Rural Nonfarm Enterprises in Tanzania’s Economic Transformation

The chapter explores the nature of rural nonfarm activities to better understand their contribution to the economic development and diversification of rural areas or rural transformation. Numerous data sources are used to demonstrate rural household participation in the nonfarm economy. They also reveal heterogeneity in firm productivity by sector. Using a probit analysis, we identify the characteristics of firms that make them more likely to fall into a category of ‘high potential’ firms in order to better understand the correlates of enterprise success in rural areas. We found the following for rural businesses: (i) those owned by females are less productive; (ii) businesses that operate full-time are more productive; (iii) businesses operated by owners who live in households that are not poor are more productive; (iv) owners who see their businesses as growing are more productive; and (v) businesses with more customers and regional (vs local) customers are more productive.

Youth and Jobs in Rural Africa

Theories underlying the relationship between urbanization and transformation are being challenged by trends in Sub-Saharan African countries, since many have yet to observe their own “green” or industrial revolutions, despite moderate urbanization. Africa’s trajectory is very different than those of other developing regions, a main reason for which is the region’s significant “youth bulge” and the lack of a labor market outlet for this growing subpopulation. In many countries, the youth are driving the (albeit slow) movement out of agriculture, yet rather than migrating to urban areas, many are finding (usually informal) work in secondary cities, their peri-urban spaces, and the rural nonfarm economy. This book examines the overall trends in youth migration, policies, and political activism, then looks specifically at five African case studies to identify key trends and provide recommendations on encouraging youth to spur structural change. Conclusions reached in this book include that the rate of structural transformation varies among countries in Sub-Saharan Africa, but in most cases, it is the youth who are driving these changes. Education, access to financial services, and agricultural productivity contribute to this structural transformation and can act as pushes or pulls out of agriculture for the youth. However, when structural transformation policies are not pro-poor or inclusive, it can result in higher levels of youth under- and unemployment. Thus, the conclusions point to recommendations focusing on agricultural productivity, the rural nonfarm economy and informal sectors especially along agriculture value chains, access to finance and savings, infrastructure, and education.

Urbanization and its Impact on Ghana’s Rural Transformation

Urbanization without industrialization is a major feature in Ghana, as elsewhere in much of Africa. This chapter explores how urbanization in Ghana has affected agricultural development in terms of rural employment, the farm size distribution, and use of modern inputs. In examining these relationships, the authors recognize that there have been distinct spatial patterns of urbanization in Ghana, and urbanization has not affected agriculture equally throughout the country. Therefore, the chapter develops a spatial typology of seven types of districts based on their city population size and location in the north or south of the country and examines the share of households employed in agriculture, nonagriculture, or both across these different district types. The findings illustrate that urbanization is increasing the share of rural households in the nonfarm economy, and contributed to a shift towards more medium-sized farms in the agriculturally important areas of the north. The chapter further tests the induced innovation hypothesis, which predicts that urbanization and associated increases in population density and market access should lead to more intensive farming practices. The findings show though that while there has been substantial uptake of fertilizers, herbicides, and mechanization in recent years, there is only limited support that this has been driven by urbanization.