GCRF - Conflict and Private Economic activity: an analysis of new harmonised household data from sub-Saharan Africa (COPE)

Lead Research Organisation: University of Sussex
Department Name: University of Sussex Business School

Abstract

Some scant evidence exists that conflict influences households' investment choices in economic activities, for example by reducing investments in relatively more capital intensive activities and in activities with longer term returns. However it is unclear to what extent such results can be generalized across conflicts and what other factors may affect the direction and intensity of these effects. Beyond the type of investment, it is also not clear how changes in conflict intensity affect the growth of investment and firm size.
This research aims to provide comparative evidence by improving our understanding of the impact of violent conflict on investment in entrepreneurial activities with different growth potentials. Methodology will consist in building a new dataset matching and harmonizing household surveys and violent conflict events for fragile and conflict states (FCS) in Sub-Saharan Africa (SSA). We will investigate how conflict affects the type of private investments by households - type of activity, firm size, and returns to investment - and how institutional, geographical, and individual characteristics influence this entrepreneurial choice. We will also investigate how changes in conflict intensity affect firm growth in size, investment, and profits. This project will make a number of crucial academic and policy contributions. Firstly, it will shift the focus from the effect of conflict on the number of entrepreneurial activities to the composition of entrepreneurial activities with different growth potentials. Secondly, it will improve on the identification of the average effect of conflict on entrepreneurial activity and private sector development at the micro level. Thirdly, it will improve substantially our understanding of the institutional, geographical and conflict related factors that mediate the impact of conflict on entrepreneurial activity. Furthermore, the inclusion of a large set of countries will allow to test for the external validity of these effects across several countries and types of conflict on which no such evidence exists. All these achievement will be obtained through an approach that will credibly identify the causality of conflict on economic activity through the use of a novel instrumental variable strategy and exploiting a new household panel dataset. Lastly, and more importantly, we will be able to test the effect of conflict as a barrier to firm growth in size and investment.
This research adds to a debate on pressing social and policy issues: conflict and economic growth. It is therefore particularly relevant not only for the academic community, but also for policy makers, peace builders and peace keepers, NGOs operating in the field, employers, public, social and private enterprises, trade unions, training institutions and young and old members of the workforce that seek and use information on employment and investment decisions. Our dissemination plan ensures that the findings of our research reach all the above stakeholders to inform their decision-making processes.

Planned Impact

WIDER BENEFICIARIES
The findings are of direct relevance for African, international and national government bodies that aim at fostering entrepreneurship, development and increasing conflict resilience (including Departments of Industry, Trade and Investment; Labour and Employment; Finance; Commissions on Corporate affairs; World Bank; African Development Bank; Development and Sahel and West Africa Club Department at OECD; and regional groups (e.g. Southern African Development Coordination Conference), employers, i.a. Entrepreneurs Unions, civil society pressure groups on conflict and peacekeeping, the third sector, including major funders with a focus on poverty and inequality and donor organisations e.g. Oxfam.
The results from the project will support all these stakeholders to articulate responses to the effects of conflict in the private sector induced by the highest risk attached to investments in private productive activities. The research will inform evidence-based policy to fine-tune incentives for firms and entrepreneurs to invest more capital, fuelling economic growth, while at the same time increasing inclusion, improving employment, and reducing income inequality.

ENGAGING WITH USERS THROUGH DISSEMINATION, COLLABORATION AND CAPACITY BUILDING
The project team itself having long been engaged with organizations that have contacts with members of committees in government, international bodies and NGO experts, represents an excellent platform of joint academic excellence (SPRU and the School of Global Studies at the University of Sussex) and policy impact (World Bank, IPCR, PeaceDirect) to ensure the widest benefit in terms of academic and non-academic impact. This will be done through three engagement and three dissemination events across SSA, policy reports and research briefs, and an advisory commission on policy action with stakeholders included in the project activities (IPCR, World Bank, PeaceDirect).
The collaboration with PeaceDirect will be essential as the organization will commit to disseminate results from the research across different countries, translating the policy messages in other languages. Also SPRU, the School of Global studies, IPCR, and PeaceDirect teams have long-standing experience in academic and non-academic dissemination.

RELEVANCE
The topic addressed by this research is of utmost relevance and has entered the frontline of both UK and international debate following the recent publication of the UNCTAD Report (2015), which suggests that entrepreneurship plays a crucial role in creating conditions that will bring stability to communities and foster peace. The project will produce high quality academic research through the usage of different datasets, and it will focus specifically on the decision about the type of entrepreneurship conducted, the level of employee hired and the amount of capital invested.
The findings will allow engaged stakeholders to increase awareness about the relevant aspects of the current impact of insecurity on private activity, intervene in defence of the weakest groups in society, and lobby by informing about the best-practices for targeting the main effects of conflict on entrepreneurship.
For similar reasons the findings will highly benefit the actions of entrepreneur unions, as well as peacekeeping and peacebuilding organizations, particularly with reference to dimensions of post-conflict poverty and directly connected with employment, earnings, education and skills.
While the stakeholders mentioned above will benefit from the research directly, our purpose is to have a wider impact on the society. We hope that a clearer understanding of the different competing mechanisms will inform policies to lower firm failures in the mid to long term. We hope to stimulate further research and data analysis and collection, which will further inform decision making beyond the continental level.
 
Description It must be acknowledge that all the findings are relevant to low and middle income countries, particularly those that experience violent conflict

The objectives of the project were:
1) to investigate the causal effect of violent conflict on dynamics and composition of private economic activities across countries/conflict/institutions/geographies;
2) in order to address (1), to build a new dataset combining and harmonising household surveys and violent conflict events for fragile and conflict states (FCS) across sub-Saharan Africa (SSA) countries;
3) to work with non-academic partners to maximise engagement and policy impact;
4) to produce high quality academic outputs;
5) to ensure training and capacity development of Early Career Researchers (ECRs).

We start from Objective (2), which is foundational to all others:
Objective (2) has taken significantly longer than expected due to difficulties in accessing household data, from such diverse SSA countries, each with their own data sharing policies. Although we eventually managed to collect existing household survey run during a year of violent conflict in a SSA country, we did not harmonise all of them. We did not harmonise the data of countries for which we had non solvable difficulties in acquiring the geolocation of the household, village, or survey cluster, or any other subnational geographic level fine enough to make the information useful to identify the household proximity to violent conflict event (despite numerous interactions with the statical offices or other actors who may have access to the data).
We have now produced a database that harmonises information on the following household features related to private economic activity and violent conflict: employment and entrepreneurship; credit and other money transfers; demography; education; household assets, including housing; land and livestock; migration; community and social capital.
The data base covers the following country/years that are used in the analysis in (1): Angola (1999); Burundi (1998); Cameroon (2001, 2007, 2010); Ethiopia (199, 2004, 2001, 2013, 2015); Kenya (1997, 2005); Madagascar (2001, 2009); Mali (2008, 2014); Mozambique (2008); Niger (2007, 2013); Nigeria (2010, 2013, 2015); Rwanda (2000, 2010); South Sudan (2008); Uganda (1999, 2002, 2005).
Data for other countries were collected, but not harmonised due to difficulties in accessing data about households location -- which would make them not usable in the analysis of this project (these data can be harmonised in the future, if needed and if other researchers/project may be interested, even without access to geolocation). These countries are Chad (2003); Congo, Democratic Republic (2005); Cote D'Ivoire (2002); Guinea (2002, 2007, 2012); Liberia (2007, 2010).
As reported in the data manual that we wrote in the form of a report, the data alone provides an extremely rich description of households across very different countries, for years in which they have suffered violent conflict. Abstracting from the many details in the paper, this comparative description of the above SSA countries clearly shows the importance of comparing the microeconomic impact of violent conflict across different countries: although these countries share the feature of being in conflict, households are affected in crucially different ways in different country settings.
We have geocoded most, but not all of the household in the above countries: Burundi (1998); Cameroon (2001, 07, 10); Ethiopia (2011-16); Kenya (2015); Madagascar (2009); Mali (2014); Mozambique (2008); Niger (2007, 13); Nigeria (2010-15); Uganda (1999, 2002, 05).
We will are exploring a process to acquire permission from the various data owners to publish the report, together with access to anonymised data on a public repository, e.g. the Humanitarian Data Exchange (HDX) or Zenodo.

Objective (1)
We have produced two different analysis/papers:
a) the impact of violent conflict on the probability that households own an activity as self-employed or as non farming enterprise (NFE), across 10 Sub-Saharan African countries (SSA);
b) the impact of violent conflict on NFE performance in Nigeria, and the mechanisms that drives such impact.
a) Main findings from (a) are :
i) Across the 10 countries, a higher level of violent conflict reduces the number of households that own a self-employment activity but has no impact on the number of households that own a non-farm enterprise.
ii) However, there are substantial differences across countries. The negative impact on self-employment dominates in Cameroon, Mali, Niger, Mozambique and Uganda (no impact is found in Burundi, Ethiopia, and Nigeria). Although overall there is no impact, violent conflict has a negative impact on the probability of holding a NFE in Mali and Nigeria (where the conflict is stronger).
iii) Some of these differences are driven by the sector of activity: violent conflict reduces self-employment in non mobile activities such as agriculture, accommodation and food services, but increases self-employment in more mobile activities such as wholesale and retail trade
iv) Typically, poorer and less educated households own a self-employed activity, and richer and more educated households own a NFE.
v) Contrary to the literature, we find that, across SSA countries, violent conflict has a negative impact on activities that are smaller and owned by the least wealthy. Violent conflict then increases even more poverty by increasing their vulnerability.
Although the analysis may suffer from data measurement issues related to the difficulties of collecting and harmonising all these data, we have run a large number or robustness check and identification strategies; the main message seem to not change.

b) Main findings from (b) are
Although NFE owners do not consider violent conflict as a major obstacle to running a firm, when they are asked directly
i) Conflict intensity in Nigeria has a negative impact on the performance of micro firms, reducing both labour productivity and profits. This is because micro firms sales drop, but labour does not adjust accordingly
ii) Safety does not appear as a main constraint to operating a business for NFE managers. Instead, they indicate that access to finance, higher interest rates, local demand reduction and electricity costs as the main constraints.
iii) The drop in NFEs' sales is mainly due to supply side constraints: reduced access to inputs and increased costs lead to a reduction in firm investment. Instead, the cost of labour reduces.
iv) Violent conflict does not seem to have a strong impact on local household expenditures (although this doe snot exclude that demand does not reduce, if the price of good and services increase -- unfortunately we did not have the data to measure satisfactorily price changes).
v) Taken together, the evidence suggests the following dynamics: as a village experiences an increase in violent conflict, the supply of inputs reduces and their cost increases. Because NFE operate with a tight budget, and may need to make a choice between purchasing basic goods or purchasing inputs and capital (and they may not fully replace capital and intermediate inputs with labour), they reduce inputs and production. Demand adjusts more slowly than supply, likely because a reduction in consumption may have a strong impact on household welfare, maintaining prices high. This is coherent with a general increase in local prices.

Objective (3)
3) We have spent 9 months to devise an engagement and dissemination strategy together with the Nigerian Institute for Peace and Conflict Resolution (IPCR) and the international NGO Peace Direct. Due to a number of unforeseen circumstances the engagement in Nigeria has been postponed twice. Eventually, in the last week of March 2019 we have discussed the results discussed in Objective (1) in three Nigerian states that suffer from violent conflict: the North (Kano), the south (Calabar), and the centre afflicted by confrontation between herders and settlers (Makurdi).
https://peoplesdailyng.com/ipcr-partners-sussex-varsity-to-address-sub-sahara-africa-conflict/
https://issuu.com/pml01/docs/270319/5
And policy brief here: https://blogs.sussex.ac.uk/policy-engagement/files/2019/04/Research-brief-nigeria.v3.pdf
These events have been very well attended by local stakeholders (including academics, NGO representative, policy makers, small business owners). The discussion generated by the results have provided crucial insight that have benefitted the continuation of the analysis during the last months of the project. By and large, results were well received by local stakeholders, and the discussion that ensued provided further insights to interpret them.

Before the end of the project, the researcher presented their findings at an international policy workshop organised by the Institute for Peace and Conflict Resolution (IPCR) in July 2019, in Abuja, Nigeria.
The event brought together policy, civil society and key stakeholders from more than thirty organisations and NGOs active in Nigeria and other Sub-Saharan countries including members of the Nigerian Government and national media, as well as representatives from the World Bank and universities from across the region.
With several regions in Africa blighted by on-going violent conflict, the workshop enabled participants to better understand how small businesses could be assisted in conflict-affected communities by discussing the challenges in relation to violent conflict and private economic activity across Sub-Saharan Africa and proposing specific policy recommendations to support the resilience of micro and small firms in areas of violent conflict.
Please find report here: http://www.sussex.ac.uk/spru/newsandevents/2019/engagement/cope
More info may be available on local news
https://talkam.home.blog/2019/07/31/ipcr-seeks-public-policy-on-small-businesses-on-conflict-zones-talkamnews/
https://www.sunnewsonline.com/small-businesses-ipcr-university-of-sussex-meet-over-sub-saharan-conflict/
https://www.von.gov.ng/ipcr-ready-to-address-conflict-issues-across-sub-saharan-africa/

Objective (4)
We have so far produced three draft papers, none of which has been yet submitted to a journal -- but are all in the process of revising before submitting
1) One report describing the new dataset harmonising and geocoding household survey from across several SSA countries (objective (2) above)
2) One academic paper on the impact of violent conflict across SSA countries -- due to the difficulties mentioned above in pulling together the data, we are stil revising some of the analysis for this paper
3) One academic paper on the impact of violent conflict on firm performance in Nigeria and the mechanisms through which violent conflict has such impact

The project has also contributed work on two more side outputs
4) An academic paper on the impact of violent confit on self employment in Afghanistan -- close to submission
5) A literature review on the ration between violent conflict and entrepreneurship -- to be revised but close to submission

Finally, we have produced three research briefs to disseminate results to a broader (non academic) audience

Objective (5)
Despite the small size of the award, a large number of ECRs and research assistant were involved int he project at different stages, have contributed to it, and were supervised on different activities.
Giuseppe Maggio (University of Sussex, now moved on to FAO), ECR co-I, has been working on the project since the beginning on data harmonisation, data collection, geolocation, analysis, and co-authoring papers. Giuseppe is now a definitely mature and independent researcher
Abiodun Egbetokun (NACETEM, Nigeria), ECR partner, has been working on the project since the beginning on data harmonisation, geolocation, and co-authoring the database report
Adekemi Oluwadare (NACETEM, Nigeria), ECR officer, has worked on data harmonisation and geolocation, and co-authoring the data report
Maruf Sanni (NACETEM, Nigeria), ECR, has worked on data harmonisation and geolocation, and co-authoring the data paper
A large number of research assistants (Master students) in Nigeria (NACETEM) have contributed to data harmonisation, especially on geocoding. They were trained by Abiodun Egbetokun
Annalena Oppel (IDS, University of Sussex), PhD student, has worked as research assistant on data harmonisation for several months. She has also worked on revising the whole data harmonisation procedure and stata do file for consistency. And contributed co-authoring the data report
Exploitation Route First, the objective (2) above will produce a unique and highly valuable database that can be used by a large number of researchers and policy makers to study the impact of conflict on several households outcomes. We estimate this to become a valuable resource with multiple ways in which it can be taken forward. We still have to open publication of the report describing the harmonised data. Once published online, we will have to make agreements with the country offices to be able to deposit the data in a repository that will be accessible to all (e.g. HDX and Zenodo).

Second, results on the impact of households choice to invest in a private economic activity, and on the behaviour and performance of small firms will provide crucial results on micro channels though which conflict influences households welfare. These channels will be crucial to design policies to improve resilience and sustainability.
This has been the core of the debate and crucial policy outcomes discussed in engagement and dissemination workshops in Nigeria with several stakeholders.

Third, the results across countries clearly indicate how violent conflict negatively affect mainly the more vulnerable, making them even more vulnerable, across SSA. However, important differences exist across countries and sector, which require much more research for policies to be more effective.

Fourth, starting from the result of our research, it will be possible to further investigate how private economic activity may contribute to reducing conflict.

Overall, as we know, a large proportion of the poor and migrants leave in conflict or fragile countries. At the same time, private economic activity is a crucial source of livelihood and economic development. Our results will open a large number of questions about how conflict, private economic activity, household welfare, and pace-building may be related.
Sectors Communities and Social Services/Policy,Education,Government, Democracy and Justice,Security and Diplomacy

 
Description It must be acknowledge that all the findings from this award are relevant to low and middle income countries, particularly those that experience violent conflict In particular the research is relevant for the following SDGs 16: peace, justice and strong institutions. Results from the research help devising strategies that can support the economic activity of small entrepreneurs in the informal sector, which may also lead to lower tensions. 8: decent work and economic growth. Results from the research help to better understand how to support economic activities, in the informal sector, which can help in reconstruction, employment and wealth creation after the conflict. We are not yet in position to clearly define specific actions/decision taken on the basis of this research outside academia We have discussed the main project results i thee meetings during the last week of March 2019 in three Nigerian states that suffer from violent conflict: the North (Kano), the South (Calabar), and the middle belt afflicted by confrontation between herders and settlers (Makurdi). https://peoplesdailyng.com/ipcr-partners-sussex-varsity-to-address-sub-sahara-africa-conflict/ https://issuu.com/pml01/docs/270319/5 These events have been very well attended by local stakeholders (including academics, NGO representative, policy makers, small business owners). The discussion generated by the results have provided crucial insight. By and large, results were well received by local stakeholders, and the discussion that ensued provided further insights to interpret them. However, we were not directly informed of any direct application of the findings. Before the end of the project, the researcher presented their findings at an international policy workshop organised by the Institute for Peace and Conflict Resolution (IPCR) in July 2019, in Abuja, Nigeria. The event brought together policy, civil society and key stakeholders from more than thirty organisations and NGOs active in Nigeria and other Sub-Saharan countries including members of the Nigerian Government and national media, as well as representatives from the World Bank and universities from across the region. With several regions in Africa blighted by on-going violent conflict, the workshop enabled participants to better understand how small businesses could be assisted in conflict-affected communities by discussing the challenges in relation to violent conflict and private economic activity across Sub-Saharan Africa and proposing specific policy recommendations to support the resilience of micro and small firms in areas of violent conflict. Please find report here: http://www.sussex.ac.uk/spru/newsandevents/2019/engagement/cope More info may be available on local news https://talkam.home.blog/2019/07/31/ipcr-seeks-public-policy-on-small-businesses-on-conflict-zones-talkamnews/ https://www.sunnewsonline.com/small-businesses-ipcr-university-of-sussex-meet-over-sub-saharan-conflict/ https://www.von.gov.ng/ipcr-ready-to-address-conflict-issues-across-sub-saharan-africa/ The results and events clearly influent IPCR thinking on the role of conflict in stifling the economy where most of the Nigerians, and youth across SSA countries are employed. IPCR is trying to bring this agenda forward, within Nigeria and beyond, through their connections in SSA. IPCR has been willing to lobby the Government (IPCR is a Government agency) in shifting their attention from large to small and micro companies and the difficulties they face with conflict. However, i have not been informed of practical actions and uptakes, beyond discussions at Government level, and with other NGOs.
Sector Government, Democracy and Justice,Security and Diplomacy
Impact Types Societal,Policy & public services

 
Description New and Emerging Forms of Violence Data for Crisis Response: A Comparative Analysis in Kenya
Amount £199,015 (GBP)
Funding ID ES/P010709/1 
Organisation Economic and Social Research Council 
Sector Public
Country United Kingdom
Start 02/2017 
End 06/2018
 
Title Sub-Saharan African in-Conflict Countries: A Database 
Description We harmonised household (HH) data for 29 surveys across 15 Sub-Saharan countries. We first systematically compared the relevant questionnaire's sections and the related data. Second, following a "minimum common denominator (MCD)" principle, for each section we retained the most common variables, and for each variable we selected the common information (for instance in terms of response options) (see for other examples Kowal et al., 2000, Carletto et al., 2013). We focussed on a key number of sections such as individual/household-level labour activity, and other types of demographic, educational, and socio-economic information. The work has involved data mining and management, as well as the creation of a word log illustrating all the procedure applied for each variable. For all individual level variables, we have used the individual information, and then collapsed to household level by minimum, maximum, median, or mean, as needed. For the selection of surveys/years, we have followed three steps. First, we have identified all the surveys available in Sub-Saharan African countries containing information on household's private economic activity (PEA) and entrepreneurship. In a second step, we have identified conflict-years using ACLED data. Conflict-years have been defined as periods where the country experienced a higher level of conflict activity compared to its historical distribution. In doing so, we have also considered a minimum threshold of conflict events, to avoid the inclusions of countries that experienced a small number of conflict events, but were not experiencing a systematic conflict. In a final step, we have selected exclusively the surveys conducted during these conflict-years. Next, we geocoded households in order to be able to measure co-location with conflict activities. This is based on first accessing information on the household village through statistical offices (facilitated by World Bank partners) and then geocoding the villages. Due to several difficulties with finding reliable gazetteers this process is still ongoing. We are in the process of cross checking using different automatic retrieval and manual methods. 
Type Of Material Database/Collection of data 
Year Produced 2018 
Provided To Others? No  
Impact We are still geocoding villages, to make it useful to study the impact of conflict on households. We are still checking the data for any inconsistency, We will and seek authorisations to be able to publish online as a last step 
 
Description Peace Direct 
Organisation Peace Direct
Country United Kingdom 
Sector Charity/Non Profit 
PI Contribution We collaborate with Pace Direct, an international NGO, to organise dissemination evens at the end o fate project in Democratic Republic of Congo and Uganda. We provide them with the analysis on the data harmonised across SSA countries
Collaborator Contribution Peace Direct was supposed to translate the results from the analysis in a way that is appealing and interesting to several stakeholders They were also supposed to organise the dissemination events, exploiting an extended network in several SSA countries where they have ongoing projects As they pulled out in 2019, we organised events with IPCR and the Sussex communication team
Impact No events organised since the parent pulled put
Start Year 2017
 
Description GCRF Global Engagement Meeting 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact The event was designed to contain a mixture of plenary sessions, workshops and networking opportunities with more than 100 attendees from different countries, different disciplines, and from a mix of academic and non-academic organisations (e.g. non-governmental organisations; charities; policy makers; international funders). We presented the the work done within COPE, its motivations and implications. I have no idea about the actual impact, but the presentation raised a lot interest and further engagement with many participants in the following days.
Year(s) Of Engagement Activity 2018
 
Description GCRF/UNDP Workshop 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Third sector organisations
Results and Impact The presentation was part of an initial engagement between GCRF and UNDP, in particular in relation to the then published Pathways for Peace Report.
The event helped discussing a new research agenda between GCRF and UNDP
Year(s) Of Engagement Activity 2018
 
Description Sussex GCRF event 
Form Of Engagement Activity Participation in an open day or visit at my research institution
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Researchers and postgraduate students attended to learn about GCRF funding and topics
Year(s) Of Engagement Activity 2019
 
Description Workshop on Exposure to Armed Conflict and Private Economic Activity 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Several scholars and international policy organisations participated to exchange results and ideas on the exposure to armed conflict and private economic activity
Year(s) Of Engagement Activity 2022