Zimbabwe

One of the greatest human catastrophes of the last decade started in 2000 when Robert Mugabe announced his policy of violently moving white farmers off their land and handing their property over to blacks, with little experience or knowledge of farming. Zimbabwe went from being one of Africa’s largest exporters of agriculture to a recipient of food aid, with land area allotted to tobacco and corn dropping from 180,000 hectares and 850,000 hectares respectively in 2000 to 60,000 hectares and 500,000 hectares in 2008. Zimbabwe now needs to import 1 million tons of corn to feed its people.

But black Africans weren’t the only ones getting the land to work. After the collapse of farming in Zimbabwe, the state began handing over plots of land to the Chinese. Who were able in the select areas they controlled to match the output of the white farmers they were replacing.

This was part of a general tightening of Chinese and Zimbabwean relations as Western government have strengthened their embargos on the African country. The large Chinese business community in Harare took the embargos as an opportunity to expand their presence in the country, by explicitly lobbying the Zimbabwean government to increase their ties to China as a strategic counterbalance against Europe and the US. Rhetorically Mugabe has been aggressively pursing Chinese favors, and China has been more than willing to provide aid and trade, though standing somewhat aloof from the country politically.

While China has often been characterized as propping up Mugabe’s government, an accusation supported by China’s willingness to sell guns to anyone who asks and some high profile military cooperation, China’s assistance to the country has largely been in the form of agricultural aid. The Chinese government announced a donation of US$ 40 million in farm equipment in May 2009, following from a donation of 5,000 tons of food in 2008. China’s trade with the country is still dwarfed by South Africa’s involvement. Further, there are rumors that China has been pushing to transition more power away from Mugabe.

China’s effect on the Zimbabwean economy

Posted by Olivia Wainwright at 1:12 pm In the News No Responses »

Jul 252011

Zimbabwe adopted a Look East policy seven years ago, when Western aid and investment dried up because of the Zimbabwean government’s widespread human rights abuses. In reality, Look East was a way of saying look to China, and the two countries have cultivated a close relationship, but it is now showing increasing signs of strain. Last week, the role of Chinese businesses in Zimbabwe was called into question by the president of the Confederation of Zimbabwe Industries (CZI), Joseph Kanyekanye.

Kanyekanye called for the Zimbabwean government to protect local industry and pay more attention to the country’s balance of payments. Its struggling manufacturers can’t compete with the low prices of goods from imported from China and South Africa, he said, and as these manufacturers fail, Zimbabwe’s reliance on imported goods will only increase, further depressing its beleaguered economy.

Kanyekanye did not call for an end to the Look East policy. He is still enthusiastic about Chinese investment and has tried to reassure Chinese investors who pulled out of a pulp and paper project in Manicaland, when the Zimbabwean government was unable to confirm that the land would not be invaded. The deal is particularly important in Zimbabwe because it currently has to import newsprint.

Ways to anger China: redistribute their investment to locals

Posted by Bradley Gardner at 5:43 pm In the News, The Beijing Consensus No Responses »

Dec 102010

More on China-Zimbabwe (which I’m writing about at the moment for a publication). I was just looking over two articles, and noticed a strange coincidence:

From February 21, 2010:

Deputy Prime Minister Arthur Mutambara says the Chinese want all loans to be repaid before loosening its purse. According to the Mutambara the Chinese President Hu Jintao revealed to him during a brief meeting at the World Economic Forum in Switzerland that he considers Beijing relationship with Harare as ’business partners’ and not ’friends’.

The Chinese are quoted telling the Mr. Mutambara that: “We’ll not condemn you publicly but we’ll not give you cash”. And according to the Deputy Prime Minister, “unless we do the right thing the Chinese will not work with us.”

From February 9, 2010:

Zimbabwe passed a law that compels all businesses with assets worth more than $500,000 to be 51 percent black-owned within five years, according to a copy of the law distributed by Harare-based Veritas Trust.

The law was published in the Government Gazette, a public document. It comes into effect March 1 and stipulates prison sentences of up to five years for non-compliance. Veritas is a Harare-based non-governmental organization that monitors the passage of laws through parliament and their publication.

Oh wait, that’s probably not a coincidence at all.

As I mentioned in a previous post, I have recently spoken to people from Huadian Power who said that after the passage of the February law they lost interest in investing in the country. That doesn’t really explain why the agricultural investments seem to still be going on, but China was obviously not pleased about having their investments redistributed.

More Chinese involvement in Zimbabwe agriculture

Posted by Bradley Gardner at 5:40 pm In the News, The Beijing Consensus No Responses »

Dec 102010

Just when I think I have a grip on what Chinese people are doing in Zimbabwe something like this throws me for a loop:

Sino-Zim Development Company has registered 180 000 cotton farmers in Zimbabwe for contract growing and acquired 40 000 tonnes of fertilisers and 6 000 tonnes of seed ahead of the 2010/11 farming season.

The firm is targeting to contract over 300 000 cotton farmers* this farming season.

Sino-Zim operations manager Mr Tanga Matema said the organisation had mobilised enough inputs to cover 130 000 hectares of land so far.

“Our initial target was 200 000 hectares countrywide. Due to a few problems, we have managed 130 000 hectarage at the moment, but we still hope to reach our target. We have registered farmers from such districts as Chiredzi, Gokwe, Mt Darwin, Rushinga and Mhangura,” he said.

Mr Enderani said farmers would clear their debts at the end of the season after marketing their crops, but stressed that they would not victimise farmers for failing to meet their end of the bargain in the event of a bad season.

“In fact, we are flexible and will give a grace period in which we will try to work out a method of payment that will enable the farmer to survive and complete payments later.

“What we guarantee at the moment is that we will be offering good prices just like we did this past season so farmers contracted to us can bring their crop to us and we debit our dues leaving them with enough to go back and finance their operations. We do not export the cotton we buy, but intend to process it locally so we have no shipment costs, hence our capacity to pay good prices,” he said.

As I’ve mentioned elsewhere on this site, China is heavily, and somewhat bafflingly, involved in Zimbabwe’s agriculture industry. Chinese companies have received contracts for irrigation systems as early as 2003. China has also supplied a large amount of food aid, and has also been sending piles of machinery.

Though the system here seems to be somewhat deliberately opaque, as far as I can see they are transforming the small scale farming operations which Zimbabwean agriculture has turned into, into a sort of contract farming. Which would be a clever work around to the farm ownership laws – farmers could at least make use of economies of scale in financing and purchasing even if they can’t in the actual process of farming. The trick here though is that Zimbabwe has also recently passed laws that require 51% black ownership of all corporations based in Zimbabwe.

I talked to someone recently from Huadian Power who said that this new law kept them from investing in Zimbabwe despite originally being interested. This was just one man at a cocktail party, so who knows if it is representative of the situation with most Chinese investment. But in this case they either found a work around, or they have something else in mind other than profits. Like low-cost inputs for Chinese textile mills.

*There was an interesting study published by the BBC that showed that over the past decade Zimbabwean agriculture has transitioned away from tobacco and towards cotton. (The graph to the left shows the basic trend.)

While I’m sure there are a number of reasons that this took place, I don’t think its too far fetched to point out that during that time China became Zimbabwe’s number 2 trading partner (after South Africa), and China has the largest textile industry in the world and as well as being the world’s largest producer of tobacco. Which is fine. That’s just how trade works, and with cotton at a 140-year high it’s pretty good that Zimbabwe started growing it. But it does make the textile input idea a bit more appealing.

Correction: The story in the Guardian which I linked to above was later shown to be incorrect. The contract which was awarded to China International Water and Electric Corporation, was in fact for an irrigation system, and not farming. The project never got off the ground. (source: The Dragon’s Gift by Deborah Brautigam)

Agricultural development and the spectre of neo-colonialism

Posted by Bradley Gardner at 5:45 pm The Beijing Consensus No Responses »

Nov 082010

A few years back I did some research work for a consultancy looking to advise a Middle Eastern state how to invest in Sudanese agriculture, without running into the kind of political backlash that ruined the South Korean company Daewoo’s investment in Madagascan agriculture (details here and here). The deal ended up dying of its own accord, but these types of “food security” deals have since become a major facet of Asian and Middle Eastern investment in Africa, and have become accepted to the extent that African countries are making similar investments in other African countries:

The Egyptian government is hoping to cultivate wheat and other cereals on fertile land in African countries to feed its growing population of over 80 million.

In early September it signed a deal with the Sudanese government to give Egyptian companies access to Sudanese farmland.

… Egyptian officials say African and Nile basin countries, such as Uganda, Rwanda, Kenya, and Ethiopia, are high on a government list as potential places in which to make agricultural investments. They add that, apart from strengthening links with these African countries, the move would help Egypt avoid depending on its limited water resources.

So have we finally put to bed the spectre of neo-colonialism over these deals? Well perhaps not. The article goes on to describe how these other countries might become a bit testy about leasing their limited water resources to already thirsty Egypt. And let’s not forget that the main reason why Egypt needs to look South for more farmland is colossal mismanagement of their land resources under a pretty much planned economy.

We really should put these concerns to bed though, because in many cases selling land for foreign agricultural development increases the quantity of food sold on the domestic market. Part of this obviously depends on profit and product sharing agreements, but these agreements allow for a quick transition from subsistance farming to industrial farming, which can increase yields substantially, as well as providing other benefits.

Of course food output isn’t the only problem. There’s also the problem of relocations, which, though we’re quite used to them in China, is hardly something you’d wish on people elsewhere. The issue is made more complicated by poorly demarcated land rights in Africa, which can significantly add to the pool of people looking for a kickback in relocation schemes. But this is a governance issue, not an issue with foreign investment in farming. And the move of people out of subsistance agriculture is essentially the definition of poverty alleviation.

With peak oil approaching agricultural substitutes will get more valuable, and Africa’s extensive amount of arable land will be increasingly seen as a sustainable revenue source. Industrialization has to happen sooner or later, and this sort of foreign investment speeds the process up. I don’t expect it to be uncontroversial. But lets just say its better that Africa have this sort of problem, than this sort.

Zimbabwe Flirts with Yuan

Posted by Iain Manley at 4:03 pm In the News, Translations 4 Responses »

Aug 162010

Robert Mugabe was in China last week. He attended the World Expo’s Zimbabwe Day on Thursday, met Hu Jintao and Xi Jinping in Beijing on Friday and spent the weekend shopping with his wife, Grace, in Hong Kong, where he owns a home and his daughter, Bona, attends university.

The visit coincided with a meeting about economic ties between China and Zimbabwe in Shanghai. The Zimbabwe Commerce Meeting received no attention from Western media, but according to a report in Chinese newspaper First Finance Daily (第一财经日报), Zimbabwe chose the occasion to announce that it is considering using Chinese yuan as legal tender.

The article – translated in full below – highlights just how different Chinese and Western views of events in Africa can be. According to First Finance Daily, Zimbabwe “was once called the breadbasket of Africa and the Zimbabwe dollar had a one-to-one exchange rate with the US dollar. But since 2000, when Zimbabwe implemented its ‘fast lane’ land reform policy, sanctions imposed by Western countries have caused economic collapse.” The contrast between this and an AFP report on Mugabe’s visit, which doesn’t mention the Zimbabwe Commerce Meeting, couldn’t be more stark. As AFP has it, “once a breadbasket of southern Africa, Zimbabwe’s food shortages have been brought on by drought and Mugabe’s crippling land-reform programme.”

Hopes of Yuan becoming Legal Tender in Zimbabwe
12 August

During the Zimbabwe Commerce Meeting held in Shanghai this week, Zimbabwe’s tourist department head Hon. Walter Mzembi said he had recently discussed currency issues with Chinese officials. Mzembi stated that changes to Zimbabwe’s currency system are going to be made, including allowing the yuan to circulate and become one of the country’s official currencies . ”I hope that in the future, people in Zimbabwe will be able to use Chinese bank cards and the yuan to make purchases, even take out RMB loans,” he said. Continue reading »