africa

Africa at a Fork in the Road: Taking Off or Disappointment Once Again?
The blue line in the graphs is the cumulative distribution function for the control
group of farmers who didn’t receive anything. In the top right panel, the red line is
the distribution of investment for the farmers who received capital grants. There is
no difference between the two functions: the distribution of investment by the two
groups looks the same.
What happened to the insurance group—the farmers to whom we gave nothing
other than a promise? These farmers increased their investment by about 10 to 20
percent on their farm (red line in two left panels of Figure 28.2). Thus when they
were assured that if a disaster happened they would have some backup, they were
willing to invest in their farm and they found the resources to do so.
We conclude that the reason why poor farmers in the study area were not using
fertilizer was not because they lacked enough money. When they wanted to use
fertilizer or more labor or more tractors for plowing, they found the money somewhere.
Their concern was actually about risk—that “I might put all of this money
into my farm and lose it all because of the drought.”
From this case one might be tempted to generalize, and conclude that credit constraints
are not the problem of small-scale African farmers. But that is not a responsible
conclusion. Credit constraints are not what are preventing these farmers around
Tamale in Northern Ghana from investing on their farms.
28.2.3 Spatial heterogeneity 2: Burkina Faso
By contrast, nearby in Burkina Faso we have really strong evidence that farmers face
binding credit constraints that hurt. The graphs in Figure 28.3 show what happened
to income and food consumption in six villages during the harvest years 1981-84—a
period of terrible drought in Burkina Faso. The six villages were drawn from three
different agro-climatic zones of Burkina Faso by the International Crops Research
Institute for the Semiarid Tropics for a four-year panel study. Detailed information
on agricultural production and consumption in 150 households randomly selected
from these villages was collected by enumerators resident in the villages. Farmers
in these villages were consuming only half to two-thirds of the amount of calories
489