Delivering Sustainable Growth in Africa

The economic situation in sub-Saharan Africa has undergone a recent transformation. After a long period of stagnation in the 1980s and 1990s, the 2000s have witnessed significant growth in GDP per capita. Although the growth rate of the region is lower than that of East Asia, currently it is significantly higher than that seen in previous decades (Figure 1.1). Arbache et al. (2008) confirm this acceleration of growth in the period following the mid-1990s, observed not only in the oil-exporting countries of sub-Saharan Africa but also across other low-income countries. The key factor in this improved economic performance is the upsurge in prices of commodities such as oil, minerals, and agricultural products—the primary exports of most African countries. Given the heavy reliance on the export of primary commodities, commodity price hikes significantly increased export earnings and, accordingly, terms of trade. The latter had witnessed a gradual decline in the 1980s and 1990s, showing improvement in the 2000s. Moreover, the upscaling of aid flows following the commencement of the Millennium Development Goals has been another factor. Enhanced commitment of the donor community increased the amount of aid flowing into Africa, thereby increasing the GDP through consumption of locally sourced products and services, such as those in the construction industry.

Agricultural markets in developing countries have experienced many changes over the past decades (Jaffee and Morton, 1995; Dolan and Humphrey, 2000; Minot and Ngigi, 2004; World Bank, 2008). The domestic agricultural supply chains, which were formerly dominated by parastatal organizations, have been liberalized in many countries due to a series of policies such as the Structural Adjustment Programme. This invited the massive entry of private traders, making the domestic market more competitive. At the international level, many tariff barriers have been mitigated as preferential treaties have been signed for developing countries. The role of retailers (both in developing and developed countries) in procuring the raw produce from farmers has also increased. In addition, improved modes of transport have also reduced transportation costs. All these changes have contributed to providing farmers in developing countries with greater access to global markets. On the other hand, competition in global markets is becoming unprec-edentedly intense, and non-tariff barriers in the form of stricter food quality standards and traceability requirements have been increasing (Jaffee and Henson, 2004; Henson et al., 2008). This trend may be causing small-scale farmers in developing countries to become marginalized from global markets.