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What will the inauguration of President Trump bring to Africa?

 trump-photo1

Later this week Donald Trump will be inaugurated as president of the US. There has been much speculation about his foreign policy position, assuming oil industry boss, Rex Tillerson, is confirmed as Secretary of State. An ‘America first’ position will certainly mean a more inward-looking stance, focusing on domestic concerns. Globalisation and compassionate, liberal internationalism will not be on the agenda. The aid agency, USAID, will probably look very different, and preferential trade arrangements, such as under AGOA, will be given short shrift. Gone will be the spreading of ‘good governance’, democracy, the ‘rule of law’ and food security; instead support for US business interests will dominate (although these of course were hardly absent before).

Some have argued that the Trump presidency will see the end of the idea of ‘the West’ – that great post-war alliance of political, commercial and military interests, generated under globalised neoliberal policies, that have helped forge multilateral institutions, trade pacts and environmental/social policy agreements.

Is this all under threat? Somehow I doubt it. No matter the undoubted power of the US presidency there are plenty of other forces at play that will see such alliances hold, even if transformed in their objectives, membership and support. But what is certain is that geopolitics will look different.

At a time when the prospects for the old world order look threatened, and many fear the consequences for global trade, peace and stability, new arrangements will have to be forged. Already, Trump has alarmed the world with connections with Putin’s Russia, by praise for Pakistan, and by engaging directly with Taiwan, as well as threatening commitments to hard-won agreements on trade and climate change. For sure, the status quo is about to be seriously disrupted.

Opportunities for Africa?

For some this may be a positive thing. The meddling in foreign lands by western powers, led by the US, has often been challenged by those arguing for a new post-colonial order, where aid is not seen as a route to imposing liberal, western values. Instead a greater independence and geopolitical and commercial autonomy may open up new avenues. Of course many in Africa, including Zimbabwe, have been ‘looking east’ for both cash and political support. China as the great competing superpower of the twenty first century has many ambitions in Africa. China sees the long game, and is investing in social, cultural, political and economic capital across Africa. Already the US’ standing in Africa looks different, and this will change again.

Yet there may be opportunities for Africa from a new US stance. Despite the belligerent rhetoric, Trump is clearly a well- practised pragmatist, born of his experiences of building his business empire. Working from instinct, direct personal connections and relations are crucial, and high-flown policy is secondary. In many ways, he is more similar to most African presidents than his predecessors, who also share some of his less than liberal views.

Surrounded by family, senior military officials, and with politics firmly linked to business interests, there are striking, if not always positive, similarities. Trump is associated with a different type of political dynasty, far from the more familiar Clinton and Bush version, perhaps more akin to those seen in Africa, where business and politics mix easily. Such family and business connections may be important for Africa, as suggested below.

As African governments have got used to a different type of relationship with the other major superpower, China, new forms of engagement have emerged, very different way to the standard diplomatic and aid connections of western powers. Business is central, geo-political interests are clear, and deals are struck based on often quite personal connections. Just look at how the late Meles Zinawe and of course President Mugabe cultivated China, often to good effect.

Trump’s inconsistent and rare commentaries on Africa reveal little of his policy position. He has called South Africa ‘a mess’ (but few would argue about that), and has challenged President Museveni of Uganda, arguing that he should be locked up for corruption (well he may have a point too). But overall there is little to be gleaned beyond the usual Twitter-led knee-jerk commentary that has characterised Trump to date.

The Zimbabwe connection: sport hunting and golf?

So what are the implications for Zimbabwe? Robert Mugabe in his usual mischievous style has both backed Trump – as a challenger of western liberal hegemony – and castigated him – arguing that Adolf Hitler must be his grandfather! Trump has said that, along with Museveni, he will personally see that he is imprisoned. Beyond the campaign rhetoric and political posturing, Zimbabwe though has more direct and positive connection with Trump, via his sons. This suggests an interesting set of common interests, arising from a slightly bizarre route.

The new US President’s sons – Eric and Donald Jr., now in charge of the Trump business empire – are very fond of Africa, and indeed in 2010 visited Zimbabwe on a high-end trophy hunting trip organised by an exclusive South African company, Hunting Legends. Their time in Matetsi safari area near Hwange was much enjoyed.  During their hunting safari they hunted leopard, elephant, buffalo and waterbuck and more, and paid huge sums in trophy fees, as well as their no doubt luxurious bush accommodation and safari services. A small media storm occurred, with outrage at the horrors of hunting from the usual quarters (check out the photos – you can see why), although it was completely above board.

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So perhaps Zimbabwe can make the connection to Trump through his sons and via the promotion of sport hunting? Trump Senior prefers golf (he has his own golf course in Scotland, but I am told some of Zimbabwe’s are world class), but as a route to promoting US business and African development, sport hunting may be a win-win. Personally I don’t like hunting or golf, and many will no doubt object to the idea that hunting can result in development gains, as in the outraged global reaction to the death of Cecil the lion at the hands of a hapless dentist from Minnesota.

Nevertheless, there are good arguments for the sustainable use of wildlife, and trophy revenues are the ones that usually make it economically profitable, as I argued in a blog on Cecil. So perhaps the relevant ministers need to get on a plane to the US, and be the first in the queue to make the case for Zimbabwe as an investment destination.

Last time the Trump brothers came to Zimbabwe they were escorted by a white-owned South African company; perhaps next time they can engage with a community-led business, with more benefits to local people from the significant fees paid. Perhaps the Save Valley Conservancy can get involved, along with their outreach schemes; and maybe the long-lost ‘wildlife-based land reform’ can be revived, with dividends spilling over to support development in some of the most disadvantaged areas of the country.

Just as diamonds were the platform for Chinese engagement with Zimbabwe (see next week’s blog), perhaps sport hunting could provide the same starting point for new political relations and joint business ventures with the US; although hopefully – but far from guaranteed – without all the murky corrupt, politics that ensue when investments in valuable resources occur in Africa.

This all may be grasping at straws. I suspect so, as the more serious global challenges are more fundamentally about Trump’s challenge to rights, democracy and the global political order. Certainly, we are about to enter a new era, where old rules don’t apply. Thinking out of the box, and developing a new discourse for African engagement with the US will definitely be necessary; and this must start from Friday.

Further reflections of mine from last year: http://steps-centre.org/2016/blog/trump-and-brexit-whats-the-alternative/

This post was written by Ian Scoones and appeared on Zimbabweland

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Access to $1000 credit: would this help unleash agricultural commercialisation in Zimbabwe?

One of the repeated complaints of farmers on the new resettlements is the lack of access to finance. This is holding back commercialisation, particularly for A2 farmers with bigger plots but also for those on A1 farms eager to expand, intensify or diversify. All of this needs money, and it is in short supply.

In our studies of farmers’ fortunes in Masvingo, and more recently in the tobacco growing areas of Mazowe, as part of the Space, Markets, Employment and Agricultural Development project, we identify three standard pathways of agricultural commercialisation, each associated with different sources of finance. All are limiting, and available only to a few, or relate only to particular commodities.

The first route is through regular accumulation, investment and saving. This is tough, given all the other demands on funds, and requires real tenacity. Each year profits have to be sunk back into the farm, and new equipment purchased. This is a route we see in the vegetable farmers of Masvingo who by making use of water resources, investing initially in a small pump, have expanded their production and marketing significantly, and after a few years are able to upgrade, with new irrigation equipment, the purchase of pick-up trucks and so on. The regularity and reliability of income from horticulture (if the water is available and the pests can be kept at bay) helps drive this pathway to commercialisation. Some farmers have been very successful, now with turnovers of tens of thousands of dollars, employing large numbers of people and with transport businesses on the side. And all from an initial outlay of a few hundred dollars.

The second route is investment from external income sources. Getting going in farming is often the hardest part, like many businesses. Basic up-front investment is necessary. For A2 farmers with quite large plots – up to 100 or 200 ha – making productive use of this land really requires substantial capital investment. Most such farms were formerly ranches in our study areas in Masvingo, and had limited infrastructure. Those farmers that inherited dams and irrigation equipment were lucky, but most did not. A2 farmers tended to have jobs in town, or at least good connections. These were crucial in getting going. But in the economic crisis period, standard government jobs were not enough to live on let alone provide additional income for investing in farming. Those who were able to get going usually had NGO jobs paying on foreign exchange, or had connections overseas. This diaspora and employment money was recycled and invested in farms. Such farmers, unlike their neighbours, were able to rebuild or rehabilitate irrigation schemes, build dairies and farm sheds, as well as purchasing transport – the ubiquitous 1 tonne truck – to facilitate marketing.

The third route we have identified is of course via contract farming. This is important for crops such as tobacco, but also cotton, and through a different arrangement, sugar. This means the farmer does not have to pay for inputs up front, and the contracting company will supply seed, fertiliser, pesticides and other inputs and also take care of the marketing. Increasingly cash-strapped farmers are hooking up with contractors for other crops, including maize. I have been amazed how many readers of this blog get in touch, and ask to be put in touch with a contractor for selling their crop. There is clearly a massive demand for this intermediary function, where those with cash and capital can invest in farming without taking on the burden of actually owning or holding land or producing. Former white farmers are heavily involved, as well as the new black business elite, alongside the standard cotton and tobacco companies, and of course the estates. The terms of the contract may be one-sided, with the risk pushed towards the producer, as discussed in earlier blogs, but contract farming does release cash, in the absence of any other source.

It is this absence of any other source of finance that is striking across our case studies. Rural financial institutions simply are unable to respond. Some say this is due to the lack of collateral due to the land tenure system, but this is red herring in my view, given the possibility of loaning with all sorts of other security beyond freehold tenure. Surely the new farmers who are desperate for finance would open up commercial possibilities for banks and other finance providers. But the financial sector is very conservative in Zimbabwe, being used to a very different structure of agriculture and form of finance. They do not know their new client base and have few incentives to offer new financial products.

Rural finance in Zimbabwe thus has a massive missing middle ground – between the miniscule forms of finance offered by savings clubs and rotating loans schemes promoted by church groups and NGOs and the large lumpy finance offered through the conventional routes. While there have been some state-backed attempts at improving the situation, they have often foundered due to complex bureaucracy, absurd conditions and lack of outreach. The type of finance offered by banks is largely irrelevant to most new farmers (see Tables 4 and 7 in this Finmark report from 2012)

While I have little knowledge the type of business models that would work, my bet is that a company, perhaps initially supported by a development organisation, that could offer a US$1000 loan on flexible terms would have massive uptake and success. This is the sort of amount that is needed, sufficient to buy a decent pump and irrigation kit, sufficient for a down-payment on a second-hand pick up, sufficient to get going on a commercial chicken project, sufficient to buy a beast or two, or some basic farm equipment. This would make all the difference (and there are now some examples supported by USAID and others). It is standard in Asia for example, so why not in Zimbabwe?

While the three pathways to commercialisation noted above are great if your crop is contracted, if you have close ties to someone with a well-paid job, or if you farm a commodity that gives quick, reliable returns, and you can manage to save. But this is not everyone, or every type of agriculture. Today commercial agriculture in Zimbabwe is being held back, and rural finance is probably the biggest blockage.

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

 

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Zimbabwe’s poultry industry: rapid recovery, but major challenges

Zimbabwe’s poultry industry has shown massive growth since 2009. A range of sizes of units have sprung up everywhere – from the medium size units of 1000 birds to massive industrial scale operations. Chickens are big business.

Meat consumption has changed significantly in Zimbabwe over the last 20 years. Beef used to be the most consumed, with Zimbabweans eating on average 13kg per annum in the 1980s. According to a recent USAID report (see below), today this has dropped to only 3.3kg, the lowest in the region. Chicken and pork in particular have replaced this, with chicken consumption is now half of all meat consumed. Beef has dropped to only 35%. Meat consumption has rebounded since 2009 as the economy has improved, now estimated to be 11000MT per month, up by 20%. But the pattern of consumption has changed. This has been driven in part by taste, but also austerity as people looked to cheaper sources of protein. According to the USAID report, the retail price of economy beef which has the highest demand is between US$4.60 – US$5.00 per kg compared to the average chicken retail price of about US$3.30 per kg.

After the stabilization of the economy, many invested in poultry as a sure-fire way of making money. The data in the graphs below are from a recent World Bank report, showing the rapid increase in both broilers and layer production of day old chicks, according to Ministry of Agriculture (MAMID) data.

Day old chick production (layers)

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 Day old chick production (broilers)

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But there are significant challenges to these new producers.  These centre in particular on competition from cheap imports, including illegal dumping. ZIMSTATS shows that in 2011 chicken imports were 25,500 MT at a value of $13.644 million or an average of only $0.53/kg. The low price suggests much of this is offal (including ‘waste’ pieces), which is illegal to import. Additionally the volume exceeds the official quota by over 100%, representing 20% of the total demand for chicken nationally, according to a recent USAID report (see reference below).

In addition the costs of feed have escalated. Soya production has been slow to rebound in Zimbabwe, and imports are costly as only Zambia produced GM-free soya in the region. These imports are expensive as Zambia tries to protect its own growing poultry industry. This really took off when Zimbabwe was suffering outbreaks of avian influenza in the early 2000s, and then subsequently when the Zimbabwe economy collapsed, and along with it its poultry industry.

The 2013 budget statement laid out the challenges for the Zimbabwean industry clearly:

• Stiff competition from cheap imports for both table eggs and meat, threatening viability of producers;

• Rising input costs, particularly maize and soya meal, following poor harvests; and

• High volumes of illegal imports which are being sold in the domestic market at sub-economic prices

The USAID study highlighted the challenge of cheap and illegal poultry imports for the meat industry as a whole. Much of the imported poultry meat comes from Brazil which has a massive poultry industry. Products that cannot be sold in the Brazilian markets are often transported elsewhere in the world. Feet, skin, necks and other ‘offal’ are frozen and packaged and sold at rock bottom prices. Chicken pieces too are packaged and sold, again at highly competitive rates. Go to any Zimbabwean supermarket and you will find 1kg of chicken pieces being sold at $3, sometimes considerably less.

How these prices can be so low is beyond me. Maintaining a cold chain from Brazil to Zimbabwe must cost a fortune, let alone the cost of the product and its processing and packaging. While there are import quotas, many believe these are being exceeded through illegal imports. The import of offal is also illegal due to health and safety concerns. The USAID study recommended tighter import controls and the banning of offal imports, arguing that cheap imports were not only damaging the poultry industry, but also the beef industry as cheap meat alternatives were suppressing demand.

This is not just a Zimbabwean problem. In 2012, the South African government slapped on surcharges, provoking a row with the Brazil. Brazil responded by taking the dispute to the WTO, claiming that the South African’s protectionist actions were threatening the new friendship developed between the nations as a result of the BRICS partnership. It seems the diplomatic heat, and the threat of a WTO case that the South Africans have backed down, at least for now.

Undeterred by this dispute from across the border, Zimbabwe has now responded to the same problem. The 2013 budget statement noted:

“Due to unfair competition from imports of chicken, local breeders are increasingly cancelling orders for day old chicks as they fail to secure customers for their chicken as imports from outside the SADC/COMESA region retail at prices significantly lower than locally produced chicken, notwithstanding the 40% duty levied on imported chicken…. Investigations indicate that chicken imports are either smuggled or are grossly undervalued for duty purposes. In instances of smuggling, the necessary veterinary and health hazard permit controls are undermined….”.

From mid-November, the government introduced a higher customs duty “in order to level the playing field between imported and locally produced chicken”.

This is an important and welcome move. Let’s see if it has the effect it needs to. Hopefully the Brazilians will be less heavy-handed with Zimbabwe where the market is much smaller, and a trade dispute can be avoided.

Unfortunately, the issue is not just about formal trade. As already noted it is perhaps the illegal trade which is most significant, and damaging. This is well embedded in local Zimbabwean business networks, sometimes with high-level connections, and veterinary control and customs enforcement capacity remains weak. While chicken smuggling is perhaps less dramatic than drugs or diamonds, it has just as devastating an effect on the economy, lives and livelihoods.

Sukume, C. and Maleni, D. (2012). Beef CIBER Study. Constraints to Competitiveness. Unpublished report to the Zimbabwe Agricultural Competitiveness Program, DAI/USAID

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

 

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