Sunday, 12 April 2015

Hey, Vote for our grandparents, the CTA ARDYIS project

Dear readers,

If you enjoy this blog, here is an opportunity to give back to the people who have helped it to become what it is.

CTA’s ARDYIS (Agriculture, Rural Development and Youth in the Information Society) programme has been nominated for the WSIS Project Prizes in the category 13: e-agriculture.  This is the organization that has trained many young people across Africa, the Caribbean and the Pacific in areas such as Web 2.0 and Social Media for Development. I am a product of their training, that is why I call them our grandparents. 

WSIS Project Prizes recognise the efforts of stakeholders for their added value to society and commitment towards achieving the World Summit on the Information Society (WSIS) goals. The winners will be selected from the three (3) most voted projects and announced at the WSIS Forum 2015, to be held in May 2015 in Switzerland.

Through initiatives such as blog competitions (YoBloCo Awards), the support of ICT for agriculture entrepreneurship by youth (AgriHack Talent), Web 2.0 training targeted to youth, Social Reporting at various events, and the constant interactions with youth via its mailing lists since 2010, the ARDYIS Programme has supported youth in agriculture and strengthened youth capacities and opportunities in ICT for agriculture (e-Agriculture) in African, Caribbean and Pacific countries.

Vote right now!
The voting process for the WSIS Project Prizes has started and it’s time to support and vote for ARDYIS!
Here are the steps you need to follow to vote:
1.       Go to: - Log in if you/your organisation are already registered on the WSIS platform, or register by clicking on the link « click here » on that page (in blue)
 If you are not registered, provide your contact details on the page. A confirmation message will be sent to you automatically by a WSIS account – check your email (if needed your spam box) and click on the confirmation link ; go back to WSIS Prize homepage or to and log in 
2.       Once you have logged in, you will be required to provide your organisation's name and country (the name of your organisation can be your current employer or any other organisation you are affiliated to, that has an interest in this topic).
3.       Read the voting instructions if needed, or go directly to the « Vote » tab (see image below)
4.       You can now start voting. Under the Voting tab, you will find a list of projects in 18 Categories. ARDYIS is nominated in the category e-agriculture (category 13) ; but you need to vote for one project in each category, from 1 to 18. If not, your vote for ARDYIS will not be counted. Under Category 13, look for the ARDYIS programme, and click on « Vote for this project ...» (see below)
5.       You will be asked to confirm your vote for each project in the 18 categories.
6.       After voting for a project in all categories, a thank you message will appear on your screen. Check also your mailbox (if needed wait for some minutes), you should receive a message from WSIS indicating that you have voted. And you are finally done!
This information is also available on the ARDYIS website:
Please note that the voting process will take you around 10 minutes. If you are having any issues to vote, please write to us at
Kindly spread the word to the youth in your organisation and members of your networks, to vote for us to support youth in agriculture and ICT, and better put these issues in the spotlight.

Thursday, 9 April 2015

Zimbabwe’s limited fiscal space is constraining agricultural growth and development

Photo Credit: M. Granados - CIMMYT

Defining fiscal space

Fiscal space is defined by the balance between government revenue (i.e. tax), denoted by T and government expenditure, denoted by G, through time. For instance, if G < T, then there is a fiscal surplus, but if G > T, then there is a fiscal deficit. A sustained or perpetual deficit through time results in build-up of annual deficits, leading to an unsustainable high debt. With a high level of debt, the government cannot borrow on the international market, and its ability to finance future deficits, i.e. the fiscal space is limited. 

Zimbabwe currently endures very limited fiscal space since debt distress is undermining the capacity of the country to service its debt obligations. Accumulation of external payment arrears since 2000 (including interest charges) has resulted in public and publicly guaranteed debt reaching 51% of GDP and was projected to reach US$7.2 billion by December 2014 (Chinamasa, 2014).

Fiscal space is constraining agricultural growth

The country’s credit worthiness in the international community has been eroded and efforts are currently being made to reengage with the international community. While there may seem to be sufficient ground to argue that limited fiscal space has constrained agricultural growth; constraints to agriculture sector growth may emanate from a variety of angles.

However, it is to a large extent, that Zimbabwe’s limited fiscal space has affected agricultural growth and rural development. Zimbabwe has not been able to access patient capital from international financial institutions (IFIs) as well as global agricultural investment funds.

International and regional lines of credit in Zimbabwe are few and are subject to a high risk premium, reflecting the perception of Zimbabwe as high risk due to the existing external debt payment arrears and debt overhang, said Agribank Chief Executive Officer Mr S. Malaba at an Agribusiness Conference late last year.

Failure to unlock patient money

With limited fiscal space reflected by an unfavorable credit worthiness, Zimbabwe has limited opportunities to unlock “patient” capital from IFIs. The IMF had closed its Zimbabwe office for over a decade. However, possibly in response to ongoing efforts to reengage with the international community, the IMF office in Zimbabwe has since been re-opened. 

IFIs are a source of patient money which is critical for agricultural growth and rural development given the capital intensive nature of agriculture as a business, and the high risk of smallholder agriculture.

Failure to unlock innovative agriculture investment

In the recent past, agriculture investment funds have grown in Africa as a region. In 2010, 31 agribusiness investment funds were targeted at Africa, with capitalization ranging from $8 million to $2.7 billion (Miller, et al., 2010). These have different asset classes (such as commodities) and financial instruments (for example bonds, listed securities and derivatives). These include both public/donor (with philanthropic objectives) funds as well as private investment funds. 

Due to the risk associated with Zimbabwe’s limited fiscal space, private investor funds, for instance debt funds, which are the type of funds that may provide loan capital directly to agriculture may shy away from Zimbabwe. 

Credit guarantee schemes are innovative tools that are being utilized to unlock financing of agriculture especially through value chain approaches. Some credit guarantee schemes may involve financiers who will require the government to be guarantor for external agricultural financing. Limited fiscal space compromises government’s ability to guarantee credit e.g. for financing smallholder agriculture.

Debt instruments such as treasury bonds are another form of instruments that the government can use to finance agro-industry and agricultural value chains. In 2014, treasury bonds were issued by the government to input suppliers for the debt owed for inputs supplied through the RBZ quasi-fiscal activities. Limited fiscal space may compromise the government’s ability to meet the commitments to the bonds. This constraints agricultural growth. 

In countries such as Nigeria and some Asian and Latin America countries that have benefitted from developed countries’ debt relief, FDI in agriculture/agribusiness is reasonably high. In Latin America and Asia, it is as high as 78% of FDI. Though in Nigeria, the value of agriculture related FDI is proportionately low compared to total FDI, falling within single digit percentages, the country’s agricultural sector benefits from investment funds such as Fund for Agricultural Finance in Nigeria, FAFIN (Ogwumike, 2013; Nigeria Sovereign Investment Authority, 2014). 

Agricultural investment funds and other innovative financing instruments can play a critical role in agricultural growth and rural development in Zimbabwe, but their success requires “space” for both social and market lending facilities.

Failure to absorb external hazards or shocks 

Most rural farmers in Zimbabwe still depend on rain-fed agriculture. However, rainfall patterns are increasingly becoming erratic and less predictable. This makes smallholder agriculture extremely risky and in need of the absorptive capacity of government to ensure resilience in the event of external hazards. The majority of livelihoods depend on agriculture and the growth of the smallholder agriculture and rural livelihoods improvements can be considered key in achieving economic growth and development. Limited fiscal space however limits ability of the government to absorb the effects of shock and in turn propel agricultural growth and rural development.

Limited investments in key drivers of agricultural growth such as research and development

Research and Development (R&D) can be considered one of the key drivers of agricultural growth and rural development. The United Nations recommended a minimum threshold of spending 1% of GDP on R&D. Given a scenario of limited fiscal space government has to negotiate this with other investment priorities. In the case of some “inescapable” budget requirements which have immediate/short term implications, resources are often channeled to other priorities e.g. the “next season’s” input support programme. Lower fiscal space and sustained budget deficits may result in starving of strategic investment areas such as R&D and extension.

Other factors constraining agricultural growth and development in Zimbabwe

While there may seem to be sufficient reason to argue that limited fiscal space constrains agricultural growth and rural development, it may seem also important to consider some of the forces that may be independent of limited fiscal space but also constrain agricultural growth and rural development. 

General macroeconomic policy gaps, for instance the lack of clarity on the indigenization policy and lack of resolution on land tenure instruments such as the 99 year lease also constrain agricultural growth. For instance, there is still debate whether ownership structures are the only means of complying with indigenization regulations. This form of uncertainty shies away even domestic investment which may then find better havens elsewhere. 

Additionally the lack of resolution on the bankability and transferability of the 99 Year Leases renders complications to the functioning of domestic land markets, suffocating domestic investment and hampering productivity. Surges in the local costs (financial and time-related costs) of doing business through high transaction costs hinder growth of agricultural businesses. For instance cumbersome processes related with acquisition of licenses and registration by traders also stifles local agribusiness.