11 the extent of labor and land use in smallholder farming, which is clear evidence of continuing pervasive market failures. These market failures are not specific to a given sub-population (e.g., women or remote locations), but rather appear general and structural in nature (Dillon and Barrett 2016). Financial markets for agriculture remain especially underdeveloped. Traditional (formal or informal) credit use remains especially low, with farmers primarily financing modern input use purchases with cash from nonfarm activities and crop sales (Adjognon et al. 2016).

Population growth, urbanization, income growth, and increased connectivity have all fueled growing demand for food across Africa, and increased agricultural market integration, as food marketing channels are showing early signs of value chain transformations similar to what occurred in Latin America and East and Southeast Asia over the past 20 years (Reardon and Timmer 2007; Gómez _et al._ 2011). These food marketing channels are generally domestically oriented, however, in spite of the attention paid to export promotion. In part because of the high costs of commerce due to poor infrastructure, regulatory and competition issues along the value chains, and unpredictable trade policies, an unusually large share of food consumed in SSA is produced within the same country where it is eaten, with virtually all of the remaining imports coming from outside the continent.<sup>17</sup> Between 1980 and 2009 the share of domestic food production consumed at home routinely exceeded 90 percent and increased, on average, over the period. As global prices and SSA food demand have increased, the region continues to rely heavily on its own output to feed its population. Net imports have increased slightly, especially for cereals and meat, from 15 million to 26 million tons and from 0.4 to 1.4 tons, respectively, during 2000-2011, but most of the region’s added food demand has been met by expanded SSA food production (not least also through the expansion of root and tuber production). The long-standing differences between coastal and land-locked countries have become more pronounced in the past decade, with the landlocked SSA states now obtaining up to 95 percent of total food from domestic production. The highly domestic orientation of SSA agriculture accentuates the opportunity and necessity of agricultural structural transformation and of development of viable food value chains to efficiently move food from farms to growing cities. Increasing regional food trade across countries within Africa would further open up opportunities for a number of countries with higher agricultural potential to supply neighbors that currently meet their rising cereal and meat demand with imports from outside the continent (Brenton 2012). And as structural transformation trends continue to pick up in Africa, an impending _dietary transformation_ will quickly follow, adding new jobs to the agri-business sector in turn (Tschirley _et al._ 2015).

The dietary transformation can help the transition towards off-farm employment as well as the structural transformation in agriculture itself (by providing access to capital). While 70 percent of rural households (across 14 national surveys in 9 SSA countries) were already found to participate in nonagricultural activities, at 31 percent, nonagricultural income shares are still well below those in other developing countries in the sample (54%) (Davis, Di Giuseppe and Zezza 2016). A substantial part of this difference relates to differences in levels of development (GDP per capita) that spur demand for non-food goods and services. But this difference also reflects much lower engagement in nonagricultural wage employment in rural Africa. By contrast, shares of nonfarm self-employment income are comparable across countries of similar level of development. This points to the need for greater attention on growing formal non-farm businesses in rural areas and small towns across SSA.

# **5 Policy implications for stimulating agricultural and rural transformation in Africa**

Promoting the structural transformation of African agriculture and of the rural spaces within which most agricultural activities occur is essential to advance an inclusive growth agenda in Africa. But researchers have yet to convincingly identify precisely the reasons for sharp intersectoral productivity differentials that keep agricultural labor productivity so low in Africa. Most likely there are multiple 17 Only an estimated 5 percent of Africa’s 26 million tons of net cereal imports in 2011 was provided by African farmers (Brenton 2012).