Economic Reforms and Rural Livelihood Diversification in Tanzania

Abstract

This paper examines the impact of the economic reform programme initiated in Tanzania since 1986 on rural livelihoods. The macro-level data suggests that there has been little diversification in the Tanzanian economy since the mid-1980s both with respect to composition of output and exports. Analysing the behaviour of producer prices, the terms of trade and the producers' share of export value, the paper finds that the impact of economic reforms on the agricultural sector has been uneven, with favourable movements in the terms of trade for export crops offset by unfavourable movements in the terms of trade for food crops. Trends in the producer's share of export/retail prices in the post-reform suggest an improvement in the returns to farmers growing cashew nuts and food crops such as maize, rice and sorghum, though there seems to be no such improvement in export crops such as coffee, cotton, tea and tobacco. The paper argues that this apparent stagnancy in the Tanzanian rural economy in spite of almost a decade and a half of liberal economic policies can be linked to slippages in macroeconomic policy in the early 1990s and to the lack of an enabling environment for rural households to pursue dynamic strategies of income diversification. Key issues relating to the latter are 'government failures' in the provision of rural infrastructure, agricultural extension services, the local taxation regime, and the setting up of an institutional structure for private sector involvement in agricultural marketing, and a pronounced 'market failure' in agricultural credit.

Citation

Kunal Sen. Economic Reforms and Rural Livelihood Diversification in Tanzania. (2002) 23 pp. [LADDER Working Paper No.12]

Economic Reforms and Rural Livelihood Diversification in Tanzania

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