Introduction: African Farmers and Firms in a Changing World

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.