Twenty years ago, local resistance arose in the Niger Delta because of the way oil revenue was being shared and how oil pollution was undermining local livelihoods.

Young people helped bring development agencies to the region through their activism for social justice. The government eventually created the Niger Delta Development Commission (NDDC) to bring development closer to the region in response to local demands. Local people welcomed it with a renewed sense of belonging within the national community. But now, 20 years later, they have been left behind in regional developmentand young people’s lives, in particular, have not improved.

Local elites have hijacked the Commission, and the agency is seriously under-performing. But these elites claim that’s the fault of national-level politicians who take a larger slice of the NDDC contracts. Since inception, the commission has received $40 billion to invest in development projects. These include road construction, health care, education and job creation. But there is very little on the ground to account for this money.

Contracts are often inflated. Projects get abandoned. And shoddiness is normal. Young people will have to live with the fallout. They are already suffering the impact of political corruption, because the money that should have been used to improve their lives has simply disappeared.

Unlike many young people, local leaders live a life of luxury.

Similarly the Amnesty Programme, implemented more recently to end violence in the Niger Delta and benefit young people, has been hijacked by elites and local politicians. Funds meant for youth development projects are often embezzled. Inflated contracts are awarded to the elite youths, and while the youths who enrolled as ‘ex-militants’ get monthly cash payments, their non-violent counterparts have nothing.

But this is not the whole story, as my research reveals. I wanted to understand young people’s perspectives of violence in the Niger delta, and to compare their perspectives with the explanations of institutional leaders. This comparison helped me to produce an analysis of youth violence that locates young people’s experiences within the institutional structures that contours their lives.

Research findings

My research found that while the local leaders undermine young people’s well-being through political corruption, they conceal their complicity, and maintain this inequality, through the way they explain youth violence. In sociological terms, these explanations are called doxa – meaning assumptions about people and explanations about reality which are popular, but not always true, and which reproduce exclusion. While direct violence in the form of deaths and bodily harm has declined in the Niger Delta because of the Amnesty programme, indirect violence in the form of exclusion has continued.

Local leaders explained that young people embrace violence because they are lazy and unwilling to work. ‘These youths are lazy, they think they have oil so if you give them job they don’t want it, just militancy’ an official from the Niger Delta Development Commission told me. This presents local leaders as hardworking people deserving of their wealth, while portraying young people as the lazy, undeserving poor. Attributing youth violence to laziness ignores the high unemployment rate in the Niger Delta. It also absolves the local leaders from failing to create jobs.

Local leaders also said youth violence occurs because young people are deviants and always ready to fight. ‘After taking Igbo (weed) and alcohol they want to fight everybody.’ ‘They are yahoo-yahoo (cyber fraud) boys, always clubbing.’ These are some of the common portrayals of young people by institutional leaders.

I visited many clubs for my research in the Niger Delta and saw young people laughing, dancing, sharing liquor and discussing plans on how ‘to leave this nonsense country’, as one of my respondents put it. Clubs serve as a space of solidarity for young people in a world where they feel left behind, and social drinking is their way of escaping boredom and the many frustrations of their daily life.

A director at the Commission said young people are incapable of good leadership while older people are wiser, and therefore better leaders. He was responding to my question about what he thinks of young people’s complaints that old people dominate leadership positions within development agencies, and this was a typical response. The idea that older people are better leaders legitimises the political domination of the older generation.

Way forward

By portraying young people as lazy, unwise and deviant, local leaders preserve their political, economic and social power and maintain their domination over young people.

It is not accidental that young people are the main perpetrators of violence in the Niger Delta, because many of them feel that Nigeria does not work for them. Hence, they use violence to get by in life. Yet by using violence, young people also undermine the very development they yearn to have. Violence leads to the loss of lives and destruction of valuable assets, which slows down development.

To address youth violence in the Niger Delta, it’s necessary to demand accountability from institutions and to challenge the common ideas used to exclude young people from the development process.The Conversation

 

Modesta Tochi Alozie, Researcher at the Urban Insititute, University of Sheffield, University of Sheffield

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The predation of livestock by carnivores, and the retaliatory killing of carnivores as a result, is a major global conservation challenge. Such human-wildlife conflicts are a key driver of large carnivore declines and the costs of coexistence are often disproportionately borne by rural communities in the global south.

While current approaches tend to focus on separating livestock from wild carnivores, for instance through fencing or lethal control, this is not always possible or desirable. Alternative and effective non-lethal tools that protect both large carnivores and livelihoods are urgently needed.

In a new study we describe how painting eyes on the backsides of livestock can protect them from attack.

Many big cats – including lions, leopards, and tigers – are ambush predators. This means that they rely on stalking their prey and retaining the element of surprise. In some cases, being seen by their prey can lead them to abandon the hunt. We tested whether we could hack into this response to reduce livestock losses to lions and leopards in Botswana’s Okavango delta region.

This delta, in north-west Botswana, has permanent marshlands and seasonally flooded plains which host a wide variety of wildlife. It’s a Unesco world heritage site and parts of the delta are protected. However, though livestock are excluded, the cordon fence is primarily intended to prevent contact and disease transmission between cattle and Cape buffalo. Large carnivores, and other wildlife including elephants, are able to move freely across it, and livestock losses to large carnivores are common in the area. In response, lethal control through shooting and poisoning can occur.

While the initial focus of the study was ambush predators generally, it soon became clear that lions were responsible for most of it. During the study, for instance, lions killed 18 cattle, a leopard killed one beast, and spotted hyaenas killed three.

Ultimately, our study found that lions were less likely to attack cattle if they had eyes painted on their rumps. This suggests that this simple and cost-effective technique can be added to the coexistence toolbox, where ambush predators are involved.

Eye-catching solution

Conflict between farmers and wildlife can be intense along the borders of protected areas, with many communities bearing significant costs of coexisting with wildlife. The edge of the Okavango delta in Botswana is no exception, where farmers operate small non-commercial livestock enterprises.

Livestock rub shoulders with lions, leopards, spotted hyaenas, cheetahs, and African wild dogs. To protect the cattle, herds (anything between about six and 100 individual cattle) are kept within predator-proof enclosures overnight. However, they generally graze unattended for most of the day, when the vast majority of predation occurs.

Working with Botswana Predator Conservation and local herders, we painted cattle from 14 herds that had recently suffered lion attacks. Over four years, a total of 2,061 cattle were involved in the study.

Before release from their overnight enclosure, we painted about one-third of each herd with an artificial eye-spot design on the rump, one-third with simple cross-marks, and left the remaining third of the herd unmarked. We carried out 49 painting sessions and each of these lasted for 24 days.

Nenguba Keitsumetsi demonstrates the eye-cow technique to local farmer, Rra Ketlogetswe Ramakgalo. Bobby-Jo Photography

The cattle were also collared and all foraged in the same area and moved similarly, suggesting they were exposed to similar risk. However the individuals painted with artificial eye-spots were significantly more likely to survive than unpainted or cross-painted control cattle within the same herd.

In fact, none of the 683 painted “eye-cows” were killed by ambush predators during the four-year study, while 15 (of 835) unpainted, and 4 (of 543) cross-painted cattle were killed.

These results supported our initial hunch that creating the perception that the predator had been seen by the prey would lead it to abandon the hunt.

But there were also some surprises.

Cattle marked with simple crosses were significantly more likely to survive than unmarked cattle from the same herd. This suggests that cross-marks were better than no marks at all, which was unexpected.

From a theoretical perspective, these results are interesting. Although eye patterns are common in many animal groups, notably butterflies, fishes, amphibians, and birds, no mammals are known to have natural eye-shaped patterns that deter predation. In fact, to our knowledge, our research is the first time that eye-spots have been shown to deter large mammalian predators.

Previous work on human responses to eye patterns however do generally support the detection hypothesis, perhaps suggesting the presence of an inherent response to eyes that could be exploited to modify behaviour in practical situations, such as to prevent human-wildlife conflicts, and reduce criminal activity in humans.

Possible limitations

First, it is important to realise that, in our experimental design, there were always unmarked cattle in the herd. Consequently, it is unclear whether painting would still be effective if these proverbial “sacrificial lambs” were not still on the menu. Further research could uncover this, but in the meantime applying artificial marks to the highest-value individuals within the herd may be most pragmatic.

Second, it is important to consider habituation, meaning that predators may get used to and eventually ignore the deterrent. This is a fundamental issue for nearly all non-lethal approaches. Whether the technique remains effective in the longer term is not yet known in this case.

Protecting livestock from wild carnivores – while conserving carnivores themselves – is an important and complex issue that requires the application of a suite of tools, including practical and social interventions. While adding the eye-cow technique to the carnivore-livestock conflict prevention toolbox, we note that no single tool is likely to be a silver bullet. Indeed, we must do better than a silver bullet if we are to ensure the successful coexistence of livestock and large carnivores. Nevertheless, as part of an expanding non-lethal toolkit, we hope that this simple, low-cost approach could reduce the costs of coexistence for some farmers.

 

Dr J Weldon McNutt (Director, Botswana Predator Conservation) and Tshepo Ditlhabang (Coexistence Officer, Botswana Predator Conservation) contributed to this article.The Conversation

Neil R Jordan, Lecturer, UNSW; Cameron Radford, PhD Candidate, UNSW, and Tracey Rogers, Associate Professor Evolution & Ecology, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Aug 10, 2020
The Chinese government says there’s no clause in the $500 million loan it gave to Nigeria that include taking over its sovereignty.
 
The House of Representatives had in the probe of Chinese loans to Nigeria alleged that the agreements ceded Nigeria’s sovereign right on the assets financed by the loans to China if there was payment default.
 
However, the Chinese foreign ministry in a statement debunked the claim saying the country had no such plan.
 
“We follow a “five-no” approach in our relations with Africa: no interference in African countries’ pursuit of development paths that fit their national conditions; no interference in African countries’ internal affairs; no imposition of our will on African countries; no attachment of political strings to assistance to Africa; and no seeking of selfish political gains in investment and financing cooperation with Africa,” the ministry quoted President Xi Jinping, as saying at the FOCAC Beijing Summit in 2018.
 
The ministry added that “China is committed to enhancing investment and financial cooperation with African countries based on their needs to help them improve infrastructure and extradite socioeconomic development.
 
By funding infrastructure and other areas that lag behind for short of money, we have helped the relevant countries break bottlenecks, enhance their capacity for independent development, realize social and economic sustainable development, and improve people’s livelihood.
 
Such cooperation has delivered tangible benefits to African countries and peoples.
 
“In the process, China always gives full consideration to debt sustainability and seeks mutually-acceptable proposals through equal and friendly consultations.
 
That is the fundamental reason behind the enormous popularity of China-Africa cooperation in Africa.”
 
 

source: dailytrust.com.ng

South Africa's land reform programme was supposed to ensure that the impoverished get to own and work the land. Now, only the politically connected and economically included are benefitting.

The majority of actual beneficiaries of land reform to date are from the urban middle class, according to the Institute for Poverty, Land and Agrarian Studies (Plaas). The institute says this is "elite capture" of the land and has effectively redirected state resources, originally intended for the impoverished, to the better-off.

Public resources have been targeted at those who can afford to engage in the conventional practice of large-scale farming and the bias has been changed to pursue commercial success instead of land redistribution. The result is that land reform policy has been directed away from small-scale farmers, effectively defeating the aims of land redistribution spelled out in the Constitution. Pro-poor precepts of land reform have increasingly been abandoned in favour of redistributing land to those who have already proved that they have the resources to achieve commercial success in their farming ventures.

At a recent webinar to mark the 25th anniversary of Plaas, its founder, emeritus professor Ben Cousins, and its lead researcher on land reform, Farai Mtero, warned that land reform has become the preserve of the well-off, with 44% of beneficiaries being urban-based "business individuals, taxi or transport operators, former state bureaucrats and local politicians with access to material resources, knowledge and information". Their economic and political influence has enabled them to diversify into farming. And most of them, more than 80%, have been men.

The result is that only 18% of the 66 farms that Plaas studied were allocated to farm workers, many of whom encountered huge obstacles to success and have left their unsuccessful farms to seek employment elsewhere. A significant decline in systematic research on the outcomes of land reform, especially in the wake of the focus on Covid-19, says Plaas, confirms that elite capture in land redistribution has become firmly entrenched in South Africa.

Mtero and his team conducted intensive fieldwork at seven sites in five provinces: Eastern Cape, Free State, KwaZulu-Natal, North West and Western Cape. They found clear evidence pointing to skewed distribution of resources in the land redistribution programme. Plaas says the well-off now often qualify as beneficiaries due to "policy biases which prioritise commercial success as an overriding goal in land reform".

Mtero points out that this comes at a time of significant budget cuts in land reform programmes, alongside "a perennially low land reform budget, which has persistently been below 1% of the national total budget". He says existing land reform legislation, such as the Land Reform, Provision of Land and Assistance Act 126 of 1993, has proven to be "very inadequate when it comes to assuring adequate access to land in South Africa ... there are wide discretionary powers that are afforded to the administrative authorities in determining the allocation of resources. In other words, there is no formula to apportion the distribution of resources."

Mtero points out that the Constitution directs the state to broaden opportunities for people to derive benefits from land, and this should include the right "for people to produce their own food". "The right to land and the right to food [are] integrally linked. They are inseparable. They are interconnected," he says.

Elite capture of land

The Plaas research team gathered data on 66 land reform projects across the country and found that "land reform has shifted from being pro-poor to being pro-elite". The question, then, is: who has benefitted from land redistribution in South Africa? Who are the winners and who are the losers?

Elaborating on the concept of elite capture of the land, Mtero says, "[It] simply refers to the concentration of public resources in the hands of a few individuals, and usually it's the economically powerful and the politically influential individuals. Instead of broadening access to land and reconfiguring the unequal agrarian structure, a select group of black commercial farmers is promoted in land reform."

In the study, Mtero and his colleagues found that a majority of land recipients have basically dropped out of production as a result of a number of constraints on their farms, mainly lack of production support, poor infrastructure and rundown farm houses. These people, Mtero says, fall under the "dropping out category". This is largely on account of "powerful people intercept[ing] resources, so that they don't reach the rightful beneficiaries". In the absence of resources and support, many have abandoned the farms allocated to them and moved elsewhere to seek alternative livelihoods.

About 16% are still hanging on. "These are farmers who are just really maintaining a foothold on the farm," says Mtero. This in spite of the fact that they still lack support and resources, such as machinery and production chemicals.

Fewer than a fifth of farmers who were allocated land are able to reinvest any surplus.

The strategy used by the elite is to move in on new business that have nothing to do with land but which they can use to divert resources into acquiring land. This results in the concentration of resources in the hands of a few powerful individuals.

"There is the imposition of politically connected beneficiaries; there's the bailing out of politically connected elites who have accumulated debt in their farming enterprises; there's the withholding of leases; there's fronting; there's also the exerting of political pressure on lower level officials so that they comply and flout departmental regulations," says Mtero.

Agribusiness complicit

He says agribusiness is heavily involved in elite capture and describes how farms, even farm produce, are bought at a very low price and resold to the state at a very high price. Assets are transferred to partners or rented out to other farmers, including what he calls "strategic partners".

Capital is brought in from outside agriculture. "Politicians, civil servants, affluent professionals, have increasingly become more involved in agriculture. Across the continent, the middle class is moving into agriculture, diversifying their sources of income," Mtero says.

Instead of the agrarian structure being equitable, broad and inclusive, a few black commercial farmers now hold the concentration of public resources. What is lacking, he says, are the founding principles of land reform. The process must strive to apportion resources in an equitable manner, so that historically disadvantaged groups, the marginalised, women, the youth, farm workers and dwellers can also benefit from land reform in South Africa. "The accumulation that we see is not based on the inclusion of the smallholder farmers," says Mtero.

Approximately 250 000 small-scale farmers out of the total of 2.5 million small-scale farmers actually produce surplus food. The rest produce only for household consumption.

Job creation potential of land

Cousins' study, commissioned by the European Union's Capacity Building Programme for Employment Promotion (CBPEP) for the government's Technical Advice Committee, focuses on the potential for job creation on the land. It concludes that land set aside for reform would be more effectively utilised if it were further divided into smaller pockets enabling small-scale farming to play a significant role in tackling the challenges of unemployment and food security.

This research was based on a model in which 50% of available agricultural land was redistributed. Focusing on four local municipalities - in Eastern Cape, Limpopo, KwaZulu-Natal and Western Cape - it found that more than 23 000 jobs could be created in these municipalities.

As the Covid-19 pandemic rapidly corrodes employment, Cousins' project findings may suggest ways to get South Africans working towards self-sufficiency.

"Successful land reform and rural development could dramatically improve the quality of life of the many rural residents who make up one-third of South Africa's population, by boosting jobs, fostering economic opportunities and opening up access to markets," says Cousins.

By carefully selecting beneficiaries and strategically pairing them with the right farming opportunities, jobs would be created.

He found, for example, that KwaZulu-Natal's Inkosi Langalibalele Local Municipality, which focuses on livestock production, could increase employment by about 2 200 by farming mainly goats. Rearing goats is more labour-intensive than other forms of livestock farming. This would come at a cost of an estimated R325 000 per job, which includes the price of procuring the land.

In Limpopo, where high-value subtropical fruits and nuts are grown in a labour-intensive process, Cousins says, "We estimated the total new jobs which could be created through redistributing 50% of farms, commercial farms, would be around 17 000, at an overall cost per job of R418 000." These estimates include the cost of the land.

In the Western Cape's irrigated lands along the Oliphant's River where high-value crops such as grapes and vegetables are grown, Cousins estimated that about 3 198 new jobs could be created. The relatively high cost of R680 000 per job is due to the higher price of land in the area.

"The selection of beneficiaries and matching them with opportunities is absolutely key ... What is key here is to move away from the relatively wealthy and elite to those smallholder-based farmers, using mostly family labour and the small-scale commercial farmers who are going to invest in farming itself."

 

Source: New Frame

This article was first published by New Frame.

The Covid-19 pandemic has demonstrated the fragility of having a single source of income, particularly if you are self-employed, and have at the same time emphasised the need for more South Africans to embrace the principles of sound financial planning, says Old Mutual.

So says John Manyike, Head of Financial Education at Old Mutual who says that the belief that if you devoted yourself to tasks and remained disciplined, dedicated and worked hard that success was ensured no longer apply.  

"Regardless of whether you are self-employed or gainfully employed, you should not be relying solely on the stability and ability of the clients or company to support you. The Covid-19 crisis has demonstrated that even the best businesses can experience difficulties when a 'perfect financial storm' erupts."

“If you rely on your efforts to generate income, it is likely that part of your ability to earn is tied to a personal brand.  This means that over time people have bought your products and services based partially because of the rapport you have built with them.  The music business, for instance, is built mainly on this mutual respect.”

However, when the 'personal buzz' goes, or you can no longer render a service, it can impact on income. Then, only those who have multiple streams of income and invested in the futures will survive.

Some of the most common mistakes that self-employed people make is:

  • They do not have a business account to contain all their business income and expenses
  • They fail to separate business and personal expenses
  • They transact mainly from a single account
  • They regard all income as personal income
  • They don’t focus on the paperwork of their business
  • They do not pay attention to their tax affairs and end up owing SARS a lot of money
  • They live for the NOW and simply buy stuff to impress

" The result is that it's hard to identify where the money is coming from and where it is going. Even worse, income can see-saw from one month to the other and is totally unpredictable," says  Manyike.

"When people are doing business with you because of your strengths, and personality-which you transfer to your income-generating activity none of the shortcomings will appear serious”.

The emergence of a national economic problem like the shutdown, or even a change in service and product requirements can destroy income. Personal appeal vanishes and survival then means having had a well-balanced saving and second-income plan waiting in the wings.

The base requirement for the self-employed, says Manyike, is that business and personal are separate.  Instead of taking what is left in a single account at the end of a month, the business owner should be making a regular salary and paying it into a personal account.

It then becomes easier to compensate for a ‘financial drought’ in the business and develop a personal plan.

The steps to be taken early on to secure a second, standby income are to:

  • Take a realistic look at your finances and get expert help

A qualified personal financial planner will be able to match your expectations to the funds you have available. He or she will also be able to advise on investments and build an income that can carry you through tough financial patches.

  • Take a short, medium and long-term view of your future and plan accordingly

An investment plan must take into account what your short-term needs are so that money is available to maintain your lifestyle. Longer-term investments will require a strategy that builds capital and interest, and, for instance, use investment plans like annuities and life policies to create financial security. Looking towards retirement will need long-term money that can be invested and left to grow for years.

As you get older, the investment strategy should be to reduce risk so that the funds you have built up are preserved and can pay you a pension.

  • Taking lump-sum payments from bonuses and 13th cheques when times are good and investing the money rather than spending it.

“Proper use for ‘bonsella money’ is to use it to reduce debt, reduce home loan interest or invest in a savings and investment instrument where it can earn interest and save some as part of your emergency savings plan where it can be easily accessed in emergencies,” says Manyike.  

All these topics and financial tips can be found in the Old Mutual AMPD Studios Live series which features some of South Africa’s leading entertainment personalities.

For more information about the AMPD Studios Live, go to the AMPD Studios website at www.ampdstudios.co.za. To join the AMPD Studio community for updates, events, and invitations, join the AMPD WhatsApp line by WhatsAppíng your name to 081 707 66 36.

Aug 07, 2020

Samsung hosted its first-ever Galaxy Unpacked virtual event livestreamed from Korea yesterday to introduce a new suite of power devices.

Five devices were revealed during the event, that seamlessly integrate to empower consumers navigating a rapidly changing world: Galaxy Note20 and Galaxy Note20 Ultra, Tab S7 and S7+, and Galaxy Watch3, a premium smartwatch along with advanced health features, Galaxy Buds Live, stylish and ergonomic earbuds and Galaxy Z Fold2.

Never before have we relied on technology like we are today. It’s how we are staying connected as we navigate the extraordinary challenges faced around the world," said Dudu Mokholo, Chief Marketing Officer for Samsung Central Africa. "Technology must make life easier, not more complex. That’s why we have introduced five new power devices. Alone, these devices are powerful tools to help you maximize work and play. Together, as part of the Galaxy ecosystem, they work together seamlessly so you can spend your time focused on what matters most.

 

 

Aug 06, 2020

This music is played on loudspeakers by a group of seven members of the Tabernacles of Freedoms Ministries in Cameroon’s capital Yaounde.

The four women and three men move from house to house and street to street calling themselves end time evangelists. Thirty-two-year-old Prudence Mayah, the group leader is referred to by church members as sister.

She said last month God revealed to them through their pastor Ngoa Atangana that nations are wasting the time and resources being spent on fighting COVID-19.

"We are asking everybody to go on their knees and pray and know that there is nothing as coronavirus," Mayah said. "It is God’s punishment for wrongdoing, for the several wars people are fighting in the world. A man marries a man and a woman marries a woman, so God is very angry."

Among the 45 homes the group said it visited on Monday is that of 49-year old farmer Lionnie Fotso. Fotso said she believes in the teachings of the small church, and will follow its orders not to wear masks.

Fotso said Tabernacles of Freedoms Ministries has just confirmed her thoughts that COVID-19 is a hoax. She said no member of a group of 300 farmers where she belongs has ever attested that she saw a COVID-19 patient and none of them has been sick of the so-called coronavirus.

COVID-19 is very real, killing nearly 700,000 people worldwide since December. There have been more than 17,000 cases in Cameroon alone, and about 400 deaths in the Central African state.

But that doesn’t stop the Tabernacles church, which has about 300 followers and reaches more people with broadcasts on Yaounde radio stations.

Last week, Governor Naserie Paul Bea of Cameroon’s Center Region said three students refused to take their secondary school certificate exams because they were asked to wear masks.

When the student’s parents were asked to come to school and convince their children to wear the masks, the parents chose to take the children home. The parents said they were members of the church.

The governor said he has ordered the church to follow instructions on COVID-19 prevention or be arrested.

'We have already closed down this church for anti-government policies," Bea said. "You can imagine, some of our youths have refused vaccinations. Some of them are now refusing barrier measures (against COVID-19). Some of them refuse even to go to the hospitals, (saying) that if you die, they can pray and you come back to life."

Even with the closure of the church, members have continued organizing their daily prayers and meetings in front of the sealed building.

The church says it also sends out fifteen groups of seven on a daily basis, to preach its erroneous message about COVID-19.

 

Credit: Voice of America Logo

The Zimbabwean government recently signed an agreement to pay 4,500 white farmers US$3.5 billion for infrastructure improvements on the land expropriated by the government during the chaotic land reform programme of 1997/8.

The initiative shows commitment to constitutionalism and respect for property rights and restoring the rule of law. The agreement is also a noble attempt at bringing closure to a questionable episode of the country’s land history.

But the proposal to fund the exercise by issuing a sovereign bond is highly ambitious. With an ailing economy, the country simply doesn’t have the resources to meet its commitment to white farmers. In his letter dated 2 April 2020 to the heads of the International Monetary Fund (IMF), World Bank, African Development Bank (AfDB), Paris Club and European Investment Bank, Finance Minister Mthuli Ncube clearly outlined that the country does not have the medical and financial resources to fight the COVID-19 pandemic. Although the government cleared its US$107.9 million arrears with the IMF in 2016, it is still struggling to settle its US$2.2 billion debt to other international financial institutions, including the World Bank and African Development Bank.

The government has proposed issuing a long-term sovereign bond, a process where the government sells bonds to investors on either domestic or international financial markets to raise funds. This year, only Ghana, Gabon and Egypt have managed to do so.

It has also called on international donors to help it raise the needed funding. If these options do not raise sufficient funds, another proposal is to sell municipal land around the nation’s biggest cities.

In my view issuing a sovereign bond would be ill-advised. The main reasons for this are that the economic and political conditions are not conducive to an issuance of such a bond. For a country to successfully issue a sovereign bond, it needs some basics in place. It needs an international sovereign credit rating, stable domestic economic fundamentals and investor confidence. None of these are currently present in Zimbabwe.

Why it’s a bad idea

Most of the factors relate to internal political and economic fundamentals.

Firstly, Zimbabwe does not have a sovereign credit rating from the three international credit rating agencies – Fitch, Moody’s or Standard & Poor’s. Without a rating, it is impossible to successfully issue a sovereign bond on international markets because it’s a key input in determining yield and coupon payment on a bond. The government has not yet solicited a rating from the big three rating agencies. It is among the 23 African countries that are yet to request an international sovereign rating.

Secondly, the country has no domestic debt market. If it did, it could try to mobilise local investors who understand the associated risk exposures and could perform their own due diligence. Domestic institutional investors would have to subscribe for the government’s bond issuance to be successful.

Thirdly, the country has changed its currency more than 10 times since 2000. In 2019, the Central Bank banned the use of foreign currency for trading and reintroduced the Zimbabwe dollar quasi-currency that had been abandoned in 2009. The local currency depreciated by more than 320% in less than a year. This eroded savings and pensions, and saw a further loss of confidence in the entire financial system. Strength of a country’s currency determines the attractiveness of its bond issues. A weak currency compounds the risk of default and debt sustainability as repayments will still have to be made in foreign currency.

Fourthly, the increasing economic crisis in the country has eroded the goodwill that the current government accrued post-Mugabe era. President Emmerson Mnangagwa’s actions have failed to tally with his “open for business” mantra. His trips to Davos have failed to yield any significant foreign direct investment as investors question his credibility.

The government is also in bad favour with institutions such as the IMF and World Bank. It has defaulted on IMF loans and failed to implement reforms agreed with the organisations.

Fifth, the government has been hostile to the private sector. It ordered the closure of the stock exchange on 29 June 2020 and accused businesses of fuelling currency devaluation. State security agencies attempted to stop certain business operations of Econet and Old Mutual, the two largest companies listed on the stock exchange. They were accused of fuelling hostilities against the government. It is these companies and their multinational networks that would support the bond issuance by purchasing the government bonds.

Sixth, the government’s brand has been damaged by a number of government officials being targeted for sanctions. Some are calling for stronger sanctions for human rights abuses. Investors perceive a country that does not respect its rule of law as unlikely to respect its sovereign bond covenants nor honour its obligations on time.

In addition, the government’s commitment to transparency and integrity has been called into question on the back of accusations of mass corruption. Despite promises, there has been little to no action against government officials embroiled in corruption scandals.

Seventh, Zimbabwe’s economy has failed to pick up in the post-Mugabe era. Instead, it has become worse. Food production is at its all time low, the health sector has been paralysed by constant protests and inflation has been estimated at more than 800%.

The last internal factor to consider is that the country’s central bank can no longer perform its functions as the lender of last resort and facilitating cross-border transactions, because of the lack of foreign exchange reserves. Forex access has been restricted to government agencies, departments and selected individuals. Local banks technically have the liberty to make their own forex transaction arrangements with other international corresponding banks.

There are also some external factors that make raising capital this way a bad idea right now. The international debt market has been depressed as a result of COVID-19 and is likely to remain so for the next two years as investors wait to see how countries emerge from the crisis. And the cost of issuing a bond has doubled, which has priced most African countries out of the market. Zimbabwe is no exception.

All these factors are not favourable for Zimbabwe to issue a sovereign bond.

Solutions

Zimbabwe has many pressing issues. Given that the economy is at its lowest, compensating farmers is a luxury the country cannot afford. It will not yield the implied results of increasing foreign direct investment.

Instead, Zimbabwe should focus on demonstrating the political will to restore business confidence. Evidence of this will include the removal from public office and prosecution of people involved in corruption.

It should also acknowledge the challenges it faces and commit to genuine political dialogue. International partners and investors interpret the denial of the challenges faced by the country as being dishonest and untrustworthy.

Lastly, the government should implement the economic reforms previously agreed with multilateral lenders. Under the agreement, policies should focus on eliminating the government’s double-digit fiscal deficit and adopting reforms to allow market forces to drive the functioning of foreign exchange and other financial markets. These will help stabilise the currency and monetary policy. Without fully implementing these reforms agreed with multilateral agencies, mobilising foreign direct investment will remain a dream.The Conversation

 

Misheck Mutize, Post Doctoral Researcher, Graduate School of Business (GSB), University of Cape Town

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Aug 05, 2020

Adopting a Restrictive Rule of Origin will not allow the Nigerian manufacturing industry enjoy the full benefits of the African Continental Free Trade Area (AfCFTA). This is according to Peter Lunenborg, the Senior Program Officer at South Centre.

According to him, most sectors in the industry still source the bulk of their raw materials and expertise from outside the continent.

Speaking at the Manufacturers Association of Nigeria (MAN) webinar themed “AfCFTA Rule Of Origin: Implication For Growth Of Manufacturing Sector,” Lunenborg noted that while restrictive rules of origin are the best for wealth creation, the African continent cannot afford to toe that path just yet.

“It needs to be flexible because so far, most of the things produced here still require some input from foreign countries, in form of raw material or technology or expertise. For instance, Nigeria imports half of the wheat used for its flour manufacturing from the United States, because Africa has a huge supply deficit,” he said.

Why this matters
One of the objectives of the AfCFTA is to promote industrial development through diversification and regional value chain development, Agricultural Development, and Food Security. AfCFTA also aims to create a single market for goods, services, and movement of persons within the African continent.

One of the ways of achieving this is removing duties and taxes from goods produced within the continent.

However, with many of the manufacturing companies sourcing a bulk of their raw materials externally, a restrictive rule of origin will not let the local industries to fully reap the benefits of the Free Trade Area.

Lunenborg explained that this is the reason for adopting a flexible rule of origin so that local companies that source a minimum 40% of their raw materials locally can be qualified as originating and given the benefits.

Adopting a flexible RoO first is a trade-off where the country gives up some benefits so that local manufacturers can benefit from the arrangement at the level they are.

Reaping AfCFTA’s benefits

Aissata Koffi Yameogo, ECOWAS’ Programmes Officer in charge of implementing AfCFTA rules of origin in the continent, said in her address that the implementation will expand market for the manufacturing industry to 1.3 billion West African citizens, without additional duties and fees.

“It will build production capacity in the region and develop the value chain, and increased export to other African states” she added.

The benefits would also encourage member states to specialise in the production of a certain good where they have a comparative advantage, thus enhancing the quality and quantity of local production and creating more jobs.

She commended MAN for the webinar, noting that it was important for manufacturers to be sensitized and trained adequately so that they could reap maximum benefits of the AfCFTA.

MAN President, Mansur Ahmed, in his welcome address delivered by Paul Gbededo, noted that the MAN webinar series are geared towards sensitizing manufacturers in the country, and working together to create “a watertight Rule of Origin” within the next six months.

Why Nigeria is yet to ratify implementation of AfCFTA

Even though 30 countries have ratified the implementation of the agreement, AfCFTA is yet to get ratified by an Act of the Nigerian Assembly.

Secretary of the National Action Committee on AfCFTA, Francis Anatogu, stated in his presentation that some of the threats to Nigeria’s ratification of the agreement include; the rise in smuggling, illegal transshipment of goods from non-African countries, and import surge arising from trade liberalisation without corresponding growth in export of Nigerian products.

“Nigeria also has to combat with the influx of substandard products due to uneven quality standards in some African countries, and loss of revenue from import duties and levies, exacerbated by smuggling and Rule of Origin abuses. Putting these things in check will help speed the ratification of the AfCFTA” Anatogu stated.

He added that the National Action Committee on AfCFTA is working together with the Manufacturers Association of Nigeria (MAN) on the issues, to hasten the ratification of the agreement.

He also added that there are adequate provisions in the agreement and ECOWAS regulations to deal with these issues, and Nigeria has built capacity based on her experience of the ECOWAS Trade Liberalization Scheme (ETLS).
 

The Backstory

President Muhammadu Buhari, in July 2019, after initially withdrawing assent, signed the AfCFTA agreement at the 12th Extraordinary Session of the Assembly of the African Union in the Niger Republic.

According to International Monetary Fund (IMF), the elimination of tariffs could boost trade in Africa by 15-25% in the medium term, and once fully implemented, is expected to cover all 55 African countries, with a combined GDP of about US$2.2 trillion.

 

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