Markets are as fundamental to African agricultural development and poverty reduction as technologies and macroeconomic policies. All three heavily influence the productivity, and thus the incomes, of rural land owners and workers, as well as the prices of agricultural commodities and the food security of poor populations. Scholars and policymakers have nonetheless paid far less attention to the promotion of improved institutions for exchange than they have to the development of improved production technologies or to the pursuit of more prudent macroeconomic policies. This is perhaps especially true in Africa, an agrarian continent that was largely bypassed by the Green Revolution technological innovations of the 1960s-1970s, and subsequently unresponsive to the macroeconomic reforms enacted during the structural adjustment era of the 1980s-1990s. Recent efforts at sparking a new Green Revolution for Africa are finally awakening observers to the continent’s longstanding need to attend to market development.
There are multiple reasons to applaud the increased attention being paid to markets for African agricultural development. Enhanced performance of the institutions that govern the exchange of commodities across form (e.g., processing grain into flour), space (i.e., intra- and inter-national trade), and time (i.e., storage) can generate important benefits for low-income agrarian economies. First, the market defines the economic reach of the state. Markets transmit the policy signals sent by central governments through exchange rate, fiscal, monetary and trade policy. When markets function poorly, those signals are distorted or extinguished before they influence firms, households and workers by changing constraints or incentives. Given how much has been invested in trying to improve agricultural and macroeconomic policymaking in Africa over the past generation, it is essential to reinforce whatever improvements have been achieved by enhancing the market institutions that ultimately support effective states.
