Structural transformation and labour market development in Sub-Saharan Africa: Evidence from Ghana and Nigeria

Abstract

The thesis examines the changing economic and employment structure in Sub-Saharan Africa by focusing on Ghana and Nigeria. It is structured into an introduction and four main chapters, each answering specific research questions contributing to the main objective. The second chapter presents an overview of the agricultural sector’s importance. The third chapter comparatively analyses structural transformation processes in Sub-Saharan Africa (SSA) and South-East Asia (SEA). The fourth chapter analyses the nature and structure of the labour market in Ghana and Nigeria. The fifth chapter looks into one of the policy strategies for using agricultural labour effectively by examining the determinants and extent of farm household labour participation in agro-processing. A combination of time series and cross-sectional databases were mainly used. Based on descriptive statistical methods, structural changes and the changing nature of the labour market are illustrated. A Heckman selection model was used to analyse factors that influence the decision to participate in food processing as well as the level of participation. Overall, it shows that the agricultural share in national income and employment has been declining. The crop sub-sector contributed most of the agricultural value added and employment in both countries. In a comparative study of economic development, we found that while the sectoral transformation in SEA countries happened to a large extent by farm labour migration to manufacturing and industry, SSA countries were rather characterised by labour migration to the services sector. Results on the nature of the labour market showed that a greater share of labour in SSA was employed in the trade and other commerce, crop production, and mixed farming sub-sectors. Further, we found substantial growth in private wage jobs amid the dominance of self-employment and non-wage jobs. There was a decreasing trend in the real wage levels of all sub-sectors in the agricultural sector which is a catalyst for labour out-migration from the sector. In the final analysis chapter, land constraints and asset-rich households were found to positively determine farm household participation in food processing, but not the extent of participation. Higher levels of economic development at the district level rather result in less likelihood of diversification into food processing and its intensification by farm households. In conclusion, this study provides empirical evidence of a declining but relevant agricultural sector in the economies of SSA and, unlike its Asian counterpart, the service sector dominates sectoral change, whereas the industrial sector has only played a minor role in the development process so far. Farm household-level food processing activities currently absorb surplus farm labour, particularly on farms facing land constraints. In the long run, however, f the emerging food processing industry will likely take over food processing activities at the farm level Nevertheless, fostering farm-level agro-processing in the agricultural value chain is a potential option for the employment of non-migrated farm labour as long as off-farm job opportunities are unattractive or lacking.