Grow Rural Incomes Off the Farm

March 19, 2014

Photo: World Bank Group

Non-farm income is important for people living in rural areas—to supplement and diversify livelihoods or replace farm income. Rural non-farm income includes earned and un-earned income received by rural people from the urban economy (via temporary migration, remittances, welfare, pensions, interest), and the rural non-farm economy through activities based in rural towns such as manufacturing, processing, and construction. 

Non-farm livelihoods can absorb excess labor, and create employment in middle-income countries that are transitioning away from agriculture-dominated economies.

To boost incomes beyond the farm, the World Bank helps improve the rural investment climate, invests in rural infrastructure, and works with countries on livelihood programs and skills training.

Improving the Rural Investment Climate

The Bank uses analytical work to advise countries on how to improve the investment climate for smallholder farmers, traders and others involved in agriculture. Enabling the Business of Agriculture looks at how laws, regulations, policies and infrastructure affect the ability of farmers to produce, sell and buy their products, and deliver affordable food to a growing population.

The Bank also invests in roads, telecommunications and other infrastructure in rural areas to lower transaction costs, increase connectivity, and raise incomes. The Bank’s work to improve rural roads in Sri Lanka has made it easier for small tea estate holders to bring their products to market. The Bank has also built bridges in Afghanistan’s remote Panjshir Province, co-financed the construction of water systems in rural Haiti and improved broadband internet in Tonga, which has allowed farmers to seek international buyers for their products and use smartphones to manage pests in the field.

Training for Improved Livelihoods

The Bank supports better-quality education and skills training so that the rural population can develop the skills they need to get non-farm jobs and build rural enterprises.

In Malawi, the Bank took actions to increase off-farm opportunities for women: funding for men and women was made equal, training areas were placed closer to home villages, bicycles were purchased so women could access technical assistance, and women were trained on assertiveness and how to advocate for their rights. In Rajasthan, the Bank provides support towards implementing adaptation approaches in community water resources management, diversification of farm and non-farm livelihoods, and climate risk management tools to respond to drought induced by climate, with a focus on women.

Livelihood programs that build up the physical, financial and social assets of the rural poor can also raise their incomes. The Bank supports strong networks that push for collective action, demand greater representation and can access bigger economic opportunities. It also provides training that improves entrepreneurial, administrative, technical and social skills; programs that provide access to credit, savings, insurance and matching grants; and partnerships that link rural groups with markets and the private sector. In Sri Lanka, entrepreneurship and financial skills training helped thousands of families lift themselves above the poverty line.