Guide to Rural Economic Enterprise Development

The Rural Economic and Enterprise Development (REED) approach aims at diversification and innovation of the rural economy, increasing its market orientation, and fostering value addition to rural products. The intensification of agriculture and the transformation of agricultural and natural resource products will lead to additional non-farm employment, increased local incomes, and greater demand for local agricultural and non-farm products. REED therefore aims at stimulating and enhancing the sectoral links between agriculture, agribusiness (which forward and backward links to agriculture) and non-agricultural economic activities (including service provision).

REED views entrepreneurs and the private sector as the main drivers of sustainable rural development, and emphasises the importance of providing an enabling environment for marketoriented economic activities. However, REED also has a public policy element, which focuses on the provision of basic rural infrastructure (soft and hard) and services that foster poverty reduction and economic growth. Rural economic and enterprise development needs a policy environment conducive to fostering investment and increased effectiveness of existing public and private institutions. Public policy needs to strike a balance between the public interest in reducing poverty levels and improving the livelihoods of the majority of the population on the one hand and, on the other, stimulating efficient markets as a basic element of sustainable economic development.

Although agriculture remains the most important livelihood of the rural poor, REED has the potential to help them to diversify their income-generating activities by stimulating engagement in value addition to rural products and in non-farm production and services, which provide additional income opportunities and reduce household risk. It allows people to graduate from subsistence and food security activities to improved, diversified and sustainable livelihoods.

After a chapter covering background details and rationale, chapter 2 presents the ten cornerstones for successful intervention in rural economic and enterprise development:

  1. An enabling environment that provides for an attractive investment climate and fosters dynamic entrepreneurship;
  2. Adequate mechanisms and structures that address local needs;
  3. Active private sector institutions and linkages;
  4. Functioning and effective infrastructure (hard and soft);
  5. Access to integrated and open markets;
  6. Access to effective and efficient support services and resources;
  7. Adaptive management capacity and entrepreneurial competence within business and enterprises;
  8. Local organisations, groups and associations (representing the poor) as building blocks;
  9. Active participation in and ownership of development processes by well-linked stakeholders; and
  10. Ongoing learning from success and failure by all stakeholders.

Chapter 3 describes how to apply them, and discusses areas and institutional settings where the Guide can make useful contributions to situation analysis, strategy development and evaluation. The Annex provides detailed information on implementation methods and links to case study information and other resources.

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