Dryland agro-ecosystems in sub-Saharan Africa provide the resource base for some of the fasted growing populations today. However, rainfall variability and poor soils make these systems inherently vulnerable, and land degradation reduces their capacity to cope with disturbances. In this paper we propose a theoretical framework for interpreting dynamics and resilience in such systems, where two aggregate variables, the agricultural soil water index and the ecosystem insurance capacity, are particularly important. We apply the framework to the case of the Makanya catchment in Tanzania and conclude that the studied area has moved towards an increasingly degraded state, where ecosystem services other than food have been lost, over the past 50 years. Three main drivers behind this are identified; a) institutional changes affecting strategies for natural resource management, b) increased dry-spell frequency, and c) high population growth. We suggest that the reason for the dramatic effects is that these changes occurred simultaneously, reducing the adaptive capacity of the local population. However, several trends in the area today indicate that there is a window of opportunity for positive change. Copyright © 2007 John Wiley & Sons, Ltd.