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Medium-scale commercial farming in Zimbabwe: how has it fared since land reform?

We have a new open access paper out in the Journal of Modern African Studies – “Medium-scale commercial agriculture in Zimbabwe: The experience of A2 resettlement farms”. Contrary to assertions that A2 medium-scale farms allocated during the land reform are largely occupied by ‘cronies’ and that they are unproductive and under-utilised, a more differentiated picture emerges, with important implications for policy and the wider politics of Zimbabwe’s countryside following land reform.

The paper is based on in-depth empirical studies in Mvurwi (a higher potential area to the north of Harare) and Masvingo-Gutu (in the drier south). The findings are important as they show ways forward for supporting the revival of commercial agriculture in the country.

This has been seriously hampered by lack of finance, sanctions affecting donor investments, uncertainties around the lease arrangements, poorly designed support programmes (notably the now notorious Reserve Bank of Zimbabwe (RBZ) mechanisation scheme and Command Agriculture) and selective capture and corruption by elites, during and after the land reform programme.

Surprising findings

The research was carried out during 2019 and involved a representative sample of 90 farms across the two sites, representing around 20% of all farms in the areas. This was a small, random sample, but the challenges of researching A2 farms are well-known to any field researcher in Zimbabwe. They are scattered over long distances, owners are often not present and because of on-going threats of audits talking to people is often challenging. In the end, we managed to speak to everyone in the sample, generating fascinating reflections from farmers, managers and workers documented in the paper.

The findings were a surprise. In the mid-2000s, we undertook research on a small group of A2 farms across Masvingo province and our conclusions were rather dismal. By-and-large, they were not occupied and if so very little was happening, except for a few individuals where external investments were driving recapitalisation of the farms. When we undertook the recent study, there was much more happening, although anecdotal evidence suggests that this has tailed off as the economy has declined further in the last year or so.

A key period in our reconstruction of the fates and fortunes of each of the farms since the early 2000s was the small window of relative stability around the time of the Government of National Unity (2009-2013) and immediately afterwards. At this time, it was possible to raise funds and invest, and markets were relatively stable and commercial agriculture was thus feasible.

Before and after this period, this has not been the case, and over the whole period the lack of financing for agriculture has been a major constraint for all farmers. Without leases being issued, as promised, farmers cannot raise bank credit with their farm as collateral, although some have used houses in town to do so.

Meanwhile, the external financing schemes have not supported production. Across our sample not that many received equipment through the RBZ mechanisation scheme in the 2000s, but as we discussed back then (p.99), and reinforced by recent BSR revelations, this proved a hopeless investment, and mostly a source of patronage-based corruption, with well-connected elites linked to the party-state and military benefitting and so appropriating public resources.

Much the same applies to the Command Agriculture scheme. Since 2016 this has been a loan/subsidy scheme supported by the party-state. In our sample, 43.7% in Mvurwi and 12.0% in Gutu-Masvingo benefited from the scheme to some extent in 2018-19. Although higher maize yields were achieved on average, it clearly was not a good use of public funds, and much of the investment was wasted, with benefits accruing mostly to the financing ‘cartels’.

Indeed, many recipients complained to us that their allocations were late or grossly insufficient, and that it is only a very few well-connected people who can jump the queue and get inputs – fertiliser, seed, fuel and so on – as part of the programme.

Patterns of accumulation and differentiation

Our data show a growing pattern of differentiation emerging between A2 farmers. The standard narrative that A2 farmers are all ‘cronies’ of the party-state and military and that the land is unutilised and unproductive does not hold up.

Yes, there are those who are beneficiaries of patronage for sure, including via Command Agriculture, but only an elite few gain the full package, and most of those who were recipients in our sample got very little, and complained bitterly.

Equally, there also some who have large areas unutilised, but this is far from the whole story. Indeed, patterns of ‘underutilisation’ are not hugely different to what was observed during the 1980s and 1990s when these farms were settled by white farmers. It all depends on the focus of production (intensive on small areas or extensive) and the type of operation (irrigated or dryland cropping or livestock, for example), as well as the nature of the land (many areas have extensive rocky areas, unsuitable for agriculture, but great for grazing). 

In terms of accumulation patterns, some have access to external finance (from jobs, diaspora investment and so on) and can make a go of it, even under very difficult circumstances. In the two sites, we have some quite successful tobacco farmers in Mvurwi and livestock farmers in Gutu-Masvingo – proper commercial farmers by any standard. Others are more aspiring, and lack the financing, while others are really struggling, farming only a small portion. Some have managed to mobilise joint ventures with former white farmers or with other investors, including Chinese firms involved in tobacco around Mvurwi, while others benefit from close relationships with tobacco contracting companies. Meanwhile, others have effectively abandoned farming or may be holding the land speculatively for future generations. Across these groups, especially the aspiring farmers, some are investing in ‘projects’ on small areas, while others have been joined by other families and are creating ‘villages’ on the farms.

Perhaps not surprisingly the patterns were very similar to what we found in our study of a former ‘purchase area’ (small-scale commercial farming area) near Masvingo – again supposedly commercial farms of a similar scale on average. Here we found very similar categories, but perhaps fewer commercial farmers than in the A2 study, in part because of lack of state support of any sort in these areas. And this was 80 years after their establishment, not just 18 as in the A2 farms we studied.

Ways forward

A more differentiated view therefore suggests ways forward for the A2 areas.

To ensure more effective, commercial use of A2 areas requires investment based on sustained financing and secure leasehold tenure. A2 farmers we talked to wanted to be independent, not reliant on state patronage, but able to get financing on time to produce successfully. Successful production can also be facilitated through land administration policy – including land audits and forms of taxation – that encourages more intensive, commercial use. But farm investment will only flow if the conditions are right, which means getting the leases issued, the contestation over land resolved through land compensation and private and public finance made available in flexible forms, and not through state schemes that are prone to corruption and patronage.

Contrary to assumptions – including our own before undertaking this latest research – A2 medium-scale farms do have future, but those with potential need investment and support, while others need to be encouraged to pass on the land they received during the land reform. The next blog will discuss the political consequences of the emerging pattern of differentiation on the A2 farms, and the implications for policy.

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

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Hopes dashed in Zimbabwe as the economic crisis deepens

It is now a year since people came out onto the streets of Harare to celebrate the army-led ‘coup’s’ ushering in of a new post-Mugabe era. The year has not delivered the dreams and hopes of those on the streets, however, and now an economic crisis is enveloping the country once again.

Despite clear wins for ZANU-PF in the parliamentary elections, even in surprising places (see this interesting recent report focusing on Matabeleland), the July presidential elections between Emmerson Mnangagwa and Nelson Chamisa were disputed. In the aftermath, violence erupted on the streets and the ruthless backlash by the security forces resulted in civilian deaths that shocked the country, and the world.

The uncertainty surrounding the presidential elections, despite numerous international reports, has made international re-engagement difficult. The opposition has capitalized on this to try and push the Mnangagwa regime into concessions. Added to this, the failure to agree a long-term economic stabilization deal with the international finance institutions, so far, has resulted in an accelerating economic crisis. This has resulted in commodity shortages, a growth in a parallel currency market and rising inflation. As in 2006-08, the impacts on those in the cities, and particularly the middle classes, has become in the words of one commentator, ‘unbearable’.

The political roots of the crisis are becoming more and more openly debated. In an extraordinary outburst, presidential advisor Chris Mutsvanga named Kudakwashe Tagwirei, boss of the network of companies linked to Sakunda holdings, as getting preferential access to foreign exchange from the Reserve Bank and being central to manufacturing scarcities, particularly in the fuel market. Close ties to the political-military elite of influential business people who control the economy, and with this parts of the state have been exposed. Meanwhile, maverick politico, Acie Lumumba, the short-lived adviser to the new technocratic minister of finance, Mthuli Ncube, in a bizarre Facebook live broadcast made a dramatic set of allegations about RBZ corruption, the process of state capture and the role of ‘queen bee’ at the centre of the network. Social media speculation went wild, but these interventions only served to confirm what everyone knew already: some ZANU-PF factions and some in the security forces are intimately tied up with controlling oligarchic forces in the economy. This makes effective economic reform and stabilization extremely difficult, without getting rid of these networks of power and economic control.

In the midst of rising crisis, the MDC appears to be holding out for a renegotiation of power. But as Brian Raftopolous argues in a typically perceptive article, there are several problems with their approach.

“Firstly, as we have seen in other parts of the continent, crisis authoritarian states can maintain their rule for long periods of time through minimalist state forms of rule that combine a control of certain extractive forms of revenue with command over the central means of coercion. Moreover, as Paul Nugent points out, such states can combine coercive, productive and permissive forms of rule involving varying relations of coercion and consent and different episodes of negotiations and conflict between states and citizens. The reductionist view that economic crisis will deliver what the election could not is extremely precarious.

Secondly, the social base of the opposition, particularly in the now largely informalised urban sector, is likely to be further weakened by a deepening economic crisis. This is unlikely to result in more protests and a strengthening of the opposition presence in the public sphere. It could lead to a further retreat into individualised forms of survival and already well supported religious structures and their more optimistic ethereal futures.

Thirdly, the international pressure that the opposition is counting on will not take the forms of more open political conditionality in favour of the opposition. At present, key players in the international community are more concerned with keeping Zanu PF on the reform agenda than with any more open or surrogate support for the opposition as in the past. For many countries in the EU the stabilization agenda in countries like Zimbabwe remains a key factor in the face of all the changes in European politics, particularly around the massive migration issue that is currently dominating European politics.”

At the moment there remains a stand-off. While the government desperately seeks international political agreement for a stabilization programme, and the injection of liquidity into the economy, the opposition pushes for the maintenance of sanctions, holding out for political reforms and perhaps a sharing of power. It is a dangerous moment, with little sign of anyone shifting from entrenched positions.

Strangely, both main political parties seemingly agree on the broad contours of the way forward, and both are committed to a radical neoliberal reform package, with unknown, perhaps disastrous, consequences for the long-term. Currently debate on what types of reform are needed, and how Zimbabwe moves from this crisis mode is limited.

Raftopolous argues that, to move forward, “there is clearly a need for a new national dialogue, including but not just limited to, the major political parties”. The terms of any macro-economic stabilization programme alongside political reforms “should be the start of such a national discussion”, he argues, leading to “a serious critique of this currently shared economic policy”.

This is a hopeful, positive position that I share, but it currently has few backers, given limited evidence of progressive visions for economic policy from all sides. As argued before on this blog, unless a locally-developed response to the economic crisis emerges, rising inequality, lack of sustainability and capture – this time by new actors – will likely result. A future, resilient economy must therefore be rooted in the existing productive economy where most people work and gain a livelihood. Reform efforts therefore must focus on small-scale agriculture and the informal urban economy linked to area-based local economic development, and not expect large, external investments to do the job, even if they paper over the cracks temporarily.

Building long-term resilience for a broad-based economy that will reduce poverty and share wealth will take time. But small steps – most notably through providing reliable and cheap sources of funds to support farming and small businesses – can have a big impact.

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

Photo credit: Flickr CC, Baynham Goredema

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Zimbabwe’s bond notes: the birth of a new currency?

bond-note

The bond notes have arrived! Well at least a $2 one and a $1 coin. Subject to street protests, court cases, beatings and arrests, and the object of both ridicule and fear, never has a new form of exchange been subject to such intense – and prolonged – debate.

I got my first note in a bar in Mvurwi on the day they were released, and they have been circulating widely since. While, the Reserve Bank of Zimbabwe (RBZ) didn’t follow my advice for the design and instead opted for the famous Epworth balancing rocks on one side and a picture of parliament and the Heroes Acre flame on the other, they certainly look like ‘real’ money.

But exchange is all about trust and confidence, and that has been in short supply. The RBZ’s endless TV adverts and the full page spreads in the newspapers, along with the calming words of a string of ministers, will not satisfy everyone. The bond notes are supposed to provide an incentive for those who export, and aimed to preventing the massive expatriation of US dollars. Zimbabwe has become the ‘bureau de change’ of the region, with foreigners joining local elites in removing valuable currency reserves. The result has been a massive liquidity crunch, with less and less physical cash circulating.

Yet the spectre of a return to the Zimbabwe dollar, and a return to money printing and hyperinflation is ever present. The trauma of 2008 is very recent, and memories last. Of course Zimbabweans have had bond coins for a while, and they appeared without any fuss. In the absence of small change, and as an alternative to endless supplies of boiled sweets and lollipops as change in supermarkets, the small denomination bond coins were widely welcomed.

The government has assured the population that the new bond notes are backed by a US$200m bank loan and only that amount will be issued, although the details of the deal with Afrexim bank remain opaque. With such backing, it is argued, the new notes are ‘real’, exchangeable one to one with the US dollar. In most transactions this seems to be the case and over two weeks I have not had a bond note refused, although parallel trading to secure US dollars has inevitably started with the exchange apparently currently at 1:0.7. The fear certainly exists that with new control on monetary policy, there will be a temptation to print more, with or without security, and this will get out of hand once again, with local accounts filled with useless bond notes, as was the case with the ill-fated Zimbabwe dollar.

Some claim that there was under a million US dollars of physical cash circulating in the economy, although Finance Minister Chinamasa is more optimistic. Much of this is not in the banks, as many prefer to store it themselves, and significant amounts may have already left the country, so it’s difficult to know. But bank queues and limits on withdrawals (down at one stage to $50 a day) were witness to the troubles being faced. The liquidity crunch is severely hampering business and constraining investment, so boosting cash supply must be a good thing.

However many fear the gradual conversion to a local currency, while hard-earned US dollars are siphoned off from bank accounts to service the government’s massive debts. It is no surprise that many commentators remain sceptical. While the present RBZ governor, John Mangudya, is no Gideon Gono with is wild ‘casino economy’ of the mid-2000s, the severe economic crisis, combined with huge corruption, suggest desperate moves are possible, especially if pushed by political circumstances.

It is also worth reflecting on some of the potential benefits of this controversial move. While many have moved to cashless exchange – just as Greece did during the euro crisis and India is trying to do now – the lack of hard cash in circulation can affect exchange. I was in a resettlement area the other day, and one of my colleagues bought two buckets of sugar beans for $40 using an ecocash transfer there and then, thanks to both parties having accounts and there being 3G network.

But not everyone has a mobile ecocash account, an electronic ‘wallet’ on a smart phone or a swipe card linked to a bank account, although in a very short space of time out of necessity increasing numbers do. As we enter the farming season, having small dollar denominations that are valid sources of exchange is vital for buying inputs, marketing crops and for day-to-day supplies. Going to the grinding mill, buying a cup of beans, securing a bag of fresh termites or purchasing a bowl of maize flour cannot be done without.

You can already see the changes happening as cash circulates again, particularly in rural areas where such exchanges are so vital. Keeping the bond note introduction to small denominations, up to $5 (although we haven’t seen this one yet – apparently with giraffes on the note), seems to make much sense, particularly for those outside the electronic exchange economy. We will however fear the worst if denominations creep up, and hugely divergent parallel markets emerge. We all remember how notes and bearer cheques increased in the 2000s, with so many zeros that cash machines couldn’t cope.

While the introduction of the US dollar in 2009 put an end to the hyperinflationary period at a stroke, it also limited options for economic policy making, hiked prices, reduced liquidity, as the dollar is so strong, and domestic growth and productivity is so low. The Rand as an alternative currency in a multicurrency environment soon got squeezed, and the US dollar dominated. US dollars in a region of weak currencies proved a honey pot for those wanting to exchange into a harder currency, and often illegally moved funds offshore, reducing cash availability yet further. Returning to a more diverse currency arrangement, with US dollars focused on international transactions, and bond notes, and perhaps the Rand making a comeback, being more for local exchange, has some logic.

Radical and inventive solutions are certainly needed, as Zimbabwe’s economy is in dire straits. Injection of cash to relieve some liquidity problems must be combined with new investment, and increased export earnings. Whether gaining access to bond notes will incentivise this waits to be seen, and more structural macro-economic measures, combined with improved political relations with investor countries, will have to take place in tandem.

This post was written by Ian Scoones and appeared on Zimbabweland

 

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