Journal of African Economies, Volume 13, Number 90001, i16-i65
Journal of African Economies, Vol. 13 No. AERC
SUPPLEMENT 1 © Centre for the Study of African Economies 2004; all rights
reserved
Rural Development, Growth and Poverty in Africa
a University of Nairobi
b Cornell University
The paper argues that rural-based policies in Sub-Saharan Africa have the potential to stimulate overall growth and reduce poverty because poverty is mainly a rural phenomenon. Further, rural development is likely to have a salutary effect on the whole economy for several reasons. First, rural-based growth is typically accompanied by improvements in income distribution. Secondly, where reduction in income inequality comes from land reform and changes in land tenure, it has a tendency to increase agricultural productivity because of the resultant intensification of labour input on land. Thirdly, rural development inevitably involves increased investment in human capital of the poor, which in addition to expanding their economic opportunities, improves their quality of life directly. Fourthly, by expanding the tax base for the modern sector, rural development can empower governments to reform distortionary taxes, especially on agriculture, and thus increase overall efficiency in the economy. Although African agriculture — the usual emphasis in povertyreduction strategies — remains the principal source of employment and incomes for most rural people, its dynamism depends critically on conditions prevailing in rural non-farm sectors. Similarly, growth in non-farm sectors creates opportunities for higher incomes and employment in agriculture. Thus, agriculture and the rural non-farm sector complement each other in the process of rural development.