9 The problem arises from the combination of poor transport infrastructure and high cost transport services. The arid countries with low population density, such as Mauritania and Niger, have the severest dearth of roads, with approximately 1 km of road for each 100 km<sup>2</sup> of area, against the low SSA average of about 20 km. While a few SSA countries have extensive networks of paved roads, only 25 percent of road distance is paved, on average. Poor transport infrastructure poses particular problems for the 17 landlocked African countries that face distances of 200-1500 km from their capital cities to the nearest seaports. All-season rural road access appears a key means of overcoming spatial poverty traps, not least of which by encouraging greater market participation, input use, and agricultural specialization (Stifel and Minten 2008, Calderon 2009, Jacoby and Minten 2009, Gollin and Rogerson 2010). Indeed, transport costs are so considerable in land-locked regions, that global oil price shocks have a greater impact on local maize prices than do global maize price shocks (Dillon and Barrett 2016). Rail systems hold promise. However, World Bank data indicate that the modest total distance of active railway lines actually declined by about 30 percent between 1986 and 2009 (Barrett and Upton 2013).

In addition, crossing borders to reach ports leads to high costs beyond the burden of poor physical infrastructure. Border crossings often entail fees—both official and unofficial—that increase transaction costs and delay deliveries. Non-infrastructure related transaction costs also add a lot to the price of transporting goods within countries. Teravaninthorn and Raballand (2009) report, for example, that Africa’s transportation costs along four major transport corridors in four different parts of the continent are no higher than in other developing countries, such as China. Nonetheless, transportation prices are much higher, not only because of informal payments along the roads, but importantly also because of trucking companies’ market power. Many African countries restrict entry of new companies, enabling incumbents to earn large profits. When Rwanda—a landlocked country—deregulated its transport sector, transport prices dropped dramatically, almost overnight.

Fifth, African agriculture is especially exposed to **_<u>uninsured risk</u>_** as a result of weak infrastructure, limited water management, and its exceptionally high domestic orientation. Financial markets fail for the rural poor for a host of reasons (Besley 1995). The resulting lack of insurance and credit routinely trap poor agrarian households in low return, lower risk technologies, thereby perpetuating poverty and low productivity (Carter and Barrett 2006; Dercon and Christiaensen 2011; Barrett and Carter 2013). Financial market failures are directly associated with relatively anemic rates of development and uptake of modern agricultural inputs, in particular irrigation and machinery (Sheahan and Barrett 2014).

Finally, **_<u>weak governance and political capture</u>_** remains an important impediment to aggressive agricultural productivity growth. Shimeles, Gurara and Tessema (2015), for example, show how fertilizer import prices across a large section of Africa cannot be explained by actual transport and finance costs, implying that market power fostered by government regulation drives high agricultural input prices, starting at import and continuing through the supply channel. Berhanu and Poulton (2014) show how the largest public agricultural extension program in SSA – run by the Ethiopian government – is implemented with election outcomes in mind, undermining its effectiveness as an agricultural productivity enabler. These demonstrations of the political capture of agricultural input systems that should directly translate into agricultural productivity gains suggest structural features that thwart more aggressive and inclusive growth. At the same time, weak governance and planning could mean that that economic systems change without the transformation necessary for job creation and robust productivity growth. Resnick and Thurlow (2014) detail how this scenario unfolded in Zambia, ultimately leading to the overthrow of the government.

# **4 Advancing towards structural transformation in Sub-Saharan Africa**

Despite substantial structural issues, the first decade of the 21<sup>st</sup> century brought significant progress in agricultural productivity growth after decades of decline or stagnation (Block 2014), albeit with important divergence between countries (Barrett and Upton 2013). Overall, agricultural value added (constant 2010