AS INCOMES RISE, DEMAND FOR FOOD REMAINS HIGH

Average budget shares (ABSs) measure the percentage of total household expenditures going to a given group of goods, and marginal budget shares (MBSs) measure the percentage of an increment to income that goes to those goods, making it possible to assess the direct impact of income changes on consumption. Figure 2 presents ABSs and MBSs for food and nonfood goods and services in the four countries studied. On average, the rural households sampled spent 72 to 85 percent of their total incomes on food items and 62 to 74 percent of additions to income on food. Such high expenditures on food dramatically point out the extent of poverty in Africa: many people are so poor that they have little income left over once they purchase adequate food supplies.

Figure 2 - Shares of average and incremental income spent on food and other goods and services by rural households

Overwhelming shares of average income and increments to income are devoted to food in Africa.

When expenditures are examined from the standpoint of tradables versus nontradables, households in Burkina Faso and Zambia devote large shares of income (both average and marginal) to nontradable goods (Figure 3). In Niger and Senegal, tradables are more important, but nontradables still command a hefty share of incremental income (47 percent in Niger and 32 percent in Senegal). Detailed analysis of the expenditure data for these countries indicates that rising rural incomes are likely to lead to net increases in demand for many items that cannot be profitably imported, mainly local, unprocessed food items, certain processed foods, local inputs for farming, and services.

Figure 3 - Shares of average and incremental income spent on nontradable and tradable goods by rural households

Farm nontradables account for the lion's share of consumption in Burkina Faso and Zambia but are less important in Niger and Senegal, where more basic foods are tradables.