The sugar rush in southern Africa

The expansion of sugar production in southern Africa has been dramatic. From its early beginnings in Natal to the huge commercial estates across the region established during the colonial era, new investments are being planned. The land rush in southern Africa is often a sugar rush, with the ‘white gold’ promising riches to governments, local elites and large corporates alike.

While sugar consumption is rising with increasing wealth and urbanisation, the prospects for export to the favoured European Union market look more fragile. In 2017 preferential trade access ceases, and with this the huge ‘adjustment’ payments that some southern African countries and sugar corporates have received as aid. Nevertheless the sugar giants, mostly centred on three South Africa-based companies – Illovo, Tongaat Hulett and TSB – as well as new entrants, are still eyeing up cheap land, good soils and water resources for new ventures.

With these major changes underway it is a good moment to review the political economy of sugar in southern Africa. This is what a new open access special issue of the Journal of Southern African Studies does. There are 9 papers, with case studies from 7 countries across the region, and a valuable comparative overview of patterns of accumulation in different operations.

The issue argues that the region’s sugar industry provides a useful lens through which to understand current dynamics of corporate capital and agricultural production in Africa. The papers highlight the rapid concentration of corporate control over the past decade, but also the very diverse outcomes across the cases. Capital does not operate in a uniform way, and local contexts, resistances and struggles, and wider political economy make a big difference.

Taking the company Illovo (now owned by Associated British Foods), Alex Dubb shows how it gains high profits in Malawi due to favourable market conditions (notably preferential trade access and protected domestic markets) and  high productivity (combining cheap field labour, land and water with capital-intensive milling). By contrast, Mozambican profits come exclusively from favourable market conditions, while profits in Tanzania, Swaziland and especially Zambia are due to particularly high levels of productivity. South Africa, Illovo’s country of origin, receives low profits, making expansion across the region essential for commercial success. Value relations, at the heart of political economy, are core to understanding accumulation through sugar, Dubb argues. As companies seek to expand their operations, the search for cheap land, water and labour continues. As papers from Malawi and Tanzania caution, attempts at expansion of sugar land through grand development schemes – such as the Green Belt in Malawi or SAGCOT in Tanzania – may result in elite capture and exclusions of poorer people, even when ‘outgrower’ approaches are advocated.

A central theme of the papers is an examination of the diverse patterns of ‘outgrower’ sugar cane production. This is massively different in South Africa, Zambia, Zimbabwe or Swaziland for example, where starkly different relationships between the estate and mill and smallholder outgrowers (of different scales, and with different involvement in direct production) apply. While often presented as the ‘inclusive business’ solution to corporate engagement with smallholders, it is clear that there is no single model, and relations between corporate capital, states and local producers varies massively.

How then should we understand sugar in southern Africa? Is the sugar industry part of a new developmental frontier in the region, transforming investment, market opportunities and livelihoods with a ‘win-win’ model, centred on linking core agro-industrial investments with outgrowers, as the industry and other advocates claim? Or is it a predatory form of capital, backed by elites and international finance, where production and market risks are transferred to vulnerable smallholders and estate labour; where land and water resources are ‘grabbed’; where a colonial model of exploitative estate production is at the centre, and profits are accumulated through monopoly power?

The experience in southern Africa suggests that these stereotypes rarely apply. While the logic of capital results in a relentless pursuit of profit, state agency and national political-economic context influence outcomes, as do local conditions. Local negotiations, resistances, and accommodations matter. The result is diverse patterns of production and profit, together with different livelihood outcomes for very different types of ‘outgrower’, and quite different implications for different groups of estate labour, as shown for Xinavane in Mozambique, both in terms of gender relations and health and wellbeing.

With the vagaries of the international market dominating, and the changing fortunes of large corporate agribusiness capital in the region so deeply intertwined with this, we cannot predict whether the long-established corporation-state-outgrower relationship will persist. But for now, in all its variety and differing political dimensions, this relationship dominates the southern African sugar sector, and is central to understanding its contemporary political economy.

This post was written by Ian Scoones and appeared on Zimbabweland

 

Will white farmers in Zambia feed Zimbabwe?

 

The El Niño drought has hit southern Africa hard. Malawi, Mozambique, Zimbabwe and seven provinces in South Africa have announced emergencies. Coming on the back of a bad season last year, the food situation across the region is dire. Large volumes of food will have to be imported into drought-affected areas, with a regional deficit of 7.3 MT reported. News reports – including one from the Southern Daily that was widely circulated – point to white farmers who fled from land reform in Zimbabwe and now farming in Zambia as the saviours. Is this really the case or, as ever, is it a bit more complicated?

Who is producing Zambia’s food?

As discussed last week, the figures on how much food is needed and where is confused, but the latest on Zimbabwe suggest that up to 4.1 million people will need food aid before the end of the consumption season. While the estimates may be problematic, even adding a large margin of error, the bottom-line is that food must be imported into Zimbabwe in large quantities. The nearest source is Zambia, where good rainfall produced a harvest higher than predicted at 2.8m tonnes (not 3.3m as the Southern Daily reported, which confusingly took figures from 2014 and reported as if this year).

Who then is producing all this maize in Zambia? One of the oft-repeated narratives has been that the food being supplied to Zimbabwe now is being produced by white farmers who were evicted from Zimbabwe during the land reform. In a 2004 piece by Jan Lamprecht on the blatantly racist, white-supremacist site AfricaCrisis.org gloated that white farmers outcompeted 150,000 peasants in Zambia. Even President Mugabe seemed to have been swayed by the propaganda, commenting on the success of former large-scale commercial farmers from Zimbabwe at a rally. This was the narrative too of the error-filled Southern Daily piece (that was sent to me at least four times when it came out, with commentaries not dissimilar to that on AfricanCrisis.org). The evicted-farmers-save –Zimbabwe narrative is prevalent, but is it true?

Certainly there are some former commercial farmers now farming in Zambia – in such places as Mkushi block. Mkushi has attracted South Africans, Tanzanians, British and Zimbabweans, and is a focus for large-scale agriculture in the centre of the country.  Estimates suggest there are perhaps 750 white Zimbabwean farmers in Zambia, rising from 400 following land reform in 2000. External finances, such as through Agrivision Africa supported by the IFC, has allowed the capitalisation of commercial operations, and farms there produce a mix of crops, ranging from soya to maize to beef and dairy. Many commercial agricultural enterprises in places like Mkushi are highly productive, and currently very profitable. In part this results from skill and investment, but also the combination of recent periods of good rainfall and supplementary irrigation capacity that has improved production.

Maize being exported to Zimbabwe in part comes from such farms, but it’s actually – and contrary to the simplistic narrative – primarily grown on smallholder producers across the country. Maize production – and so the ability to export – has been massively supported by a highly-subsidised input support programme over a number of years. For example, in 2011 the Government of Zambia spent US$184 million on 182k MT of fertiliser and 9k MT of hybrid maize seed. This amounted to 0.8% of GDP then, and 30% of total agricultural expenditure. This is an enormous investment and, as in Malawi before, it has boosted maize production massively, but probably unsustainably. Today smallholders in Zambia produce around 2.5m tonnes annually, while large-scale producers 300k tonnes in a good year, like this past one.

In other words, the maize export story from Zambia is driven not by valiant white farmers of the much-promoted narrative (although they of course contribute) but mostly by the efforts of smallholders (including of course black Zimbabwean migrants who came during the Federation era, and have been important producers in central Zambia since then). But in fact the big story too is the role of massive (and fiscally untenable) subsidies from the Zambian state (and its aid donor allies), and big questions as to whether this will continue under the new political dispensation.

White farmers in Africa: mixed fortunes

White commercial farming in Zambia, as Zimbabwe before, and in experiences from Nigeria and Mozambique too, has been one of mixed fortunes. The lack of infrastructure, limited state support and poor finance and other support systems, made many farmers complain bitterly about their new settings. They had been successful farmers in Zimbabwe in the context of a massively supportive environment, with huge subsidies and state support, consistent from the 1950s at least until the 90s. This is not the case in Zambia – or Nigeria and Mozambique. Commercial farming in Zimbabwe was not always an independent, heroic effort by whites in the face of adversity. Of course there is always skill, hard work and entrepreneurial acuity in the mix, but state support, infrastructure and public investment was also part of the picture.

However, despite the challenges – and many gave up – some former farmers from Zimbabwe have become highly successful in Zambia. Considerable private resources from other businesses (some still in Zimbabwe) have been invested to make these farms going concerns, and now in the context of favourable exchange conditions and high demand, they are definitely contributing to the feeding of the region. But there is also other food entering circulation from a range of sources, most notably from smallholders in Zambia, and, as discussed last week, from production not captured by standard crop surveys and livelihood assessments in Zimbabwe itself.

A regional approach?

SADC and COMESA have always tried to take a regional approach to food security, with the expectation that at different times different countries or regions will feed others. An approach to open borders and trade should, ideally, allow low-cost food to move from places of surplus to those of deficit.

Supply of maize from surplus areas in Zambia to the Zimbabwean market has been restricted, however. Controversial restrictions on exports have helped drive the trade underground. Despite the formal limits, there is much that is travelling across the border illegally. The allure of the US dollar in the Zimbabwean economy is attracting much speculative trading activity, including in food (as well as other commodities). With a declining Zambian kwacha due to the collapse in mineral commodity prices, selling food to Zimbabwe in US dollars is an attractive prospect, and formal restrictions are very often circumvented. This of course adds to the liquidity problems and cash crisis in the Zimbabwean economy, as the dollars end up in Zambia, even if food is provided. This cross-border currency exchange politics is creating potentially large problems, especially as the US dollar increases in value against other regional currencies.

As much research shows, trade restrictions damage investment and can undermine food security. An open trading regime by contrast, it is argued, is efficient and economic, and offsets risks, which because of differential patterns of rainfall and the widespread reliance on rainfed production makes sense. Ensuring that there is regional surplus and efficient movement will offset the requirements for shipping from elsewhere in the world, which is slow and expensive. In this respect if Zambia feeds Zimbabwe, Malawi and Mozambique this year (and maybe South Africa too), this is fine, and the reverse may be the case at other times.

This post was written by Ian Scoones and appeared on Zimbabweland

 

Spurious statistics: why figures on Zimbabwe’s ‘lost growth’ mislead

There is a lot that is written about Zimbabwe that is misleading. But sometimes a piece appears that really beats the field. This week a blog from the Centre for Global Development in Washington joins that category. This claims that ‘misrule’ has cost Zimbabwe US$96 billion.

I would normally ignore such articles, but the CGD regularly produces some quite good material, if a bit close to the Washington view of the world on occasions. I also have been sent this article several times by my regular ‘correspondents’ to show (again) how wrong I am about Zimbabwe. So I thought it deserved a bit more attention, and now a blog, as I think it illustrates rather well a wider problem of the use of statistics in misleading ways.

This is not exclusive to this piece. Far from it. For example, a few weeks back when I was in South Africa I was reading the Cape Times over breakfast and was confronted by a whole page on Zimbabwe (the hook was Mugabe’s birthday) written by Professor Robert Rotberg from the Harvard Kennedy School.  This purported to show how disastrous things were through ten points. I was so flabbergasted by the content that I totted up the ‘facts’ that were presented that could be challenged with real field data that I and others had collected. There were 12 – one for each of the ten points made and two more besides. It was quite extraordinary how an author (nay illustrious ‘expert’) and an editor (of a perfectly respectable paper) could get away with it. But sadly it happens nearly every day, and most such interventions go completely unchallenged.

Anyway, the point is that in writing this blog each week I have plenty of material to reflect on, but most is not worth the time of day. However, I thought I should offer some response to the CGD piece, given its provenance and the way it illustrates a wider problem. The blog is written by Todd Moss who is COO and Senior Fellow at CGD, and was formerly Deputy Assistant Secretary in the Bureau of African Affairs at the U.S. Department of State and previously advisor to the Chief Economist in the Africa Region at the World Bank. He certainly has impressive credentials, and has written other material on Zimbabwe, but I cannot see from the website whether he has actually done field research in the country.

So where does the $96 billion figure come from? The blog presents the sorry story of Zimbabwe’s collapse in the formal economy from the early 2000s to 2009 and its slow and weak recovery since. The indicator used is the standard GDP measure. This is compared with a ‘what if?’ argument. What if Zimbabwe instead of declining grew at the rate seen in Zambia? The difference between the two scenarios is presented as the ‘loss’ that Zimbabwe has suffered.

The main argument is encapsulated in a graph, with the large deficit highlighted. The blog urges readers to tweet the graph to the world. Here is a very explicit and in some ways quite effective attempt at creating a ‘killer fact’, one that will become a focus for media articles, and a hook in the wider discourse (a phenomenon that Duncan Green from Oxfam has written on).

So why is this ‘fact’, and its wider narrative problematic? There is no denying the catastrophic collapse of the formal economy in the 2000s, and also the weakness of the recovery since, now faltering once again. Equally, the scale of graft and unaccountability was recently illustrated in the media exposes of highly paid parastatal officials, although these have now been capped. But what else needs to be taken into account when making an assessment? Here are four points.

• First is the problematic statistic of GDP, particularly in African contexts. Morten Jerven has written lucidly about this issue in his fantastic book Poor Numbers; a book I highly recommend to Dr Moss, and anyone else thinking about African economies. GDP numbers are usually fabrications with little basis in reality, and they shift dramatically depending on the assumptions made and the data collection techniques used. They show something about the formal economy, at least in terms of trends (no denying that for Zimbabwe), but they need to be viewed with very large pinches of salt.
•  Second the official statistics only pick up a fraction of the range of economic activity, especially in economies that have large informal sectors. With the restructuring of the economy since 2000, the informal sector in Zimbabwe has grown massively. Tendai Biti, the former MDC Finance Minister, argued recently that it represented most of the economy, perhaps over 80%. If so then the recent figures in the CGD graph represent only represent a small proportion of total economic activity and should be multiplied many times – in which case the disparity with Zambia would shrink dramatically. Of course this would be equally spurious, as Mr Biti’s guess is just that, and in fact we have no idea what the scale of economic activity is, as the standard statistics do not tell us, as statistical services measure only a fraction of the ‘informal sector’; a point made forcefully by Professor Jerven.
•  Third, Zambia’s economy has certainly grown but from a low base. In the 1980s and 90s in particular the economy was in dire straits. So the growth rate that has been used in the projection is to some degree a bounce back, driven in large part by the growth of commodity prices internationally. As a resource dependent economy, the dramatic growth is highly dependent on the price of copper, for example. And this has accelerated, in turn driving growth. There are of course other vibrant sectors, including tourism, but Zambia’s economic growth, and its projection into middle income status, is based on quite fragile and narrow foundations, with question marks being raised about job creation.
• Fourth, we have to ask how economic activity is distributed to make any useful assessment in relation to development. The benefits of growth in Zambia is massively concentrated. The bigger winners are international mining capital and South African retail and services. Of course this generates some jobs and tax revenues, but the distributive effects of such forms of growth have to be questioned. A broader based growth grounded in redistributive policies is perhaps more sustainable, and certainly more equitable in the longer term. Zimbabwe has certainly not got there yet, but the land reform for example has laid the foundations for this in the agricultural sector.

I could go on. If we probe a bit we can see that the ‘killer fact’ loses its shine quite dramatically. Its construction and deployment in an essentially political argument is clearly problematic. It would be just as problematic for example if Professor Jonathan Moyo – Zimbabwe’s Minister of Information and spin doctor extraordinaire – used the same figure to argue that this was the cost of international ‘sanctions’ on the country in the same period. Both Moss and Moyo would be using a spurious statistic to bolster a political narrative that is far too simple an explanation for a complex and evolving process.

So if you hear this figure again, or any other presented in this sort of way, think twice. More likely than not the statistics will have been conjured up to a suit a predefined narrative. Ask about its source, and whether real field research underpins it. More questioning and critique of such statistics and the narratives that they give rise to is essential to pick apart complex realities from dubious myth making.

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