The Non-Recovery of Agricultural Tradables and Enduring Rural Poverty in Sub-Saharan Africa

In most sub-Saharan African (SSA) countries there is a strong connection between tradables recovery and the alleviation of rural poverty through higher farm incomes, agricultural wages, rural multiplier effects and inter-sectoral linkages. Liberalisation policies, as elaborated in the Berg report (1991) and subsequent World Bank documents, stressed the importance of reversing stagnation in agricultural tradables by ‘getting prices right’ and removing state monopolies on marketing. Increasing producer prices and devaluing overvalued exchange rates was seen as the means of increasing export revenues and reducing current account deficits. This paper examines the performance of agricultural tradables through the reform phase for a selection of sub-Saharan African countries to see how far recovery has taken place. The descriptive statistics show that agricultural tradables recovery has not been sustained and that in real terms, prices have fallen rather than risen, while the relative prices of non-tradables have increased. A simple model of the determinants of tradables output is tested using data for 14 SSA countries and six major tradables. The results show that, contrary to conventional theory, none of the price variables underlying liberalisation are significantly associated with tradables output, indicating the importance of non-price factors such as the reform of institutions. The final part of the paper examines variations in the relevant institutional arrangements and evidence for ‘export pessimism’ attitudes which may have hindered sustained tradables recovery and the alleviation of rural poverty.