Abstract
This paper presents empirical material collected in the small town of Biharamulo (population 20,000) and four surrounding villages in 1993. The study area is located in the Kagera Region of north-west Tanzania. The paper attempts to demonstrate how rural areas and small urban centres are economically interdependent. Biharamulo is a district headquarter town and fulfils, inter alia, important administrative, marketing, service and retailing functions. The paper discusses how the four villages interact with the town and illustrates how village households adopt a combination of survival and accumulation strategies including the use of rural and urban resources. The most successful village households appear to be those which use urban opportunities and assets (for example, urban employment, urban house and shop ownership) to diversify income sources and thereby avoid the uncertainties of relying solely on marketable crop production for household security. As a backdrop to the whole discussion, an attempt is made to analyze the types of households which might be poor or, at least, susceptible to poverty.