Potential Levers for
Zimbabwe Economic
Recovery
Critical Evaluation of RADS
• Focuses on the comparative advantages of Africa and
Zimbabwe.
• Looks at what resources can be leveraged to jump
start and grow economy.
• What it does not deal with is the triple factors of;
– Market Driven Growth (Competitive Advantage)
– Structural Capacity
(Value Chain Development)
– Institutional Capacity (Targeted capacitating of change facilitating
institutions)
A sustainable agricultural system requires strength across
the value chain as well as a strong enabling environment.
Goal
Intermediate
outcomes
Agricultural
value chain
Increased food security* and incomes
• Improved yields
• Decreased risk
Access to high
quality inputs
• Greater efficiency
• Sustainability
Access to
knowledge &
technology
Financing
Enabling
Environment
Infrastructure
Institutions; Policy Environment
3
Source: R Sithole 2008
• Greater demand
• Better prices
Access to
markets
Twin Focus Areas
• Food Security Imperative
There is a need for a sustainable plan to bring local
production , processing and distribution of food security
crops to meet local demand.
• Industrial Development Imperative
There is a need to identify products that can be produced
for both local, and more importantly external markets in a
way that makes use of all available economic assets.
What is Food Security?
“Food security exists when all people, at all times, have physical and economic access to sufficient,
safe and nutritious food that meets their dietary needs and food preferences for an active and
healthy life”. (World Food Summit, 1996)
Four factors are at play when determining food security:
1. Food Availability
• The availability of sufficient quantities of food of appropriate quality, supplied through domestic
production or imports (including food aid).
2. Food Access
• Access by individuals to adequate resources (entitlements) for acquiring appropriate foods for a
nutritious diet. Entitlements are defined as the set of all commodity bundles over which a person
can establish command given the legal, political, economic and social arrangements of the
community in which they live (including traditional rights such as access to common resources).
3. Utilization
• Utilization of food through adequate diet, clean water, sanitation and health care to reach a state
of nutritional well-being where all physiological needs are met. This brings out the importance of
non-food inputs in food security.
4. Stability
• To be food secure, a population, household or individual must have access to adequate food at all
times. They should not risk losing access to food as a consequence of sudden shocks (e.g. an
economic or climatic crisis) or cyclical events (e.g. seasonal food insecurity). The concept of
stability can therefore refer to both the availability and access dimensions of food security.
5
Ranking of productivity drivers in Asia, a
possible template for ZIMBABWE?
Source:”Investment, Subsidies, and Pro-Poor Growth in Rural India”, IFPRI, 2007; “Policies and public
investments to promote smallholder green revolutions in Africa: lessons from Asia”, GISAMA,
2009; “Unappreciated Facts about Staple Food Markets”, FSRP, 2010
Where Are We Now?
Landscape of the banking sub-sector in Zimbabwe
Principal providers of credit
to the agricultural sector
Reserve Bank of
Zimbabwe
80% of the market
share in terms of
the value of loan
portfolio is in the
hands of eight
institutions. The
sizes of the loan
portfolios range
from US$50,000
to US$5 million
Money transfer
agencies
4 merchant banks
17 commercial
banks (13 of them
private)
95 microfinance
banks and
institutions
Banking subsector
4 of the 13 private commercial
banks are multinational
institutions. These banks face the
prospect of losing their majority
foreign ownership as a result of
the new indigenization and
economic empowerment Act that
requires them to indigenize 51%
of their shareholding. There is no
interbank lending facility
Finance houses
Asset
management
companies
People’s Own
Savings Bank
4 building societies
Statistical reports in the banking sector
indicate that as at end of April 2010,
there was about US$1,708 billion
circulating in the economy compared to
an estimate of US$10 billion required to
rehabilitate the economy
Source: “Zimbabwe Agricultural Sector Market Study”, USAID, June 2010
8
ZIM GDP Growth 1990 to 2008
15
Percentage per annum
10
5
0
-5
-10
-15
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Source: Prof Tony Hawkins 2008
Agricultural Output (1990 prices)
Z$ (1990)
19
85
19
90
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
f
5500
5000
4500
4000
3500
3000
2500
2000
1500
Source: Prof Tony Hawkins 2008
Manufacturing Value-Added
Z$ (1990)
19
85
19
90
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
f
5500
5000
4500
4000
3500
3000
2500
2000
1500
Source: Prof Tony Hawkins 2008
Formal employment
1400
1300
1200
1100
1000
Employment (000)
900
800
1980
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
700
Source: Prof Tony Hawkins 2008
Mining Output (1990 prices)
1100
1000
900
800
700
Value-added
600
19
85
19
90
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
500
Source: Prof Tony Hawkins 2008
Real wages
Z$
(1990)
19
85
19
90
19
95
20
00
20
01
20
02
20
03
20
04
20
05
-e
st
8000
7000
6000
5000
4000
3000
2000
1000
0
Source: Prof Tony Hawkins 2008
It’s important to understand the
common themes of what has
happened.
STRUCTURAL CHANGE IN ECONOMIC
LANDSCAPE
1.
2.
3.
4.
Demographics
Sectoral structure of output
De-industrialization
The balance between the formal and informal
economies
5. Consumption patterns
6. Market segments
7. Collapse of savings and investment
8. The sectoral structure of exports and imports
9. The nature of production functions, and
10. The impact of globalization
Source: Prof Tony Hawkins 2008
WHAT SHAPE DOES THE ‘NEW’ ECONOMY
HAVE?
Enhanced Role
Partially supplanting
Mining
Agriculture and Manufacturing
Distribution &Trade
Manufacturing
Telecoms, finance, real
estate
Tourism
Public Sector
Private Sector
Source: Prof Tony Hawkins 2008
WHAT SHAPE DOES THE ‘NEW’ ECONOMY HAVE?
Enhanced Role
Partially supplanting
Informal sector
Formal economy
Foreign Trade
Domestic output
“Financial” investment
“Real” Investment
SMEs and subsistence
farming
Large formal firms and farms
Source: Prof Tony Hawkins 2008
There is need for clear decision
matrices.
Analysing Old vs. New economy
Past vs. Current Potential
High
Past
potential of
sector
Low
Seek niche
opportunities
to make use
of skills and
infrastructure
Not
interesting
Low
Source: Technoserve Zimbabwe 2010
Understand
barriers to
regaining
position
Explore potential
for increased
intervention
High
Future potential of
sector
Sectoral Positioning
Manufacturing
High
Textiles
Commodities
Cotton, tobacco
Horticulture
Coffee/tea
Past
potential
Mining
Low
Livestock
Technology
Telecoms
Alternative energy
High
Low
Future potential
Source: Technoserve Zimbabwe 2010
Comparing Past & Future Technology and Markets
Positioning
Different
Market
Position
Same
New marketing
strategy required;
can grow despite
lack of access to
capital
Industry will
scale up by
itself once
policy
barriers are
removed
Same
Complete
rethink: akin
to building a
new industry
Significant
recapitalization
in line with
understood
market needs
Different
Technology/production
methods
Source: Technoserve Zimbabwe 2010
Positioning of Sectors Re: Technology & Markets
Different
?
Manufacturing
?
Market
Poultry?
Coffee
Dairy
Cattle
Same
Different
Same
Technology/production
methods
Source: Technoserve Zimbabwe 2010
Potential within specific Agric Sectors :
Smallholder Vs Large-scale Commercial
Cotton
100%
smallholder
Maize
Tobacco
Past
Sugar
100%
commercial
Poultry
Cattle
Dairy
Soy
Coffee
100%
commercial
100%
smallholder
Future
Source: Technoserve Zimbabwe 2010
Regional Perspectives
Growth constraints maize: Maize productivity in
SADC countries is low
Source: FAOstat; “Addressing Declining Productivity and the Threat of Climate Change with
Conservation Agriculture “, NFU, 2009
26
The production has been declining over the years
The reasons for the downward trend, before
the fast track land reform, include a gradual
switch by the large-scale commercial farms
from maize, which became a GMB-controlled
crop, to other non-controlled crops such as
tobacco, cotton, among others
A more recent decline (since 2002) is due to
the structural change precipitated by land
tenure policies, the lack of investments/funds
domestically and externally in agriculture
sector, and overriding economic deterioration
Production
dropped since
2008, mainly
because of
droughts
Source: “FAO/WFP Crop and Food Security Assessment Mission to Zimbabwe”, FAO/WFP, 2009; GraZim3; “Zimbabwe
Agricultural Sector Market Study”, USAID, June 2010; “Price Monitoring and Analysis Country Brief”, FAO/EU, May
2010; Robertson Economic Information Services, 2007; “Agriculture: Future Scenarios for Southern Africa”, IISD, 2009;
Personal Communication Zimbabwe Commercial Farmers Union
* CFU estimates maize production in 2009/10 to be approximately 575.000 MT, while the FAO has endorsed the Government’s
estimate of 1.3 million MT
27
This decline was caused by a decrease in
productivity, and not in area planted
Source: “FAO/WFP Crop and Food Security Assessment Mission to Zimbabwe”, FAO/WFP,
2009
28
The national productivity hides differences across
regions
Source: “FAO/WFP Crop and Food Security Assessment Mission to Zimbabwe”, FAO/WFP,
2009
29
Zimbabwe is just the 7th biggest producer of
maize in the region
Source: GIEWS Country Briefs; FAOstat
30
* Data from 2009
** Forecast for 2010
Growth constraints soy: Soy productivity in
SADC countries is low
Source: FAOstat; “Addressing Declining Productivity and the Threat of Climate Change with
Conservation Agriculture “, NFU, 2009; Personal communication Professor
Makonese, Soy Research Team at the University of Zimbabwe, 2010
31
The production has been declining in the last
decade
Soya production was lower in
2009/10 compared to the
previous year because of a
reduction in area under the crop
following low market prices
Smallholder farmers
account for less than 10%
of soya production. Best
area to grow soy is
Mashonaland
About 50,000 MT of soya is estimated to have
been imported in 2009. Imports of good quality
and competitively priced soya are from Malawi
and Zambia where due to the SADC protocol,
agricultural commodities come in duty free
Source: “Zimbabwe Agricultural Sector Market Study”, USAID, June 2010; Robertson Economic Information
Services, 2007; TechnoServe Soy Concept for Zimbabwe, 2010; Personal Communication Zimbabwe
Commercial Farmers Union, 2010; Personal communication Elizabeth Musimwa, National Soy
Producers Association, 2010
* Some sources indicate 89.000 tons, and others 150.000
32
Still, in the region Zimbabwe is the third biggest
producer of soy
Source: GIEWS Country Briefs; FAOstat
33
* Data from 2009
** Forecast for 2010
Livestock represents 34% of the agricultural GDP, and
cattle and poultry are the biggest contributors
Approximately 55% of
households in communal
farming areas own cattle,
more than 70% own
goats and over 80%
have chickens
Source: CIA Factbook, 2009; “Cattle Production Manual”, Cock, 2006; “Zimbabwe Agricultural
Sector Market Study”, USAID, June 2010; “Future Directions for Livestock Production
in the Smallholder Farming Sector in Zimbabwe”, FAO, 2010
34
This decreased the importance of Zimbabwe in the region as a
meat producer
In 1995,
Zimbabwe was
the second
largest beef
producer in the
region (73.169
tons)
In 1995,
Zimbabwe
was the
fourth
chicken meat
producer in
the region
(18.975 tons)
Source: FAOstat; “What would it take for the Cattle Industry to achieve its Potential?”, World Bank,
2010; “Report on the SADC poultry forum “, PAZ, June 2009; DAHDL, 2008
* Data from DAHDL
** Data from 2007
In 1995,
Zimbabwe
was the sixth
largest pork
producer in
the region
(13.101 tons)
35
Domestic demand for chicken meat has increased significantly with
the economic crisis, as consumer preferences shifted towards low
cost meat
Source: “Zimbabwe Agricultural Sector Market Study”, USAID, June 2010
* Pork, sheep, goat
36