Participation in Rural Land Rental Markets in Sub‐Saharan Africa: Who Benefits and by How Much? Evidence from Malawi and Zambia

Abstract

We use nationally representative household‐level panel survey data in two neighboring countries in Southern Africa—Zambia and Malawi—to characterize the current status of rural land rental market participation by smallholder farmers, and their subsequent welfare impacts. Rural rental market participation is much higher in densely‐populated Malawi than in lower‐density Zambia, reflecting the role of land scarcity in driving rental market development. Consistent with previous literature, we find evidence that rental markets contribute to efficiency gains within the smallholder sector by facilitating the transfer of land from less‐able to more‐able producers, on average, in both countries. Furthermore, we find that rental markets serve to re‐allocate land from relatively land‐rich to land‐poor households. We examine the impacts of participation on a number of welfare outcomes and find evidence for generally positive returns to renting in land in both countries, on average. However, our analysis also indicates that the returns to renting in land vary strongly with scale of production: tenants who produce more have larger returns to renting in, and many of the smaller producers who rent in do so at an economic loss. The impacts of renting out (i.e., participating in markets as landlords) are decidedly more mixed, with overall negative returns to landlords in Malawi and negligible returns to landlords in Zambia. The findings in this article highlight the need for researchers and policymakers in sub‐Saharan Africa to stay attuned to how land rental market participation and its impacts evolve in the near future.

Land Rental Market Participation and Its Impact on Fixed Investment and Household Welfare: Evidence from Chinese Apple Production Sites

“…This result differs from most research results on Africa, such as Lunduka et al for Malawi [32], Chamberlin and Jacob for Malawi [3] and Zambia, and Jin and Jayne for Kenya [33]. Contrary to this study, they show that labor endowment is another factor pivotal for households to be able to access the land markets.…”

“…Based on the approach of Chamberlin and Ricker-Hilbert, we assume that a household maximizes utility by redistributing land in order to reduce the gap between its effective and expected land sizes [3]. Specifically, famers' desired land size is usually determined by productive assets, access to credit and insurance markets [1], labor endowment [26], and other heterogeneous characteristics.…”

“…Previous ideas have, however, also met challenges from the empirical findings that neither the land sales market nor tenancy markets are efficient in the use and allocation of land, and they are not conducive to social equity [2]. The effects of land rental market participation on smallholders' equity, efficiency and welfare are therefore ambiguous, and new empirical evidence is required [3].…”

Land rental markets and rural poverty dynamics in Northern Ethiopia: Panel data evidence using survival models

“…This pattern remained fairly stable over the period that the data covered. This is consistent with several recent empirical studies showing the relatively higher welfare status of tenants as compared with landlords (Chamberlin & Ricker‐Gilbert, ; Muraoka et al., ).…”

“…Despite such relatively higher chances of exiting poverty for poor landlords as compared with poor tenants, the story reverses when simple comparison was made about the welfare status of the two groups suggesting that tenants, on average, have higher welfare status (annual per capita consumption expenditure) than landlords. This is consistent with several recent studies from Africa (Ethiopia: Ghebru & Holden, ; Malawi and Zambia: Chamberlin & Ricker‐Gilbert, ; Kenya: Muraoka et al., ).…”