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Abstract
Interlocked relationships are characterised by traders’ supply of inputs and cash to producers on
credit, to be reimbursed at sale time based on pre-defined prices which are often lower than the
prevailing market price. The study analyses determinants of choice for interlocking in the gum arabic
sector in Senegal and the effect of interlocking on gum production and market participation; gum
arabic is a natural exudates of Acacia Senegal trees that grow in the semi-arid lands of Africa. Data
from 422 gum producers in Northern and Eastern regions of Senegal are used. About 45percent of
respondents are involved into interlocking with village shop-owners or mobile traders. Interlocking
has a negative effect on prices received by gum collectors. However, in the absence of effective
credit markets, interlocking positively influences market participation and production as found
through a two-step Heckman selection model by the provision of market assurance and safety for
emergencies.