With a population that has a higher number of children and elderly, Zambia is left with not enough workers. Its dependency ratio leaves it vulnerable to taking on too much future debt, regardless of any post-default restructuring solution.
Agriculture: A new class of farmer
Any discussion about improving the lives of Zimbabweans has agriculture at its heart. A majority of the population are busy in the fields every day, and the sector provides about 30% of the country’s GDP. However, over the last few years, output clearly failed to meet domestic demand and the high cost of food in the urban areas depressed real wages. The move to adopt the US dollar as currency has restored sanity, but it has also created problems for those who have to buy seeds and fertilisers in the upcoming growing season.
Financing the October-December growing season is a key priority for the coalition government. Prime Minister Morgan Tsvangirai told The Africa Report: “We are already providing seeds and fertilisers to 500,000 vulnerable farming households and wish to extend that to a further 500,000.” The fertiliser industry managed to produce only 66,000tn out of an installed production capacity of 560,000tn last year.
The land reform process, brutal as it was, will not be revisited by the coalition government. Attention has turned towards the new dispensation in the lands ministry. The goal appears to be the bolstering of the medium-sized farmer class, focused on farms in the 100-250ha range, up to 600ha in dry areas. The business community wants to boost industrial farming and to get beyond the ‘one family, one farm’ principle. It is thought that some kind of leasing arrangement for commercial farms will end up being the model adopted.
The government will have its hands full satisfying both constituencies, but there is room in Zimbabwe for both. Smallholders produce 90% of the cotton produced for example, bringing in over $225m in revenue. Afreximbank has delivered a $60m credit line for the agriculture sector, of which half goes to agribusinesses like Chemplex and half goes towards financing farmers.
Agribusiness is a clear potential growth area in Zimbabwe. Three parastatals – the Agriculture and Rural Development Authority, the Grain Marketing Board and the Cold Storage Company – have large tracts of productive land, as well as storage facilities for grain and perishable goods. They are on the private-public partnership wish list drawn up by deputy premier Arthur Mutambara. South African companies are particularly keen to get involved.
Tobacco producers suffered a great deal from hyper-inflation, but the crop is doing well. The Tobacco Industry and Marketing Board claims a near 100% increase in demand for seeds. Strong demand for Zimbabwe’s high quality golden leaf variety have made the sector attractive. The main auction houses – Zitac, Burley Marketing Zimbabwe and Tobacco Sales Floor – have reported a regular supply of tobacco to their floors.