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Zimbabwe’s latest crisis: it’s the economy – and politics, stupid!

The images of economic crisis in Zimbabwe are all too familiar. Queues for petrol and cash, commodity hoarding, parallel markets in currency, rising inflation and so on. It all seems reminiscent of the dark days of the mid 2000s, in the build-up to the full-blown crisis of the hyperinflationary collapse of 2008. This was not meant to be how the much-hailed second republic started out.

Bill Clinton’s 1992 election slogan, ‘it’s the economy, stupid’ does ring true. Years of economic mismanagement, deep corruption and failure to invest, combined with sanctions, credit embargoes and investment freezes, have taken their toll. But the current crisis is also to do with politics, both domestic and international.

The dimensions of the economic crisis

Tony Hawkins, an economics professor at the University of Zimbabwe, recently gave a widely-circulated talk to the British Council on the economic travails of Zimbabwe. There was much to agree with in his summary of the situation.

The economy is uncompetitive, he argued, not helped by the appreciation of the US dollar by 17 percent since dollarization, the huge loss of value of the South African Rand and rising oil prices. Estimated 14% revenue increases from tobacco, gold and other minerals are offset by a massive hike in state expenditure, up 57%, exacerbated by election commitments to public servant wage hikes. The budget deficit has ballooned to $3.3 billion, with a projected trade gap of around $2.5 billion.

What’s more, he said, the total national debt now stands at a staggering $22 billion, now more than the GDP. Government borrowing continues to grow, crowding out the private sector, and putting pressure on available finance for investments, as people seek cash on the (expensive) parallel market. Inflationary pressures are also increasing dramatically therefore, with money supply far exceeding (formal) GDP growth.

But, despite the value of this description (repeated of course in numerous assessments by the IMF, the World Bank and other economists), his diagnosis of causes was only partially on target, and his solutions missed crucial dimensions.

Causes were laid largely at the door of domestic economic policy (or lack of it) and corruption by the ruling party. This, as is well documented, is a key part of the story. From Gideon Gono’s use of the reserve bank as a political tool in the ‘casino economy’ years to the massive expropriation of diamond resources, both show how the Zimbabwean economy has been destroyed from within.

This has not been the only story. The sanctions imposed following the land reform of 2000 took their toll too. While only targeting select individuals, and withdrawing aid from government led programmes, this signalled diplomatic disapproval from the West, and it had a major impact on patterns of economic support.

Aid programmes still continued but under a humanitarian label channelled through NGOs. But much more significant was the withdrawal of international finance and credit lines. This had a devastating impact and, even if not directed by official sanction policies, were their direct consequence. Despite the easing of diplomatic tensions in the post-Mugabe era, and the charm offensive that Mnangagwa has been engaging in from Davos to New York, the situation has not fundamentally changed.

Hawkins does point to the problem of ZDERA (the Zimbabwe Democracy and Economic Recovery Act of 2001, amended this year) in particular. This is the US law that prevents the US government supporting Zimbabwe at the IFIs, without implementing a set of political reforms. In the coming months, this will likely prevent the US rep at the IMF backing a recovery plan, making the position of others on the IMF board crucial if any changes to support Zimbabwe’s recovery are to be realised.

Reforming the economy

The new finance minister, Mthuli Ncube, knows all this, but does he have the leeway to change course? He is severely hampered by the political legacy of sanctions and other ‘restrictive measures’, and deep distrust across international actors. However, there have been some good signs. His interviews with Bloomberg and speeches around the world have mostly been impressive, and suggest that he is committed to a major economic restructuring.

Some of this will be tough, and will be highly political. A test of the new government’s commitment will be how far he is allowed to go. Already attempts at introducing taxation measures have resulted in protests. What happens when he is forced to cull the public sector, massively reducing the salary bill, or overhaul the currency system, which benefits those dealing on the black market, including powerful individuals well connected to the political system?

Clearly the stop-gap measure of a “multi-currency” environment that followed the abandonment of the Zimbabwe dollar and the adoption of the US dollar is no longer working. Local ‘bond notes’ were supposed to be backed by external hard currency finance, but are clearly no longer, and are fast losing value. Stalling the massive flow of hard currency out of Zimbabwe is vital, and this means ending the pretence of equivalence between greenbacks and bond notes. Sticking to the US dollar in a period when US protectionism is boosting its value is risky too, as it makes everything absurdly expensive. But setting up a new currency in such straitened times is not wise either, given the low levels of confidence in the economy.

What to do? Given the dire experiences of structural adjustment from 1991 – which in many ways set the scene for much of Zimbabwe’s current malaise – making the case for IMF stabilisation intervention, combined with a HIPC-style debt relief package, with all the raft of expected conditionalities does seem rash. But there really doesn’t seem to be any other option currently. The Chinese are fed up with Zimbabwe given its failure to pay back loans in the past, and the ‘socialist solidarity’ line has worn thin. Reluctantly, this may be the only route.

The centrality of the rural economy

Assuming a political route to reform can be created, it therefore matters a lot what such reforms look like, and how they are implemented (lessons from Greece and others of course). Where I fundamentally part company with Hawkins’ analysis is his disparaging rejection of the importance of the rural economy. Like so many conventional economists, he focuses on the urban, industrial sector, forgetting that this is dependent on a wider economic system that remains substantially small-scale, informal and rural. The distinctions between ‘formal’ and ‘informal’ economies in Zimbabwe are irrelevant today: most of the economy is ‘informal’, and that’s where livelihoods are made.

In the rural areas this is especially so. And, as we have shown in our research over many years, this is vibrant, growing and generating employment in significant ways, particularly when linked to land reform areas that are producing surpluses and creating spin-off linkages in local economies. It is far from dead, as Hawkins suggests, but it is different to what went before. This is not backward-looking rural traditionalism, bound by archaic cultural norms, as Hawkins seems to suggest, but the new economy; one that everyone must get used to and support. For sure, it is the ZANU-PF support base, and the reason they won the parliamentary elections, but that makes it even more important that the government gets its reforms right for rural people, as well as the urban middle classes.

The small steps towards a positive dynamic of rural growth spurred on by land reform however stalls dramatically when the wider economy is in crisis. With no liquidity, investments dry up, and with a lack of credit, the financing of new operations cannot occur. If inflation kicks in, as it is now (some estimate that annual inflation is touching 50 percent already), then the value of goods is uncertain, and economic transactions are risky. The result is that the economic dynamism ceases, and livelihoods are affected up and down value chains, from agricultural producers to traders to processers to wholesalers to retailers and consumers.

This is what happened in the mid-2000s, and again is what is happening now. But rather than dismiss rural people and areas as economically backward, somehow culturally unable to engage with a modern economy, policymakers and economic advisers need to appreciate the potential of the agrarian economy, and encourage investment. Simply wishing an industrial revival without a core agrarian productive base supporting the mass of the population is foolish, especially in Zimbabwe’s context, as a small economy operating in a highly competitive global environment.

Wider stabilisation, debt write-offs and addressing inflation and currency instability is vital at the macroeconomic level and must be central to Mthuli Ncube’s agenda. But his next step must be to set up the type of investment strategy that allows a dispersed, largely informal economy to thrive, and contribute to growth and employment in multiple ways for long-term, sustained and equitable recovery.

Only then will links be made that allow the industrial and service sectors to thrive, and taxation and so government revenue raising to be applied. The post land reform economy does not look like that of the 1990s in the earlier adjustment era, or the post UDI sanctions period in 1980. Big ticket ‘modern’ investments in agriculture, tourism, maybe even some industries, will be important, but they must not undermine or take attention away from the key challenge, which is supporting the real, predominantly rural, economy where most people make their living.

It’s politics, stupid!

The on-going negotiations with the IMF and the wider diplomatic and donor community are of course not just about economic restructuring, investment and financial prudence. They are also (of course) about politics. With Nelson Chamisa and the opposition MDC still not recognising the results of the elections, their lobbying of western governments continues.

Their strategy is unclear, but it seems to be to encourage the US in particular to maintain sanctions and the ZDERA law, with the aim of extracting political concessions for the long-term. You can see the rationale, but the consequence is that the economy is nose-diving and people are suffering; if not from cholera due to lack of investment in urban infrastructure, certainly from growing economic hardships, even if this is only queuing for petrol at night. This may backfire, with the opposition seen as holding the country hostage, undermining recovery for political gains.

Calls for demilitarising the state apparatus as part of conditions are appropriately central to many demands. The latest bogey-man for the international community is of course the Vice President General Chiwenga. But, with ZANU-PF, despite the new, PR-branded version that President Mnangagwa is projecting, a securitised state is likely to persist, even after the army has returned to the barracks or swapped uniforms for suits. A technocratic-military state is a feature of the current dispensation, and by some seen as a positive route to implementing a state-led (aka ‘command’) developmentalist policy, in the mode of Kagame in Rwanda or previously Meles in Ethiopia.

Where next?

There are divisions amongst the western diplomatic community on how to move forward. Some take a pragmatic stance and argue that a stabilisation bailout will create stability, and allow the economy to function, arguing that conditions for future elections and a deeper embedding of (western-style, liberal) democracy will emerge only when the country is not in crisis mode. Others make the case that a crisis of legitimacy following the elections means that this is the moment to exert pressure on Mnangagwa and exact the maximum concessions in favour of the opposition’s stance. Economic crisis is a price worth paying if political reform emerges, goes the argument. Within ZANU-PF and the MDC, as well as commentators not linked to any party, all shades of opinion exist.

What all agree is that a return to 2007-08 is not desirable, and that action to avert this needs to happen soon. And I would add: a focus on supporting the informal sector and the agrarian economy – and the linkages beyond – is vital to any way forward.

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

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Zimbabwe exports agricultural skills and entrepreneurship to South Africa

Recent reports have celebrated five Zimbabweans who have taken over 15 ha of land, part of a farm in Malmesbury near Cape Town in South Africa. The N7 farmers as they call themselves were allowed to use the land – initially 3 ha now expanding – by the farmer. This was initially for free so they could get established, although now they pay a rent of $80 per hectare. The land was not being used intensively – apparently it had a fodder crop, lupins, planted over winter – and the farmer was happy for others to have a go.

Much to the surprise of many South Africans, and now praised by former President Thabo Mbeki, the Zimbabweans were able to transform the land into a vibrant horticultural enterprise, growing spinach, broccoli, cabbage, cauliflower, tomatoes and maize. The irrigation equipment on the land was put to work, and they applied manure to the land to improve the quality of the soil. The vegetables are sold at Cape Town’s Epping market.

For many in the media, it was the background of the Zimbabweans that was surprising too. They are all in full time jobs, and are highly qualified. One has a PhD apparently in agriculture, others have degrees in physics, science, engineering and languages. They now have 6 employees, one a Zimbabwean, while others are South African and a Malawian farm manager.

While there have been disputes about the details of the ‘good news’ story, and clearly a bit of a backlash from the South African farming community, the basic take-homes were clear. Zimbabweans – including highly qualified people – can farm, while South Africans had not taken the initiative to use this, or other similar, parcels of land in the same way.

This was rubbed in with Mbeki’s commentary. He linked this to land reform, complaining about the South African land reform and restitution programmes where South Africans preferred to take money rather than invest in actively farming the land. By contrast, he suggested, Zimbabweans were committed to the land and could make good use of it, as he hinted many had done in Zimbabwe’s land reform programme.

The contrasts between Zimbabwe and South Africa’s agricultural sector and land reform efforts have been widely commented upon. South Africa of course does not have the same type of agrarian economy as Zimbabwe, and many people have not had recent experiences of farming, even if living in rural areas. South Africa’s land reform has focused on attempting to emulate ‘commercial’ farming, with inappropriate visions of ‘viability’, often through cooperative group arrangements, and has often failed.

Yet the Malmesbury experience may offer some insights for South African land policy. The opportunities for ‘smallholder’ production does exist, especially when linked to certain value chains, and expecting land reform only to emulate large-scale commercial farming just on a smaller scale is, as so many studies have shown, is bound to fail. But equally this is not simply a land to the people story – as the heightened rhetoric of the Economic Freedom Front and Julius Malema suggests – but an example of where small-scale agriculture can work under certain conditions. And these conditions are quite specific – the N7 farmers have the skills, the market connections and the infrastructure in place to make things work.

South Africa’s land reform debate remains stuck between the government’s formal focus on planned redistribution using inappropriate commercial models and a naïve populist response of handing land out without thinking about how to embed it in a reformed agrarian economy. Malmesbury – and others places around the country from Limpopo to KZN – offer glimpses of what might be if the two false extremes were dropped in favour of something more realistic and appropriate. Maybe Zimbabwe’s lessons from land reform, and the N7 farmers, can indeed export some good ideas and practices to south of the Limpopo.

This post was written by Ian Scoones and appeared on Zimbabweland

 

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Sharing results, generating impact: experience from Zimbabwe

One of the many exciting things I did when visiting our field sites in Zimbabwe at the end of last year, was to help hand out a new set of booklets based on our ‘Space, Markets, Employment and Agricultural Development’ project (supported by DFID-ESRC), that has now concluded.

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The project looked at how changing patterns of agriculture is influencing markets (upstream and downstream) and employment. We looked at a series of commodities – tobacco, beef, horticulture and maize – in two sites – Mvurwi in Mazowe area and Masvingo district.

This allowed for some important insights to emerge through both qualitative and quantitative work. We have produced a long report if you want all the detail, and some journal articles are in the works. But in our research we are also committed to making findings available to wider audiences. Our prize last year recognising ‘impact’ highlighted this approach. So we have produced some more popular outputs, including a series of much-viewed films (they are short – just 10 mins or less) that I have mentioned on the blog before. The films have been shared in showings in the study areas, and DVDs have been circulated to agricultural offices, training centres, schools and so on. And for those with good enough Internet connections they can be viewed online via youtube (there are hi and low res versions). At the end of last year we produced a booklet summarising the findings, and offering some case studies of how people have engaged with these changing markets, paid for in part by our prize money.

The booklets are in Shona and English, and are available to download here (scroll down to get the new booklets – they’re blue, and uploaded in low res quality so they are feasible to download). They complement our earlier booklets that offered an overview of the findings presented in our 2010 book (these are the green ones!). These proved a massive hit in our study areas, and ‘reading circles’ were formed to share them across villages in Masvingo.

As before we have produced a large print run of the colour booklets. In November-December we distributed over 1500 to our field sites in Mvurwi, Masvingo, as well as Masvingo. These were handed out to the villagers we have worked with over the years, as well as officials in Agritex offices, local government, private sector businesses and others. Not only were people delighted to see themselves and friends and family in the photos, but they were appreciative of the effort to feedback and share results. There have been many conversations of our findings since.

There is much talk about ‘impact’ these days in research circles. It’s become an obligation to demonstrate impact, uptake and so on, but these edicts are often followed rather reluctantly. In the last UK national research assessment exercise, university researchers had to produce ‘impact case studies’. Many were excellent, but there were a few where it was clear that researcher were scraping at the bottom of a rather empty barrel. Much of the research impact business is also rather mechanical. There are endless guidelines, tedious workshops, toolkits and yes inevitably consultants to help you with the process. And so often ‘impact’ efforts are added on after the event, with the funding body deciding (after being critiqued) that they need to ‘do impact work’ on research that has already been done, and with a group of people who are not really ready to do it.

But in my view with ‘engaged’ research (another buzzword), it’s an ethical obligation to feedback, link with research users and find ways that your research has resonance – and from the very beginning of all research efforts. Impact may not be immediate, and may require years and years of engaging before a moment arises when the research becomes relevant and useful. It may also be highly unexpected, with engagements from unusual sources. This is the problem with the approach to ‘compulsory’ impact, as people are forced to demonstrate impact and uptake in rather inane ways, when actually it wasn’t appropriate.

I am in the lucky position of working with an amazing group of people in Zimbabwe and over a long period of time. This is how we can have impact, but it is slow, patient and cumulative, and requires multiple strategies. These booklets are our latest effort: do read them!

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

 

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What happened to farm workers following Zimbabwe’s land reform?

Previous blogs have discussed the fate of workers who had worked on the large-scale commercial farms that were distributed during land reform, both in relation to the total numbers affected, and the new livelihood strategies that have been pursued. The role of labour in the new farm structure is a crucial and under-studied issue, as it is more generally in agrarian and livelihood studies. However we now have some data from our own fieldwork that sheds light on these issues.

Over the last few years we have been working in the Mvurwi area of Mazowe district as part of the Space, Markets, Employment and Agricultural Development project. We have carried out similar surveys to those that we had done before in Masvingo (and now more recently in Matobo) to find out how similar and different these sites are, and how the experience of land reform has affected different people in different places.

In Mvurwi we have been looking at what has happened on a series of A1 farms (involving a sample of 220 households), as well as a few case studies of A2 farms nearby. We have also been investigating what happened to farm workers who have either got land as part of A1 settlements or are still living in the farm worker compounds.

Across the three farms where our A1 sample is located, there are four farm worker compounds, with around 370 farm worker families currently living in them – half are original workers from those farms, the rest were displaced from about 25 other farms (notably A2 farms), from Mazowe district and beyond, where new owners have expelled former workers, as they have restructured their operations.

Former farm workers are not a uniform category of course. There are some who managed to get land under the fast-track process and since, and are part of our A1 sample. Of this sample 10% were former farm workers, from the farms concerned or from further afield, as many had to move. Others were compound dwellers with small plots where they were growing food, and indeed tobacco, and they were engaged in regular work, being employed by A1 or A2 farmers. Others had carved out new livelihoods, sometimes combining piece work on farms, with other activities such as building, carpentry or fishing (see below). However others have no jobs or other forms of livelihood, and are struggling. Some have gone to communal areas and have reinsterted themselves into social networks there, but many do not have access to these, being ‘foreigners’ originally from Malawi, Mozambique or Zambia for example, and with no rural home, despite having lived in Zimbabwe for generations. It is a diverse experience, and one that deserves more research scrutiny.

Among our sample of A1 farms, on average each household employed 0.8 permanent workers and 4.2 temporary workers, both men and women. Many of the permanent workers are drawn from where the household previously came from, often nearby communal areas, bringing in relatives and others. However, new A1 farmers growing tobacco have also hired in permanent workers from the compounds. These are often the skilled farm managers and others who can help with their new tobacco businesses. Others say they prefer to hire from the compounds as the labour is skilled and disciplined, and they are happy to avoid being tied to relatives. Permanent workers include both men and women, and the same applies to temporary workers. These are nearly all drawn from the compound, and are hired for particular production tasks. Wages are low especially for temporary work, and workers are not organised or unionised, and so have little bargaining power. Not all compound households can find work for all the time, and so must develop more diversified livelihoods. Land reform was 15 years ago, and a whole new generation has grown up in the compounds since. This group of youth have not learned the skills of their parents in tobacco growing, and so are not hired so often. They must seek out other income earning activities to survive.

The table below offers some average household social profiles and backgrounds of A1, A2 and farm worker households. The A1 households are split up into ‘success groups’ (more or less successful according to local informants), while the others are lumped together.

Table: Profiles of A1 (Success Group 1-3), A2 and Farmworker households in terms of characteristics of household head/land, crop outputs, income sources; assets and their accumulation.

  A1-SG1 A1-SG2 A1-SG3 A2 FW
Educational level of household head (% above Form 2) 54 51 58 80 19
Age of household head (% above 50 years) 42 48 33 60 40
Land area allocated [ ha ] 5.4 5.6 5.6 51.9 0.6
Land area cultivated (ha) 3.6 3.7 2.4 7.8 0.6
Maize production (kg), 2014 4805 2931 2232 18400 419
Maize sales (kg), 2014 3279 1384 973 14280 0
Tobacco production (kg), 2014 1338 1460 880 4700 246
Remittance income (percentage receiving) 13 17 16 60 15
Cattle sales (%) 33 39 22 40 1
Local piece work (%) 8 8 14 0 44
Vegetable sales (%) 27 52 49 60 34
Building, thatching, carpentry (%) 12 24 32 0 54
Fishing (%) 8 11 22 0 19
Cattle ownership (N) 9.8 6.9 4.7 10.0 0.5
Car/truck ownership ( %) 47.9 23.2 30.1 20 2
Bicycle ownership (%) 58 60 59 80 35
Cattle purchased (N) in last 5 years 1.2 0.9 2.1 0 0.2
Cars purchased % in last 5 years 27 19 21 0 0
Bicycles purchased % in last 5 years 25 35 44 80 23
Cell phones purchased in last 5 years (N) 3.4 3.2 3.8 6 1.6
Solar panels purchased (N) in last five years 1.1 1.1 0.9 0.8 0.8
Water pumps purchased % in last five years 0.25 0.52 0.34 0.2 0.2

Comparing farm worker households to others, we can see that across variables, farm worker households are badly off. They have very small plots of land (average 0.6ha), all of which is cultivated. They do this intensively although in 2014 only realising 400kg of maize on average, and 250kg of tobacco. Maize is all consumed, while tobacco offers some additional income. This is complemented by a range of other sources of income. Local piece work (including the temporary farm labour discussed above), building/thatching/carpentry and vegetable sales (for women) dominate. Fishing is also important in one of the farm dams for some. Compared to the other sample groups, asset ownership is very limited, although a few have livestock, and some are buying new animals. By contrast to the more successful A1 farmers, the possibilities of accumulation are limited, although farm worker households have bought bicycles, cell phones, solar panels and water pumps.

There is little doubt that former farm workers are extremely poor and often have precarious livelihoods. However, in the absence of alternatives, they are surviving, often through a combination of intensive agriculture on garden sized plots and other work. The compounds across what was the large-scale commercial farming areas of the Highveld are home to many thousands of people. The long-term future of this population remains uncertain, but for now their labour and skill is an important element of the success of some of the new resettlement farmers, and some are managing to find ways of getting their own plots.

Next week, I will share a few case studies of former farm workers from this area to show how different people are making a living.

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

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Land and commercial agriculture in Zimbabwe: new findings

Over the last few years we have been studying the relationships between land, markets and employment in commercial agriculture Zimbabwe through the SMEAD project, supported by the UK’s DFID-ESRC ‘Growth Research Programme’, and coordinated by PLAAS at UWC in South Africa as part of a regional, comparative study (research has also been completed in South Africa and Malawi). In Zimbabwe, the work has focused on Mvurwi area of Mazowe district and the Wondedzo area of Masvingo district, contrasting a high and low potential area.

The final report is now out, along with a briefing paper. I have already alerted readers to the series of films (‘Making Markets – in high and low res) we have made on the 3 commodities that we focused on in Zimbabwe – tobacco, horticulture and beef. Please do check out the publications and videos to get more detail. This blog offers some highlights of key findings and recommendations emerging from the work.

Despite many challenges, Zimbabwe’s agrarian economy is generating new economic activity and new employment because it is more locally rooted following land reform. Our research shows however how, while economic linkages generated by agriculture create opportunities, the distribution of benefits is patchy; some succeed and are accumulating, while others are not.

There are many challenges ahead. This blog has often focused on practical and policy challenges associated with agricultural production. These include for the need for a reliable supply of affordable fertilisers; the need for enhanced extension and service support, including through mobile phones and the Internet; the need for investment in water management and irrigation facilities; and the requirements of tenure security to encourage investment.

In our work in the SMEAD-Zimbabwe project, we focus on key recommendations for supporting economic linkages and the non-farm rural economy. These include:

  • Investment in rural infrastructure is essential. Restructuring rural production and economic activity following land reform requires a new configuration of infrastructure – roads, electrification, network coverage for mobile phones, market sites and storage facilities, business centres and so on. This is urgently required in order to facilitate the growth of economic linkages and support for the non-farm rural economy.
  • Encouragement of market information services via mobile phones, text messaging and the Internet will assist in increasing knowledge of prices and market options for farmers, input suppliers, service providers and other entrepreneurs, and help develop a more market-targeted approach, avoiding gluts and price crashes.
  • Contract farming arrangements for certain crops eases capital constraints, provides inputs and offsets some risks. In the tobacco sector, the Chinese company, Tian Ze, has contracted a number of (mostly larger) resettlement farmers, but has been key in supporting sales from the auction floors, and the wider contracting system for tobacco. However contracting needs sensitive regulation to protect all parties.
  • Finance and credit is extremely limited, and constrains on and off-farm business development. Bank loans are concentrated on contracting companies, and so a limited suite of crops and activities. Access to finance for others is constrained by major problems of liquidity in the banking and finance sector. There is need for low interest finance for farm and non-farm business activities. Rules and regulations have to be in place to protect financiers and borrowers.
  • Small towns and business centres near new resettlement areas are often booming, providing services, markets and employment. As ‘growth poles’, basic support for their sustained expansion is required, including infrastructure investments, and the facilitation of informal, small-scale trade and service supply.
  • Training in business development skills for farmers, service providers and technology manufacturers will help in the upgrading of business opportunities, particularly for youth and others without land, so they can participate in a local non-farm economy. Business training – including the issuing of business management certificates – is essential.
  • Investment in developing value addition from agricultural production is vital. This includes drying and bottling facilities for vegetables and meat products, as well as small-scale food selling, compliant with food hygiene and safety standards. Tobacco farmers lose on rejected leaf and sweepings. Value addition could involve technologies to make manures, as done by companies such as Nico Orgo.
  • Private sector-led agricultural trade, input supply and service support is often hampered by restrictive regulations and by-laws, combined with often punitive taxes and charges. Policy and regulatory reform to support the growth of small-scale businesses linked to agriculture in the rural areas is a priority. Local councils/government need to do away with out-dated rules and regulations that hinder the initiation and growth of new small businesses.

Zimbabwe’s rural economies are undergoing rapid change following land reform. However, redistributing the land was only the first step. Building sustainable local economic growth that generates employment and is rooted in vibrant rural markets is a longer process, requiring continued support. Local economic growth is being generated by a new vibrancy in the agricultural sector created by land reform. But for the full potentials to be realised, and for the benefits to be shared widely, greater investment in the conditions required – including infrastructure, skills, regulations and policy – is needed if Zimbabwe’s agricultural revolution is really to take off.

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

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Making markets: local economic development following land reform

Today we are releasing a series of films on the relationships between land reform and economic activity in Zimbabwe, focusing on three commodities: tobacco, beef and horticulture. The films emerge from on-going work coordinated by the Institute for Poverty, Land and Agrarian Studies based at UWC in Cape Town under the ‘Space, Markets and Employment in Agricultural Development’ (SMEAD) project supported by the UK ESRC and DFID growth research programme. They were made by Pamela Ngwenya, supported by the field team. This week, I am posting the overview film which gives you a taste of the series. In subsequent weeks, I will post ones on the each of the three commodities we looked at.

Over the last couple of years the work has been carried out in Malawi, South Africa and Zimbabwe looking at the linkages between agricultural production, employment and other economic activity and the spatial patterns of these interactions. Through some detailed case study research, the project has been attempting to look at the different growth pathways linked to agriculture, and investigate how inclusive these are, asking who gains and who loses from agricultural commercialisation.

The study of course links to old debates about scale and agriculture, and the linkage and multiplier effects of different types of farming. Do big or small farms create more employment and economic growth, for whom and where? What spatial mix of farm sizes and markets make sense? Can local economic development flourish in an era of globalisation? These are not easy questions to answer, and that’s why the debate has continued and continued. It depends what commodity, which markets, what spatial arrangement of farms and markets, levels of infrastructure and much more.

But across our studies in southern Africa, some interesting patterns emerge. The cases from Malawi show very localised economic activities, with spillovers and connections occurring within a few kilometers. Few farmers are able to scale up, and although commericalised, the prospects for growth without wider shifts in the economy look bleak. In South Africa by contrast, the linkages were extensive, with very few steps to large companies operating in highly developed value chains, and linking to markets in distant urban conurbations. Here, for differnt reasons, the prospects for local economic development looked limited. The value was captured and exported, and employment was not being generated in the local area. Zimbabwe showed an intriguing middle ground. Here lots of local economic activity was evident, particularly linked to entrepreneurial farmers in the A1 resettlement areas. These farmers were selling into new value chains, created since land reform. These were more local, supplying markets in nearby towns and business centres for beef or horticulture, but also export markets for tobacco. Employment was being generated along the value chains, and benefits were far more widely shared.

The results of the study are still being processed, synthesised and written up and I will share more when the reports are out. But the early indications suggest an interesting story, especially for Zimbabwe. This suggests a focus on local economic development, capitalising on and amplifying the linkages already created by entrepreneurial farmers who have benefited from land reform. This will mean a major rethink of rural development policy and planning, but the benefits could be significant if the cases highlighted in these films are anything to go by.

The post was written by Ian Scoones and appeared on Zimbabweland

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