Executive Summary:

This study examines how participation in commercial agriculture and micro, small and medium-sized enterprises (MSMEs) is associated with inclusive development outcomes for small-scale producers (SSPs) in six African countries representing different income levels.

We explore two interrelated hypotheses: first, that participation in marketing processes and MSME enterprises improves well-being through increased off-farm employment, empowerment, poverty reduction, food security and resilience; and second, that these effects are amplified in territories characterized by high levels of dynamism and interconnectivity of agri-food systems, as measured by a novel Cluster Index.

Using nationally representative panel data (and cross-sectional data in the case of Ghana), we estimate two-way fixed effects models to assess direct and contextual effects. The results show that participation in commercial agriculture or MSMEs is consistently associated with better inclusion outcomes in all countries, with stronger effects in Nigeria and Tanzania. This relationship is particularly robust in terms of empowerment and non-farm income generation.

Significantly, these benefits also reach smallholders with limited access to land, especially in Malawi, Uganda, Tanzania and Nigeria, suggesting a potential for broad-based inclusion. We also find that territorial conditions are relevant: in Ethiopia, the effects of participation are significantly amplified in more dynamic agri-food clusters, while in Nigeria and Malawi clusters benefit both participants and non-participants through spillover effects.

In addition, the inclusiveness of clusters appears to evolve along with national income levels, which are associated with greater inequality in low-income countries and with more equitable outcomes in middle- and high-income contexts.

Finally, using the Territorial Cluster Index as an instrument for participation in a robustness test, we found significant causal gains -between 0.5 and 1.4 standard deviations- in Malawi, Ethiopia and Nigeria. These findings underscore the need for integrated development strategies that simultaneously promote the commercial insertion of small-scale producers and the strengthening of agri-food ecosystems organized in clusters. Adapting these strategies to local contexts and different stages of economic development is key to ensuring both growth and equity in agricultural transformation processes.

Keywords: small-scale producers; micro, small and medium-sized enterprises (MSMEs); agrifood value chains; inclusive development; rural Africa; territorial clusters; panel data econometrics; commercial agriculture; poverty reduction.