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Open for business: what does investment look like on the ground?

Last week I was at the at the African Studies Association of the UK (ASA) conference in Birmingham. I was co-hosting, with my colleague Jeremy Lind (whose earlier blog this one draws from), a fantastic stream of five panels and 17 papers. Drawing on rich and recent empirical evidence from Kenya, Ethiopia, Tanzania and Somaliland, the discussions covered the emergence of investment corridors, investments in oil, minerals and renewable energy and the implications of the rush for land for the dynamics of circulation, accumulation and patterns of social differentiation. Listening to the presentations, I was struck by the potential lessons for Zimbabwe, as the country becomes ‘open for business’.

Across the drylands of eastern Africa, the past ten years have seen the spread of large-scale investments in infrastructure, resources and land. In the past these areas were insignificant to states in the region and large capital from beyond – at least compared to the region’s agrarian highlands and Indian Ocean coast. Yet, the recent rush to construct pipelines, roads, airports, wind farms, and plantations signals a new spatial politics that binds the pastoral margins ever closer to state power and global capital.

Being ‘open for business’ in order to develop infrastructure, resources, and towns as new industrial centres and markets is often seen very positively. State officials and donor agencies view these as part of generating growth; bringing the margins into the core of the national economy. Some see such investments as a precursor to peacebuilding of restive frontiers, ushering in stability through diversification and the creation of new livelihoods.

As Zimbabwe’s new government repeats the mantra of being ‘open for business’, seeking investment from any source is seen as an imperative in order to rescue the economy from the doldrums. The new cabinet is aimed to highlight technocratic competence, banishing the reputation of corrupt neglect. Certainly, President Mnangagwa’s choices have been widely hailed, and the appointment of Prof. Mthuli Ncube as finance minister was a smart move. His credentials and connections signal a new way of doing things. With a training in mathematical finance economics, a post at Oxford and experience with the private sector finance advice and the African Development Bank, he will be central to galvanising much-needed investment across all sectors.

But what investment will emerge? And who will it benefit? Certainly, Zimbabwe’s economy is still seen as high risk, so early investors may seek to strike a hard bargain, and safeguards, whether environmental or social, may get short shrift. As our ASA panels showed, large-scale investments have far-reaching consequences for the future directions of development. Many powerful actors are involved, from international corporations and financiers to states and local elites, but important questions are raised about who gains and who loses out, and whether such large-scale projects do indeed deliver poverty-reducing development as is often claimed.

Early debates on large-scale investments in eastern Africa’s pastoral areas turned on headline grabbing figures of the size of proposed projects, such as the $23 billion price tag for the Lamu Port South Sudan Ethiopia Transport Corridor project (LAPSSET), or the scale of proposed land deals for commercial agriculture, such as the 300,000 hectare land lease (since cancelled) to Indian Karuturi Global in Ethiopia’s Gambella Region.

A decade on, the large-scale investments have advanced in a more piecemeal way as challenges of implementation have mounted. LAPSSET’s grand modernist vision has not materialised in a sudden multi-billion dollar bang but rather emerged incrementally, such as through the completion of the Isiolo-Moyale highway and the recent opening of Isiolo’s airport. Mass expropriations to establish large-scale commercial farms have by-and-large not come to pass, as only a small part of an agreed area is actually farmed.

But the focus on ‘opening up’ the frontier through new infrastructure and investments in land and resources has had other consequences. Proposed infrastructure and investments have ignited intense competition for and revaluation of land as local elites, and other domestic and foreign investors, jostle to claim tracts of land. In and around Isiolo, which is being reimagined as an industrial centre and gateway to northern Kenya, proposed investments have set in motion an economy of anticipation as diverse actors rush to collectively and individually lay exclusive claims to land at the town’s edges. A similar dynamic plays out in Lokichar – the base of operations for nascent oil development in Kenya’s Turkana County – where fencing has multiplied around town as area residents race to claim plots to develop housing, shops and guest houses.

Development of oil, wind and geo-thermal reserves has fuelled other competitions around ‘local content’ – the industry term for procuring goods and services from local suppliers and workers. The footprint of these developments, and the arrival of workers and contractors from outside of local areas, sit uncomfortably with the reality of work opportunities that are thinly spread and temporary. Protests by residents and political leaders in south Turkana halted Kenya’s Early Oil Pilot Scheme in June barely days after it was launched to great fanfare by President Uhuru Kenyatta. Operations only resumed in late August after political concessions to address local demands for greater opportunities for work, contracts and tenders.

In this and other instances of protest, local elites have advanced their own interests by playing on the legitimate concerns of residents living adjacent to development sites concerning inclusion, rights and compensation. Various local interlocutors have positioned themselves as key liaisons between investors and communities in and around sites of operational activity, including political aspirants, ward and sub-county administrators, brokers, elders, seers, and young people. Local capital has been the greatest beneficiary of investments in oil in Turkana, or wind in Kenya’s Marsabit County. Wealthier local elites – many with connections in politics or who have worked for international relief or church organisations – have constructed rental housing, guesthouses, bars and restaurants.

Thus, while the impacts and influences of large-scale investments still unfold, the early signs can be seen. New territorialisations, local contestations and struggles, and enrichment of local elites are all part of an emerging picture. Some investments are proposed and never take off, but nevertheless reconfigure land use and local political and social relations.

As we heard in Birmingham, it’s a complex picture, and one that continues to unfold in a very fast-moving setting. Zimbabwe is only now dreaming of such investments, and state efforts will be energised to seek them out. However there are lessons to be learned from eastern Africa. Investments certainly transform, but there are always winners and losers. This is worth remembering as Zimbabwe opens its borders to all-comers with money to invest.

This post was written in part by Ian Scoones and this version first appeared on Zimbabweland. Thanks to Jeremy Lind for the original blog, and to all the presenters at the ‘Precarious Prospects’ stream of the ASA UK conference.

Photo credit (from Turkana, Kenya): Evans Otieno

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Land policy and governance: the launch of LEGEND

The first in a series of Land Policy Bulletins from a new DFID-supported programme – LEGEND – came out recently.

This is from the Bulletin:

“Land Enhancing Governance for Economic Development’ (LEGEND) is a new global DFID programme designed to mobilise knowledge and capacity for design and delivery of new country programmes, improve land governance as an essential and inclusive basis for economic development, and strengthen land and property rights at scale.

Through building policy coherence globally and stimulating innovation across civil society, private sector and sector at country and local levels, LEGEND aims to improve the quality and impact of land investments of all kinds so they contribute sustainably to growth while safeguarding rights and opportunities for poor people – rural and urban — especially women”.

This is an important departure for DFID. A decade or more ago, DFID was a leader on land and agriculture issues, but the move away from the productive sectors has meant a loss of capacity both within DFID and outside. In the last few years DFID has supported a number of efforts focused on land. Many of these are now part of the wider LEGEND umbrella – including CCSI’s Open Contracts, Landesa, The Land Portal and RRI and the Munden Project, as well as on-going land work within FAO and the World Bank – allowing more coordination and coherence to result.

Through the Future Agricultures Consortium (FAC), I am involved in a small way with LEGEND, together with Ruth Hall from PLAAS. We are contributing to the work of the Knowledge Alliance that supports LEGEND, led by ODI and involving IIED and NRI. Our inputs can draw on a substantial body of evidence and analysis through the FAC network (much of it funded until recently by DFID). This has included extensive research on the effects and consequences of the ‘land rush’ in Africa, including several conferences, and now a book from James Currey (more on this in a future blog – meanwhile you can get 25 per cent off if you quote code 15350 on the publisher’s website). We have also worked closely and helped launch the Land Deal Politics Initiative that has convened an important researcher-practitioner network globally. And we have published a wide range of journal articles, special issues and Working Papers and policy briefs on land issues in Africa.

In launching LEGEND, David Kennedy, DFID Director General, Economic Development, observed: “Changing the way in which we deal with land is critically important for growth and poverty eradication”. This will require in-depth analysis leading to practical solutions, and hopefully LEGEND can help deliver both. To date DFID’s approach has been framed (rather problematically in my view) by Prime Minister David Cameron’s ‘golden thread’, which focuses particularly on private property rights driving growth. As anyone who has studied land and property in different parts of the world, this simplistic narrative, modelled on the arguments of Hernando de Soto, is insufficient. I hope LEGEND can bring a more sophisticated response to the debate about land governance, and think about land and investment beyond the large-scale to encourage a more rounded approach that allows for genuine ‘inclusive’ growth.

To keep updated on the work of LEGEND do sign up to the Bulletin, and look out for Evidence Updates, Analytical Papers, events, and a State of the Debate report each year. The contact is: legend@odi.org.uk.

This post was written by Ian Scoones and first appeared on Zimbabweland

 

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How have the ‘new farmers’ fared? An update on the Masvingo study IV

In our 2010 book, Zimbabwe’s Land Reform: Myths and Realities, we described the pattern of on-farm investment across the 16 sites and 400 households in our sample, since settlement to 2007-08 (depending on the site, around 5-7 years). We argued that this was a significant individual and aggregate amount, adding up to US$2161 per household on average across the total sample. If extrapolated to all official fast-track land reform beneficiaries in the province at that time, this adds to a total of $73m. No small sum.

This calculation was based on a number of investments, including land clearance, housing, cattle, farm equipment, transport, toilets, garden fencing and wells. We have been criticised for not having a baseline with which to compare. Well now we have (and in a future blog series, I will be comparing these results with communal area counterparts). In this blog, I want to ask how investment has changed since 2007-08? In 2011-12 we asked the same households about assets acquired in the previous five years. We used the same methodology and have applied the same 2009 US$ replacement values for all items to make the data comparable (see Chapter 4 of the book for details). It’s a rough and ready calculation that is interesting for its patterns and trends rather than the absolute numbers, but I think is nevertheless revealing of an important dynamic on the new resettlements.

What did we find? As noted in last week’s blog, the big story is one of continued accumulation of cattle. In the period from settlement to 2007-08, households had accumulated significant numbers of cattle, then focused in the better off ‘success groups’. In the next five years, this trend continued ever upward with a total of 281 cattle acquired across all households. In percentage terms, growth in herd numbers has been especially concentrated in ‘success group’ 2 and 3 households (the income and asset poor). This is a different pattern from before, suggesting new people are now accumulating cattle as assets. In total at 2009 values, this represents US$247 worth of purchases and US$961 worth of all increases, including births and gifts, per household. Other livestock have not seen such a dramatic change, with goat numbers declining in some sites, although sheep numbers are up but overall the trend is upwards.

Across other assets that we have seen some significant investment too. This includes the increase in the number of buildings and the upgrading of their quality. In 2007-08, there were 371 houses (excluding kitchens and granaries) built across the sample. 16%% were brick with asbestos or tin roofing, 38% were brick and thatch and 46% were pole and mud. Today there are 971 houses, with 27%, 46%, and 24% across these categories, representing a significant increase in number and quality of the main housing structures on the farms. If we take the 2009 costs of construction and all buildings, including kitchens and granaries, this represents additional investment $684 per household. Toilets have been built in large numbers too. In 2007-08 only 38% of households in the survey sample had a dedicated toilet structure, but by 2011-12 this had increased to 60%.

These sites are now thoroughly inhabited with increasingly impressive building stock. The trade in bricks, cement, roofing materials, thatch, windows, doors, and building skills has been significant, adding to the local economy, as well as the main retailers of building equipment.

In terms of water resources, 108 new wells have been dug in the previous five years across the sites, adding to the intensive construction in the previous years, with now around two-thirds of households having access to their own protected borehole/well as a domestic water source. Sometimes farmers dig their own, but in most cases water tables were low, and specialist well diggers and liners had to be hired in. There is good money to be made in this business if you have the skills across the resettlement areas.

In the period since settlement to 2007-08, clearance of arable land for farming was a very significant investment. We estimated that an average of 11 ha (with large variations) was cleared in those farms where farming activities were established, and cost about $50 per ha. Clearing new land has slowed, and indeed in some sites arable areas appear to have declined, as labour, draft power and inputs have not been available to continue extensification. Only in Mwenezi did we observe an increase in area cleared as people moved from the communal areas to establish more permanent farms. But overall this aspect of investment was not significant in this period, and so we have not identified an investment value for it.

Gardens were another facet of investment we looked at in 2007-08. In addition to clearing the land, this involves fencing, either with wire or more commonly brush, and represented an important investment for around 40% of households. However, in the last few years, garden areas have not expanded significantly, except in the A1 villagised sites, as most of the clearance and garden establishment happened earlier, and again we have not included this aspect of investment in our overall assessment for the recent period.

Farm equipment and transport are two other areas of investment that continue to be important, with accelerating levels. In the five years before 2011, 181 ox ploughs, 40 cultivators, and 94 scotch carts were bought. This represents new investments of US$271 per household if the equipment was valued at a 2009 price. Equally, transport has been a focus of investment with bicycles being bought especially in the A1 sites, cars in the A1 self-contained and A2 sites, and a few tractors in the A2 sites. In the five years before 2011, 175 bicycles, 67 cars and 19 tractors had been purchased, representing a total of $320 per household at 2009 prices.

The investment values per household across the subset of categories we have looked at over time is summarised in a table below, which compares the 2011-12 data presented in the book for 2007-08.

Focus of investment 2007-08Average per household (US$) at standardised 2009 prices 2011-12Average per household (US$) at standardised 2009 prices
Land clearance 385
Housing/buildings 631 684
Cattle 612 247 (purchase), all increases 961
Farm equipment 198 271
Transport 150 320 (232 excluding tractors)
Toilets 77 51
Garden fencing 29
Wells 79 57
Total $2161 $1491 to $2293

We can see that investment has continued, particularly in assets linked to farm production (whether in terms of cattle, farm equipment or transport) and resettlement living (especially housing, sanitation and water supplies).

In addition, there has been significant investment in items we didn’t even look at in 2007-08 such as solar panels and cell phones. A few years ago, these were regarded as luxuries, available to only a few, but today, they are widely available. In the five years before 2011, 661 cell phones and 227 solar panels were bought across the sites, representing 1.75 new cell phones per household and 0.6 solar panels. At a current rough average value, the total investment per household in cell phones (at $50 each) was $87 and solar panels (at $150 each) was $90.

While multiple caveats must be attached to all these figures, the point, as noted before, is less the actual number but more the scale and trend of the investment dynamic. This is significant and impressive, and has continued now over many years, generated in large part through the economic activities motivated by land reform. Of course patterns of investment are highly differentiated, and in this short blog I have not been able to drill down into the detail. There are those who are doing well, and those who are not, and patterns of accumulation and differentiation continue to play out with multiple implications for agrarian dynamics.

But at root, as shown in our earlier studies, and again in our follow up data, we can see that the process of ‘accumulation from below’ is widespread, with important implications for longer term trajectories and the type of support that the resettlement areas need as part of a post-land reform rural development policy.

This post was written by Ian Scoones and originally appeared on Zimbabweland.

The on-going Masvingo study research is conducted by Ian Scoones, Blasio Mavedzenge, Felix Murimbarimba and Jacob Mahenehene.

 

 

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China and Brazil in Zimbabwe

There is much talk – and even more hype – about the role of the emerging economies – the BRICS countries – in development. Aid programmes have been established by China, Brazil, Russia and South Africa, and others are following suit. In the G20 and in the Busan meeting recently, a whole new modality for aid giving was hailed. A new way of doing development cooperation is in the offing, and the hegemony of the western powers will be offset, some argued.

Well maybe, but not yet. As Jonathan Glennie pointed out recently, the Gates Foundation, run by a few very rich US citizens, provides more aid than China. But it is of course not the volume of aid that matters, but what it does – and in particular how it is linked to other forms of investment. This is where aid – seen by some (mistakenly) as a pure form of giving – gets messy. Aid is always tied in some way, despite the disclaimers from the likes of the British government. It is always linked to trade interests, investment opportunities, security and foreign policy agendas. Of course it is. And if this is what the US or UK does, why not China and the rest?

China is of course fairly explicit about this. They have a keen interest in Africa’s mineral resources to fuel their massively growing demand for primary resources. They will exchange access for aid, but it is often fairly transparent what the deal is. Brazil is of course different, but there are many who see Africa as a source for expansion of Cerrado-style agriculture and a source of investment for sugar, soy and other enterprises on other land frontiers away from the Brazilian Amazon.

But it is not all such brutal self-interest. Such relations are more complex and nuanced, and have to be understood in the context of history, as Deborah Brautigam argues effectively for China’s relationship with Africa. Both China and Brazil have an important sense of solidarity with Africa. This relates in China’s case to long-standing support for liberation movements. This may translate into some fairly dodgy political affiliations in the contemporary world (like in the case of Zimbabwe), but it comes from a genuine commitment to assist. Brazil of course dwells on the historic links with Africa via the slave trade, and the solidarity that emerges from the African connection. It also sees itself as linked geographically – part of the southern hemisphere, and a different zone of influence.

And of course both China and Brazil are proud of their achievements in reducing poverty and improving agriculture. And rightly so. China has seen the most dramatic decreases in poverty in human history, and they are keen to show others how to do it too. They have had big achievements in agriculture too, with real opportunities for sharing, as Li Xiaoyun and colleagues explain in their recent book. Brazil is a world leader in agricultural technologies, and through its agency Embrapa, and wants others to benefit, so have begun to establish offices in Africa, with the first opened in Accra, Ghana. Brazil has also created novel social welfare programmes (the Bolsa familia being the most famous) that have lifted many out of poverty, creating employment and growth.

With many donors shunning Zimbabwe over the past decade, China and Brazil have been knocking at the door. Much Chinese support has been in the minerals sector, although they have interest in the financing of the tobacco sector, and some interest in cotton. Chinese finance has been critical in the rebirth of the tobacco industry following land reform, and has created a rebound no-one was expecting, with now small-scale farmers leading the way where once only large white-owned tobacco estates dominated. In 2011, a major loan was offered by China, with US$342 earmarked for agricultural machinery. They have also built an Agricultural Technology Demonstration Centre at Gwebi College, recently opened by Vice President Mujuru. But, contrary to some NGO reports, they have not been involved in extensive ‘land grabs’. Meanwhile, Brazil has started an extensive exchange programme with agriculturalists in the ministry, with extension officials, researchers and policymakers travelling to Brazil to marvel at the achievements of Brazilian agriculture. Under their ‘family farm’ programme, support for mechanised agriculture involves the provision of tractors, and the support for mechanisation of smallholder agriculture, and a US$300m loan was offered in 2011.

The Future Agricultures Consortium is about to start some research, funded by the UK’s Economic and Social Research Council (ESRC) looking at the changing relationship between China and Brazil and Africa in the context of new ‘development cooperation’ relationships in Africa. This work will include studies in Mozamique, Ethiopia, Ghana and Zimbabwe, and will focus on the details of the relationships emerging between African and Brazilian/Chinese players.

Clearly a diversification of support, and a sharing of ideas makes much sense. African countries have for too long been reliant on a narrow set of expertise channelled through aid and technical cooperation programmes from Europe and the US, or via the ‘international’ programmes of the CGIAR or the Gates foundation, which replicate such perspectives. But with new players on the scene, does this now mean that African perspectives, local knowledge and located experimentation will have more chance of breaking through?

I wonder. The top-down, expert led stances of past development interventions – from colonialism to the western aid era – are being replicated. Aid is about power, and sadly in Africa this remains skewed to the outsider, wherever they come from.

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