||The upsurge in nonagricultural income diversification which has taken place on the African continent during the last fifteen years represents large-scale agrarian labour displacement within an accelerated process of depeasantization. The literature's current preoccupation with market response and prescriptive behaviour based on Western norms and formal economic models clouds perception of what is actually taking place. The confusion begins with limiting the focus to the household as the unit of analysis while tacitly assuming that such households operate within a clearly delineated formal/informal/peasant three-sector economy. One by one, the components of the three-sector model are changing; national economies represent an amalgam of these three sectors into one 'formless' sector. This paper presents colonial and postcolonial perspectives on the African rural labour question, specifically with respect to Tanzania, in order to lend historical depth and sociopolitical dimension to the current focus on income diversification. To ground the analysis, case study observations are presented from four Tanzanian villages: two situated in the Mbeya region and two in Iringa region. The new 'sustainable rural livelihoods' (SRL) approach is a response to the complexity of rural livelihoods and their growing nonagricultural character.