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Understanding the Role of Rural Non-Farm Enterprises in Africa’s Economic Transformation: Evidence from Tanzania

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  • Xinshen Diao
  • Eduardo Magalhaes
  • Margaret Mcmillan

Abstract

Tanzania’s recent growth boom has been accompanied by a threefold increase in the share of the rural labour force working in nonfarm employment. Although households with nonfarm enterprises are less likely to be poor, a substantial fraction of these households fall below the poverty line. Heterogeneity in the labour productivity of rural nonfarm businesses calls for a two-pronged strategy for rural transformation. Relatively unproductive enterprises may be part of a poverty reduction strategy but should not be expected to contribute to employment and labour productivity growth. Failure to account for this heterogeneity is likely to lead to disappointing outcomes.

Suggested Citation

  • Xinshen Diao & Eduardo Magalhaes & Margaret Mcmillan, 2018. "Understanding the Role of Rural Non-Farm Enterprises in Africa’s Economic Transformation: Evidence from Tanzania," Journal of Development Studies, Taylor & Francis Journals, vol. 54(5), pages 833-855, May.
    • Handle: RePEc:taf:jdevst:v:54:y:2018:i:5:p:833-855
    DOI: 10.1080/00220388.2018.1430766
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    Cited by:

    1. Jehovaness Aikaeli & David Garcés‐Urzainqui & Kenneth Mdadila, 2021. "Understanding poverty dynamics and vulnerability in Tanzania: 2012–2018," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 1869-1894, November.
    2. Oriana Bandiera & Ahmed Elsayed & Andrea Smurra & Céline Zipfel, 2022. "Young Adults and Labor Markets in Africa," Journal of Economic Perspectives, American Economic Association, vol. 36(1), pages 81-100, Winter.
    3. Atenchong Talleh Nkobou & Andrew Ainslie & Stefanie Lemke, 2022. "Broken promises: a rights-based analysis of marginalised livelihoods and experiences of food insecurity in large-scale land investments in Tanzania," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 14(1), pages 185-205, February.
    4. Adella Albert Ng’atigwa & Aloyce Hepelwa & Mastewal Yami & Victor Manyong, 2020. "Assessment of Factors Influencing Youth Involvement in Horticulture Agribusiness in Tanzania: A Case Study of Njombe Region," Agriculture, MDPI, vol. 10(7), pages 1-17, July.
    5. Clementi,Fabio & Fabiani,Michele & Molini,Vasco & Schettino,Francesco, 2022. "Is Inequality Systematically Underestimated in Sub-Saharan Africa ? A Proposal toOvercome the Problem," Policy Research Working Paper Series 10058, The World Bank.
    6. Rekha Ravindran & Suresh Babu Manalaya, 2023. "Does Premature Deindustrialisation Stall Growth? Evidence from Sub-Saharan Africa," Progress in Development Studies, , vol. 23(1), pages 65-81, January.

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