Improving the Impact of Market Reform on Agricultural Productivity in Africa: How Institutional Design Makes a Difference



credit, and output price incentives, especially for rice production in Senegal and white
maize production in Zimbabwe and Zambia (Wilcock et al. 1997; Randolph 1997; Mosley
1994; Howard and Mungoma 1997). Smallholders in Kenya, Zimbabwe, and Zambia have
been affected by a withdrawal of state buying stations (Mosley 1994; Jayne et al. 1994;
Howard and Mungoma 1997). In fact, the “smallholder green revolutions” achieved
temporarily in the 1980s in parts of the region (see Eicher 1995; Byerlee and Eicher 1997)
featured state-led investments in input delivery, credit disbursement and major expansion
of state crop buying stations, which increased incentives to adopt new high-yielding seed
varieties.8 These factors partially explain the dramatic increases in land and labor
productivity exhibited in Zimbabwe and Zambia between the 1980-84 period and the
1985-89 period (see Figures 1 and 4). However, this state-led model of service provision
to smallholders has proven politically and economically unsustainable (Howard and
Mungoma 1997; Jayne et al. 1994). The budgetary deficits incurred through these state-
led agricultural policies contributed to the macroeconomic crises that allowed donors to
exert control over agricultural policy formation under structural adjustment lending
programs.9 Privatized systems of fertilizer marketing to smallholders in much of Southern
Africa are constrained by climatic risk, underdeveloped credit markets, lack of responsive
varieties for drought-prone areas, high transport costs, risky output markets, and lack of
technical/management skills and information (Rusike et al. 1997). In Senegal, Kelly et al.
(1996) found that liberalization has improved cereal marketing efficiency. The production
impact has been small because peanuts (that have a controlled market) still provide greater
profits and more predictable markets.

• Land productivity generally increased more rapidly (or declined less rapidly) than labor
productivity in most countries examined since 1990. This is because the rural population
continues to grow at an average of 3% per year while the area cultivated is almost
stagnant in most countries due to constraints on the availability of additional fertile land.
There has also been a shift in population over the past two decades from the
agroclimatically unfavorable to favorable zones in the Sahel. This may partially account for
apparent increases in land productivity, in addition to the shift in crop mix from coarse
grains to higher-valued cotton.

• Mixed record of grain production growth: Grain production has declined since the reforms
were implemented in almost all the former UK-colony countries of Eastern and Southern
Africa (Table 1). Since the mid-1980s, population growth has outstripped grain
production growth in most of Eastern and Southern Africa (Table 1, column b). Even in
absolute terms, grain production during the 1990-1995 period is lower than in the 1980s

8 These incentives were to some extent eroded by currency overvaluation (see e.g., Quiroz and Valdes
1993; Jansen and Muir 1994).

9 Examples include the World Bank’s insistence that consumer subsidies on maize meal be eliminated
before Zimbabwe received additional structural adjustment loans in 1993.

10



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