement for rural people. It also results in undue pressure on urban areas, which are unable to cope with the growing influx of livelihood refugees. Reducing migration would involve creating livelihood opportunities, which are located in rural areas. Organizing Producers Organizing producers, in unions (such as SEWA), cooperatives or societies (such as SIFFS), helps them secure better prices and enhance their power in the market. This enables them to invest collectively in their business; secure their rights against outside competitors or under law; create some buffers against market fluctuations and ensure that the market does not exploit individual producers. Enhancing the money that circulates Enhancing the money that circulates within the local economy may benefit all producers in that economy. As seen in the case of DHRUVA, the expenditure that a cashew producer makes on either purchase of vermin-compost or on post-harvest treatment of the nuts become an income of another in the village. This in turn enhances the total income within the local economy. See the section on Developing Local Economy in the Introductory Module. Meeting poor people’s basic needs more reliably and at lower cost Meeting poor people’s basic needs more reliably and at lower cost to them could also be a livelihood intervention. After all, why do poor people require more income if not to meet their basic needs? Since all funds are fungible, reducing outflows from a household allows a household to reallocate its resources to meet other needs, including, for example, investing in activity to earn more income, or in education to enhance the household’s long-term productivity.
Phases in a Livelihood Intervention: We find that most livelihood interventions go through three distinct phases. The pilot phase: when we are still testing out a new idea to see if it works on a small scale. The development phase: the pilot phase has proved successful and we are now developing a model, with the expectation of scaling it up or replicating it. The scaling up or replication phase: we now have a model, which works and we go to scale by expanding or replicating the business. Interventions may also change over time, as the intervention agency learns from experience, or shifts from one phase of the project to another. This should be a planned rather than a haphazard process.

Though enhancing income is one of the mechanisms of supporting livelihoods, in the absence of appropriate opportunities, helping people increase their effective purchasing power by reducing their costs can also support livelihood. Some initiatives primarily focusing on reducing expenditure are emerging in many places. In these initiatives, the members of various thrift and credit federations are pooling in their capital to buy essential consumption commodities in bulk from the wholesale market. These are further packaged and sold, in small packs, as 15

S.Rengasamy – Understanding & Analyzing Livelihood Framework

required by the members. Bulk purchase gets the members quality commodities at a cheaper rate than what they would have got from the local shops. These initiatives, apart from reducing consumption expenditure, make good quality food and other essential items available to poor households and generate wage employment. The primary objective of most livelihood interventions in India today is enhancing incomes and food security. Asset creation is usually seen as a means to enhance incomes. While organizing producers, again to achieve better returns, is also common, however, strategies to reduce risk are less common and very few interventions explicitly focus on enhancing the money that circulates within the local economy. Reducing migration is often an outcome of other livelihood strategies, but is very rarely a stated objective. However, in the recent years, with the opening up of the insurance sector, many new initiatives in this direction have been started. ICICI-Lombard, ICICI-Prudential, AVIVA, among others, has developed different products to reduce the risk of various livelihoods supporting activities. Why do we think some livelihood objectives are more commonly pursued than others?

Nature of the intervention
The nature of livelihood intervention can vary along three dimensions: The sector in which we intervene: What livelihood activity one want to intervene in? Do one want to improve on an existing livelihood activity or promote a new one? The point of intervention: Which part of the value-addition chain will one focus on? Will one provide the missing input, such as technology development or credit, integrate the delivery of inputs, or intervene at multiple points providing several services? The instrument of intervention: What is the tool of intervention? Do one want to train the people to make the necessary changes? Does one want to change some policy to bring about changes that help people? Sector in which we intervene: The sector in which one intervenes is often a choice based upon the demand and factor conditions. One intervenes in a sector, which is large or is growing and the factor conditions are favorable for it being taken up by large number of people. However, there are choices: We could choose to improve upon an existing livelihood activity. For example, SIFFS introduced motorized boats among small fishermen in Kerala We could work on a livelihood activity new to the area. For example, MYRADA introduced assembling watchstraps in collaboration with Titan Watches into a predominantly agrarian area The point of intervention After choosing the sector in which to intervene, it is important to identify in what to intervene in. For example, if one have chosen to intervene in the dairy sub-sector, it is necessary to identify whether • to improve fodder production, or • to help process the milk, or • to build linkages with the market, • to get the best benefit to the producers. 16

S.Rengasamy – Understanding & Analyzing Livelihood Framework

A specific activity is part of a larger value chain, from pre-production through production to marketing and finally reaching the consumer. One will need to determine at which stage of the value-addition chain the key constraints are and what can be done to overcome these bottlenecks. If one can manage to work on one or many of these critical bottlenecks, one’s livelihood intervention is likely to impact the livelihoods of many. For example: • Inputs like raw materials or credit can be provided to rural producers to help them increase their production. For example, KribhCo focuses on making fertilizer available to farmers. Many agencies involved in minimalist credit like SHARE or Cashpor provide only credit to rural producers. • Intervention can be to improve the production process itself as in the case of PRADAN, which developed a small-scale technology for rearing poultry and is helping tribals to take up such production. Seri-2000 with the support from SDC helps silk farmers improve their rearing processes (see case in CD-Rom) • Producers can be helped to get a better market price for their produce. Example, SIFFS facilitates marketing of the fish caught by its members. NDDDB 9 case in additional resources has set up processing plants and is the marketing channels for the milk produced by farmers. The case of NDDB is a good example to illustrate how the lives of more than 15 million dairy farmers were influenced by providing a multiple set of services. An intervention of this kind at many points in the value-chain is called sub-sector intervention. We will explore how this can be achieved in Module 4 Stage IV. One should remember that these stages do not represent exclusive choices. We could work with the production stage while simultaneously extending support for pre- or post-production activities. For example, the poultry project of PRADAN has not only intervened at the NGOs and Marketing: Which of this apply to us?
• NGO workers have an ideological bias against the commercialized activity of marketing; the market doesn’t follow emotions. • The market demands good quality, assured supply and lowest price. NGOs lack the business acumen to ensure this. • Their motivation makes NGO professionals want to work close to the poor rather than spend time exploring distant markets. • The chicken and egg problem - markets need volume, but production at volume is not possible in small, scattered, rural settlements. • To develop a market we have to invest as an entrepreneur (by taking risk), but NGOs are not structured to do this. NGOs seek to reduce risks poor people face, and do not have the capital to take risks themselves. To be a player in the market, we need deep pockets.

production stage, but also supports post-production marketing of the birds that are reared. The intervention strategy The issue of where to intervene in the value-

Organisations that work with a single focus intervention strategy often develop core competencies in their respective specialisation and may achieve scale. The International Development Enterprise (IDE), pedal pumps involve the marketing of a niche technology (foot operated treadle pumps) to small and marginal farmers. The intervention has reached 200,000 farmers in the country, with an estimated total rise in income of Rs 220 crores in the span of nine years. It has developed staff, internal systems, marketing channels for irrigation related products and services.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

addition chain and the choice of approaches on how to intervene are closely linked. We can either intervene by providing a single missing input, integrating several inputs or taking a systemic approach. Which of these inputs do we want to focus on? 1. Technology: Some interventions in livelihoods have evolved around technological intervention. SIFFS has introduced motorized boats using a simple technology to help the fishermen compete in the changing environment of fishing in the advent of mechanized trawlers. 2.Training: Training inputs have been an integral part of most interventions in livelihoods. MYRADA had given significant skill building to rural girls to take up the contract for watchstrap manufacturing of Titan, while promoting MEADOW.
LAL (Learning about Livelihood) Framework

3. Marketing: The Association of Crafts Producers (ACP) provides marketing assistance to a wide range of producers in Nepal. Other interventions like Janarth, NDDB, extended market support services to the producers. MYRADA chose to deal with marketing by linking up with Titan Watches, who undertake the marketing function with MEADOW. 4. Asserting Rights: The National Alliance of Street Vendors lobbied for the rights of street vendors worked with national, state and local governments. Similarly, SEWA focused on ensuring that the biddi roller got what law entitled them to.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

LAL (Learning about Livelihood) Framework

5.Policy Advocacy: Livelihood choices are often enabled or restricted by the policy environment. SEWA made significant dent in the policy environment, which earlier never recognized unorganized workforce as labor. 6.Building Local Interdependent Economy: Interventions designed to strengthen an interdependent local economy, where a large proportion of the inputs required for an activity are procured locally, and value addition is done to the produces also at the local level, have been tried by some agencies, as in the case of Dhruva-BAIF. 7.Credit: BASIX, a rural livelihoods promotion institution working in many states in India, extends micro-credit services for a variety of rural activities including farming, animal husbandry, cottage industries, trade and services. 8.Infrastructure: Some interventions also provide infrastructure, such as developing milk-chilling centers, various food processing units etc. Infrastructure such as creating milk chilling centers or building a road is often beyond the capacity of NGOs. However, there are several examples of NGO interventions in creating small or micro infrastructures like grading and sorting platform or creating a common work place for community. We may refer to the case on DHRUVA, which has created community owned processing unit.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

9.Institution building: In some cases the organization promoting or supporting livelihoods has focused only on building producer organizations. The Aga Khan Rural Support Programme (I) in Gujarat has been involved in organizing The Challenges of integration communities into various Organizations taking up multi-pronged interventions will peoples’ institutions such as need to invest in acquiring new skills and competencies. Water Users’ Association, This may have implications for the scale of their Mahila Vikas Mandal while intervention and its costs. developing watershed in this In its watershed program the Aga Khan Rural Support area. These institutions have Program (AKRSP) realized that soil and water conservation measures do not necessarily mean more production leading emerged as strong peoples’ to more income and to better quality of life. To ensure organizations, where the more production, one needs to introduce better quality livelihood choices are made by inputs. Once production increases, lucrative markets need these organizations and not by to be found in order to obtain competitive prices for the intervention agency. increasing income to farmers. Once incomes rise, there It is not essential that we should choose only one instrument of intervention; it is also possible to use more than one. For example providing livelihoods support services of many kind like provision of good quality input, timely credit and output marketing (as AKRSP, does) or technology along with community organization (as PRADAN does when it organizes people into water user associations to manage lift-irrigation schemes). This can also span to extent of an intervention along a complete sub-sector as was done by NDDB However, this choice needs to be made, keeping in view the mission and competence of the organization, as discussed in the section on Internal Context earlier. Design of the livelihood activity Finally, the livelihood activity can be structured on different aspects in different ways. How livelihood promoters are going to organize the producers? Will they be self-employed or wage earners? Who will own the activity or network of activities? Who will manage it? And where will it source its funds? Apart from these choices, the type of employment an activity provides, its ownership, management and size are closely interlinked issues. The prime actor The first choice with whom the livelihood promoters are we going to work with: • individual self-employed entrepreneurs; • entrepreneurs who generate wage employment for others or • community owned livelihood activities, which generate profits in addition to wage employment? Livelihood opportunities often come in the form of micro-enterprises generating selfemployment. But, let us not forget that they also come in the form of wage employment.
need to be opportunities created for investment. AKRSP initiated various actions to address these issues. What started as a land and water treatment project culminated in a program for agricultural extension, training, marketing and institution building? One of the serious difficulties of integration is at the level of action. Though strategically an organization may chose to intervene in multiple areas, the man who actually delivers the services may find it difficult to prioritize and integrate the variety of services that are required.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Often livelihood interventions are designed with an assumption that, given the necessary training, capital and access to market, the poor producer will be able to establish and manage his/her own enterprise. An assumption is fine, but one should also first find out if s/he wants to be an entrepreneur? Why not ask ourselves: Do I want to run my own enterprise or am I more contended with a job? Does the poor producer want to run an enterprise or is s/he looking for regular wage employment? Second, if reducing risk is more critical than enhancing income, what is more risky? Running our own business or having regular wage employment? Finally, poor people out of necessity are highly entrepreneurial when it comes to coping in difficult economic circumstances. But not all poor people are good business entrepreneurs. We may need to ponder these issues and choose whether we would like to promote microenterprises that generate self-employment, or do we want to promote activities that generate wage employment? The latter may of course be more difficult, and in most cases, poor producers have no other option than to be self-employed. It may still be possible to organize micro-enterprises into a network of activites, which supply and buy from each other. DHRUVA’s (Case study 1) mango and cashew orchard development programme has supported a range of activities, comprising both the landed and the landless. For example, the landless are involved in manufacturing mango pickles, decorticated cashew, which are marketed and producing vermi-compost, which is used by all the farmers developing orchards. An alternative to both, self-employment and wage employment for a private enterprise, is to organize producers in a collective, such as a cooperative, a savings and credit group, a water users’ association. This leads us into issues of ownership and management of the livelihood activity. This often creates opportunities for employment-by-the-collective. Ownership of the livelihood activity Ownership is another related area of choice for designing the livelihood activity. Questions like, who will own the activity? Do they have the capacities to discharge the roles of the owner? What interest do they represent? Is there some party whose say in management of the activity has to be considered? Are we willing to give the power to the chosen group of owners? need to be addressed while designing the ownership. Ownership also has significant legal implications, it is useful to consult someone who has good understanding of the legal issues related to organizations. Livelihood Activities Owned by Individual Producers Examples of such livelihood activities include the tassar grainages promoted by PRADAN and the pedal pump promoted by IDE for irrigated agriculture. Livelihood Activities Owned by a Collective of Producers Examples of collectively owned livelihood activities include MEADOW, milk co-operatives promoted by NDDB and marketing of fish by SIFFS.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Livelihood activities Owned by the Livelihood Promotion Organization Livelihood activities owned by the livelihood promotion organization include several marketing organizations such as Dastkar, which markets handicrafts of a variety of producer groups. the Tassar products produced by the weavers. Livelihood Activities with mixed ownership Often the livelihood activities are organized in multiple tiers, with different tiers performing different functions in the value addition chain. These cases also open up opportunities of different tiers being owned and structured differently. For example in Tamil Nadu, SHGs at the village level have promoted a for-profit trust at the block level. These trusts in turn have invested in a Non Banking Finance Company, Sarvodaya Nano Finance Limited. What do we think are the advantages and disadvantages of each of these ownership structures?
Who’s in Charge? Managing the interface with rapidly changing markets is a highly skilled job. The dilemma is whether the capabilities of local communities can be built so that they can manage unfamiliar tasks (such as negotiating with export markets) themselves, or should hired professionals manage them? What could be the cost? If we had to pay the full professional fees of professionals, would we remain competitive in the market? As a marketing agency, the Association of Crafts Producers (see additional case-studies provided on the diskette) seeks to act as a buffer between producers and the vagaries of the market. Can we ensure that the producers are able to meet the demands of the market themselves? How will the losses, if any (that’s what is being a buffer means!) be borne?

Management of the Livelihood Activity Management of the livelihood activity need not always rest with the owners. Even in large corporations, owners engage a group of professionals to manage the enterprise. AMUL, though owned by farmers of Khaira District, is professionally managed. There are various such choices available. Producer-Managed Livelihood Activities Local producers themselves very successfully manage many small livelihood activities, which deal with local markets. However, there are many functions in larger business activites, which are difficult for local producers to manage. For example, functions like estimating sales trends in Bhopal city for broiler chicken, negotiating prices with urban consumers, surveying urban markets for consumer preferences in handicraft design, etc. may be some of them. Livelihood Activities Managed by Hired Professionals Many producer- owned livelihood activities hire professionals to manage key functions of their business. Managing business activities with a developmental focus involves special people. Such special people, however, are in short supply. When hiring professionals to manage producer-owned organizations, it may be challenging to build the capacities of local producers to maintain control over the management. Size of the livelihood activity The size of a livelihood activity should ideally be determined by viability considerations. Economic viability may suggest the need for a larger activity to achieve economies of scale. 22

S.Rengasamy – Understanding & Analyzing Livelihood Framework

But the limited ability of the producers to manage the activity may weigh in favor of a smaller activity. Collective ownership may be an option for managing a larger activity. Example, a farmers’ cooperative establishing a paddy-processing unit. PRADAN in its intervention has worked hard to divide the production processes for poultry and mushrooms. Those processes that require more capital investment are to be managed as a large enterprise by a collective group or by a more entrepreneurial member of the community. Other processes those are viable, as micro-enterprises should be managed by individual households. Funding of the Livelihood Activity Grant-based Funding Grants are good to start with and to provide a range of services in addition to the primary activity itself, but may lead to uncompetitive businesses, which close down when grant funds run out. External Context
Institutional conditions Objective of the Intervention

Demand condition

Intervening Agency Mission Capacity Funding People’s Livelihood Portfolio Capacity Strategy

Factor condition

Assets Awareness Ability Access

Nature of Intervention

Design of the livelihood Activity

Internal Context
Industry condition

Loan-based Funding Loans allow for proper investment in the business, but may be difficult to access and difficult to repay if the business fails. Equity Equity is more flexible and less risky than loans, and is in many ways the ideal finance for an activity, but is often very difficult for a micro or small enterprise to secure. The case of MYRADA-MEADOW (Case 6 in Module 2) provides an example where workers themselves

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

contributed equity-type funds to allow the business to invest in infrastructure. In many livelihood interventions, poor households provide sweat-equity in the form of their labor. Financial Orchestration We can also choose to have a combination of grants, loans and equity. This kind of financial orchestration gives us flexibility to do initial work (which is often not commercially feasible) with grant support and then take loans when the livelihood activity is in a position to scale up. Thus, we see that there are three design areas: Objective, the Nature of the Intervention and the Design of the Livelihood Activity, which are critical for designing a livelihood intervention. These choices are made in an Internal and External Context, both of which have several elements that one needs to take stock of. This is schematically represented as:
Exercise Now that we have seen the different ways of promoting livelihoods, we may already feel like a development professional. Just imagine how many choices, permutations there can be in an intervention! To restore our balance, why not return to the case studies in Module 2 to take a reality check? • Using the framework, compare the choices made in some of the interventions • What were the implications of each choice for the producers and for the intervention agency? • Why did the intervention agency make these choices, and what could they have done differently?

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Long Term Change Culture Type Orientation Leader Type

Value Drivers Theory of Effectiveness

Values Framework Individuality & Flexibility Culture Type Clan Orientation Collaborative Facilitator Leader Type Mentor Team Builder Commitment Communication Value Drivers Development Theory of Human Development & Effectiveness High commitment produce effectiveness

New Change Adhocracy Create Innovator Entrepreneur Visionary Innovative out puts Transformation Agility Innovativeness, Vision & Constant Change Produce effectiveness External Positioning Market Compete Hard Driver Competitor Producer Market Share Goal Achievement Profitability Aggressively competing & Customer focus produce effectiveness Fast Change

Internal Maintenance Culture Type Hierarchy Orientation Control Coordinator Monitor Leader Type Organizer Efficiency Timeliness Consistency & Uniformity

Culture Type Orientation Leader Type

Value Drivers Theory of Effectiveness Incremental Change

Value Drivers

Theory of Control & efficiency with Effectiveness capable processes produce effectiveness Stability Control

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Collection of Sustainable Livelihoods Framework Diagrams

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Impacts on Assets
Vulnerability Context Changes in Resources &Stocks Climate /Population Density /Conflict / Political Change / Technology /Markets

External Environment Situation of Rural people Capital Assets Natural Social Human Physical
Influence Policy & Institutional Context Laws of Government / NGOs /CBOs /Private Sector /Traditional / Donors Processes Laws /Policies / Incentives/ Services / Formal / Informal

Financial
Influence

Disease incidents

Impacts on Vulnerability

Livelihood outcome desired More income/Improved well being/ Reduced vulnerability/ improved food security / More sustainable use of NR Base Livelihood strategies chosen Natural Resource Based /On farm /Off Farm /Non NR Based /Migration (circular, Permanent, International Implementation Own Activities without support Activities supported by external

Negotiation on appropriate Structures & processes for the strategy Decide appropriate roles, self help, advice etc

Impacts on Livelihoods

Impacts on Institutions

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

IFAD Framework

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

BASIXS ISLP Livelihood Framework

External Context

Context of livelihood Intervention design

Institutional conditions Objective of the Intervention

Demand conditions

Intervening Agency Mission Capacity Funding People’s Livelihood Portfolio Internal Context Capacity Strategy

Factor conditions

Assets Awareness Ability Access

Nature of Intervention

Design of the livelihood Activity

Industry conditions

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

IMM Livelihood Framework
IMM1: Examples of People’s Key Characteristics

IMM.2.Livelihood Assets Human

Individual
Religion

Religion Personal History

Gender

Information
Gender

Personal History

Social

Ethinicity

YOU
Class/ Caste

Abilty/ Disability Ethinicity

YOU
Class/ Caste

Ability/ Disability

Age

Age Beauty

Physical

Beauty

Natural

IMM 3: People, Service Providers & Controllers

Relationships Controllers

Financial Service Providers

Relationships

Relationships

Human
Religion

Individual

IMM 3A.The short &Long routes to influence service providers

Long Route for influence

Information
Gender

Personal History

Social IMM3B:TheSeparation of Roles
Controller Service Provider

Controller

Service Provider

Ethinicity

YOU
Class/ Caste

Ability/ Disability

Short Route for influence
User

Age

Division of Roles

Physical

Beauty

Natural
User

Financial

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

IMM 4: Other Influences on Livelihoods

Controllers
Power Politics Relationships

Relationships
Markets Influences Culture Rights Language

Service Providers

Relationships

Human
Religion

Individual

Information
Gender

Personal History

Social

Ethinicity

YOU
Class/ Caste

Ability/ Disability

Age

Physical

Beauty

Natural

Financial

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

IMM.5.The Vulnerability Context

Vulnerability Context Shocks Changes & Threads

Controllers
Power Politics Relationships

Relationships Influences
Markets Culture Rights Language

Service Providers

Relationships

Human
Religion

Individual

Information
Gender

Personal History

Social

Ethinicity

YOU
Class/ Caste

Ability/ Disability

Age

Physical

Beauty

Natural

Financial
IMM 5 A :Ever-Changing Livelihoods

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

IMM 6: Hopes & Opportunities, Actions & Choices

Vulnerability Context Shocks Changes & Threads

Controllers
Power Politics Relationships

Relationships Influences
Markets Culture Rights Language

Service Providers

Relationships

Human
Religion

Individual

Information
Gender

Personal History

Social

Ethinicity

YOU
Class/ Caste

Ability/ Disability

Age

Physical

Beauty

Natural

Financial Hopes Choices Actions Livelihood Outcomes Opportunities

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Tribal peoples living in a remote forest area may have strong ties of kinship and mutual exchange (social capital), ample access to rich forest resources (natural capital) and an intimate knowledge of their local environment (human capital), but practically no financial or physical capital and limited access to formal education. The livelihood strategies they adopt will reflect this. They will use their knowledge to exploit a wide range of different natural resources in different ways, ensuring a supply of food, clothing, fuel and shelter through the year. Their ties of kinships and mutual exchange within their community will ensure that they are usually able to overcome episodes of vulnerability, such as sickness or the deaths in the family, without reliance on help from “outside”. But the physical capital available to them may be very specialized and appropriate to their local circumstances only. As a result they may have difficulty in adapting to any changes, such a those brought about by destruction of their forest environment or intrusion by outside influences. Similarly, their complete unfamiliarity with financial capital may leave them at a disadvantage if they find themselves involved in market transactions, even if they have products of potentially high market value. Poor people in rural areas may have only their labor capacity (human capital) and the financial capital they can generate through their labor, but very limited direct access to natural capital, low levels of education and knowledge, and a very low social status that weakens their social capital base. The poorest households may have extremely reduced “livelihood pentagons” with extremely limited livelihood assets of any kind at their disposal.

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Nine Square RLS Mandala

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

Human Capital
5 4 03 2

Existing Situation Desirable Situation

Physical Capital

1

Social Capital

Financial Capital

Natural Capital

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

40

S.Rengasamy – Understanding & Analyzing Livelihood Framework

LAL (Learning about Livelihoods) Framework

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S.Rengasamy – Understanding & Analyzing Livelihood Framework

LAL (Learning about Livelihoods) Framework

42

S.Rengasamy – Understanding & Analyzing Livelihood Framework Capital / Asset Pentagon N. Natural Asset P. Physical Asset S. Social Asset H. Human Asset F. Financial Asset
F 100

N 100

N 100

F 100

P 100

P 100

100 H

N 100

100 S

100 H

N 100

100 S

F 100

P 100

F 100

P 100

100 H

N 100

100 S

100 H

N 100

100 S

F 100

P 100

F 100

P 100

100 H

100 S

100 H

100 S

43

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