Let’s look East for practical policies

By The NewsDay | Dec. 19, 2012 | 5 Min read

Latin America, which responded to its sovereign debt crisis of the 1980s with radical reform, which eventually paid off, offers an example of how to lift millions from poverty.

Opinion by Tapiwa Nyandoro

Two things are said to be behind Latin America’s renaissance; the appetite of India and China for raw materials, with which, like Africa, the continent is richly endowed, and the improvement in economic management, a product of the school of hard knocks from the 1982 debt crisis.

The crisis forced Latin America to abandon rampant unfocused protectionism and fiscal profligacy that had brought hyperinflation and bankruptcy.

Thereafter, a regulated banking system, now well managed, fostered a rapid and sustainable expansion of credit to the manufacturing and extractive industries in the region. These two things have created a virtuous circle in which rising exports are balanced by a growing domestic demand.

The economic growth has gone hand in hand with social progress with some 40 million people climbing out of poverty, out of a total of 580 million, in the five years between 2002 and 2008.

In Latin America as well, the factors listed for East Asia have played the same roles. The “Washington consensus” approach, an economic structural adjustment programme, which entails opening up the economies to trade and foreign investment, privatisation and deregulation, seems to have worked.

Interestingly, in his speech on the occasion of the opening of Parliament in October 2012, the President acknowledged both the need to improve the regulatory environment and need to attract investment. As we seek to review the Medium-Term Plan, as well as usher in the 2013 National Budget, while keeping our eyes on Millenium Development Goal 1, the way forward needs to be mapped clearly, probably focusing on land reform and enhanced agronomic practices via titling of land and adoption of a green and a livestock revolution.

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At a meeting of the Group of Eight (G8) industrial countries in 2009, food was put alongside the financial crisis on the leaders’ list of priorities and $20 billion was to be secured for agriculture funding over the next three years. And from the private sector, the world’s richest charity, the Gates Foundation, has taken agriculture as one of its beneficiaries besides health and education. Thus the funds for raising yields and completing the agriculture reform programme are available. All thats left is the political will.

The issue of titling of land and compensation for appropriated farms, as well as mortgage finance for the new farmers can all be addressed in one holistic strategy, opening the industry to the international finance markets, as well as funding by the multilateral agencies.

The World Bank/International Moneary Fund duo for example, are now deeply involved in funding agriculture.

Transferring technology to farmers is important to raise yields per hectare. And the Budget should adequately cater for agriculture extension work. Mitigation against drought is another obvious strategy.

The country can feed itself from a mere 500 000 hectares under drip irrigation. India and Israel have the technology. All we need to do is secure funding for it. Yields are extremely low in Zimbabwe, averaging one to two tonnes of maize per hectare.

The Green Revolution, therefore, which can easily increase yields to 10 tonnes of the staple crop per hectare, has to be ushered in. This commercialisation of agriculture requires technology and funding. Once regulatory legacy issues are out of the way, the Green Revolution will begin in earnest, taking millions of Zimbabwe out of poverty.

Press reports are awash with stories to the effect that there is a looming fertiliser shortage. Out of a national requirement of 700 000 tonnes, only 300 000, we are told, are in stock.

Assuming the amount represents all the different varieties — and I am assured they are available — the 300 000 tonnes are enough for 300 000 hectares of maize and 200 000 hectares of soya beans and 50 000 hectares of wheat. In a single season, therefore,550 000 drip irrigated hectares would, using the right technology, produce 3 000 000 tonnes of maize, a million tonnes of soya beans and around 400 000 tonnes of wheat, all enough to feed the nation, with some for export.

The second crop, possible in a drip irrigated fields within a year, would yield the same tonnage from the 550 000 hectares all for exports grossing around $600 million from maize and $500 000 000 from the soya crop. Fertiliser in the country, is thus not in short supply, our productivity is low leading to massive waste of land, inputs and labour. This is where change is needed. Food sometimes, is the only pleasure the poor enjoy and adequate food is the best safeguard against disease for the poor. It is a basic human right.

Key industries such as National Railways of Zimbabwe, Zimbabwe National Road Authority and Zimbabwe Electricity Supply Authority are fiscal multipliers and simply have to function as efficiently as the best in the world. The Chinese approach of putting a select few targeted for world-class competitiveness, all under one multi-skilled commission, is the way to go. Once the election is over, the indigenisation law, as currently crafted, needs revisiting, if capital is to flow into these State-owned enterprises, as they transform into partnerships and State controlled, but stock exchange listed entities. A Bill on State-owned enterprises management is being tabled in Parliament in the recently-opened session. Both the Executive and the Parliamentary Committee responsible for State Enterprises must take a trip to China to benchmark best practice, if they have not done it yet. The South Africans have already done so.

Though surprised by corporate governance issues, like the lack of boards of directors in large State-controlled enterprises, they liked what they saw on the service delivery side. As the recent census in South Africa has shown, the job creation front has faltered, and poverty and hunger continue to stalk many. Despite the provincial governments being adequately funded, they have failed to use the funds for infrastructure development.

The South African government, impressed by the Chinese success story, has now given the task to State-owned Companies now coded “Growth Tools or Drivers of Development”. South Africa’s “shared vision” is to focus on “key sectors” to reduce unemployment from 25% to 15% by 2020. The key priority sectors in the November 2010 New Growth Path and as expanded by the National Planning Commission in the November 11 National Development Plan: Vision 2030, are infrastructure development — a fiscal multiplier, agriculture, mining, manufacturing, the “green economy” and tourism. As can be seen, the Zimbabwe State-owned industries have key players in all these sectors. But they are directionless and undercapitalised. The South African vision hopes to address poverty alleviation through job creation via higher levels of capital spending by private and public sectors to meet growth objectives.

Given the fact that with the right technology the nation can feed itself from one to two million hectares of land under irrigation with plenty to spare, there is need to address the overused, now unproductive land in the communal areas.

Africa has some of the most exhausted soils in the world with less than 1% organic matter in them, half the level required for good fertility.

As the land is no longer being allowed to lie fallow to recover, the chemistry of the soil, in form of nutrients for plants such as phosphates, is being degraded. As the organic nature of the soil and its chemistry suffers, the physical structures change, leading to soil erosion. The solution is to adopt the “green” economy.