# **Conclusion**

Is Africa’s rural economy transforming as its economies grow? Or is it trapped in some sort of peculiar natural-resource based growth pattern that may prove unsustainable in the long-run? And in particular, is there evidence of the share of agriculture in the economy decreasing following the familiar secular pattern followed by the vast majority of the countries now enjoying middle and highincome status? The analysis in this paper has attempted to look at the evidence coming from micro-data to respond to some of these questions from the perspective of the rural economy.

The analysis of the income-generating activities of rural households based on a large cross country dataset paints a clear picture of multiple activities across rural space and diversification across rural households. This diversification is true across countries at all levels of development and in all four continents, though less so in the African countries included in the sample. Bearing in mind the caveat that our sample is not representative of the whole of Sub-Saharan Africa, the evidence seems to point to African patterns of household level income diversification to have the potential to converge towards patterns similar to those observed in other developing regions. While African households are still generally more likely to specialize in farming compared to households in other regions, once the level of GDP is controlled for the shares of income and participation in non-agricultural activities are not far-off from those found elsewhere.

For most countries outside Africa—generally with higher levels of GDP—the largest share of income stems from off-farm activities, and the largest share of households have diversified sources of income. However, for the African countries in the sample most income still derives from on farm sources of income. For both African and non-African countries, diversification may function as a household strategy to manage risk and overcome market failures, or represent specialization within the household deriving from individual attributes and comparative advantage. Therefore diversification can be into either high or low-return sectors, reflect push or pull forces, and represent a pathway out of poverty or a survival strategy.

Specialization in on farm income-generating strategies is the norm among the African countries in the sample. Nevertheless, agricultural-based sources of income remain critically important for rural livelihoods in all countries, in terms of both the overall share of agriculture in rural incomes and the large share of households that still specialize in agricultural and on-farm sources of income. While the nature of the diversification response will vary by a given household, in each country, African and non-African, overall greater reliance on non-farm sources of income is associated with greater wealth. In almost all cases, wealthier households in rural areas have a higher level of participation in, and greater share of income from, non-farm activities. Similarly, wealthier households have a larger share of specialization into non-agricultural wage.

Conversely, agricultural sources of income are generally most important for the poorest households. Income from crop and livestock activities, as well as from agricultural wage labor, represents a higher share of total income for poorer households in almost all countries. Furthermore, a higher share of households specializing in on-farm activities, and particularly agricultural wage employment, is found at the low end of the wealth distribution.

The results offered here suggest the need to carefully consider how to promote rural development. While the diversification of rural households clearly indicates the need to look beyond agriculture in rural development policies, the overall importance of agriculture, particularly for poorer households, suggests that the promotion of RNF and agricultural activities both need to form part of any strategy. Policy makers must also pay attention to the likelihood that barriers to entry may limit the ability of poor households to take advantage of opportunities. The links between certain assets and activities imply that due consideration be given to those assets, or combination of assets, which will ensure broad growth in the rural economy. This complexity means that a particular policy is unlikely to fit 28