| Most commentaries on the economic crisis facing the Sub-Sahara African (SSA) region relate the weak and sporadic performance of agriculture. Yet, agriculture is generally linked to food provision for the labor force, the provision of raw materials to feed into industries, savings and tax revenues to support the rest of the economy's development, to earn foreign exchange, and to provide a growing market for domestic industries.;In the past, governments of most Sub-Saharan countries embarked on fiscal and monetary policies that left the countries with weak means to function. In some cases, inflation overvalued currencies to the extent that governments had to resort to segniorage. Most multilateral agencies (led by the World Bank and IMF) have, therefore, called for comprehensive Structural Adjustment Programs (SAPs) as means to restructure the economies in favor of the most productive sectors.;Consequently, it is essential that we develop insight into the role that fiscal and monetary policy play in determining the growth of SSA economies. Likewise, it is important to discern how trade and macroeconomic policies affect the agricultural incentive systems, especially the relative commodity prices to border prices. The analytical model includes the goods market, income generation, inflation and monetary market, foreign exchange market, and the incidence of taxation equations of four countries: Cameroon, Cote d'Ivoire, Ghana and Kenya. They are structured in an integrative framework by which the major linkages between agriculture and the rest of the economy are captured for each country.;In general, we do not reject the hypothesis for SSA farmers' rational response to price incentives. We conclude that for a greater percentage of SSA countries, changes in agriculture leads to changes in income growth. The macroeconomic situation for most SSA countries is explained by the general inflationary situation. The negative and deepening balance of payments situation of most SSA countries explain their weak macroeconomic performance. Finally, we conclude that past trade and macroeconomic policies adversely taxed agriculture which affected their economies. Aside from Ghana, the level of taxation of industries was not as harsh.;These findings support the need for SAPs that translate, among other things, into the good performance of agriculture. In particular, better price incentives need to be made available to farmers. This is a very important finding which should have major implications on the direction of SSA's future economic growth, especially since agriculture provides the largest employment. |
