Zimbabwe: reviving the rural economy in Zim

ZIMBABWE’s rural economy plays an important role in national food production, the reduction of extreme poverty and the achievement of the Sustainable Development Goals (SDGs). The Zimbabwe National Statistics Agency (Zimstat) Population Survey 2017 estimates that over 68% of the Zimbabwean population lives in rural areas, which are categorized into communal areas and resettlement areas.

The percentage equates to more than eight million people. Undoubtedly, rural-urban migration has significantly altered the population distribution, with young and economically active people migrating to urban areas in search of better jobs and income-generating opportunities. This shift in distribution has put pressure on limited resources in urban areas, while depriving rural areas of the skills needed to stimulate economic activities, especially in agriculture.

In addition, a number of constraints have also played a role in the decline of the rural economy over the past four years. These include high levels of inflation (erosion of consumer purchasing power), climate change (recurrent droughts), uncompetitive producer prices for crops, closure of rural mines and declining infrastructure (roads, bridges, clinics, schools, immersion ponds, dams and irrigation systems). facilities).

The World Bank estimates that extreme poverty in Zimbabwe has increased over the past three years, from 4.7 million people in 2018 to 6.6 million people in 2019. The number of extremely poor people is expected to rise to 7 .6 million in 2020 due to the impact of drought, Covid-19 and high levels of inflation. In 2019, the prevalence of individual poverty in rural areas was 90%, compared to 40% among the urban population.

Extreme poverty was also much higher in rural areas, with 45% of the rural population considered extremely poor, compared to 7% in urban areas. This means that millions of people in the communal and resettlement areas live in poverty and there is an urgent need to revive the rural economy as a means of uplifting rural households.

Zimbabwe’s rural economy is modeled around points of growth, with the main economic activities being agriculture, mining, livestock and general merchandise trading. This means that the revival of the rural economy begins with the provision of essential infrastructure that connects growth points to urban markets such as good roads and bridges, electricity, an accessible mobile network for the Internet and basic communications. . With these elements provided, the government should develop the following policies to reshape the rural economy:

Agricultural viability

Smallholder (community) farms in rural areas are home to over 70% of Zimbabwe’s farmers. Communal areas have accounted for around two-thirds of Zimbabwe’s maize production since 2000, meaning that grain production is largely the preserve of communal farmers.

In tobacco, around 180,000 small farmers supply 80% of the gold leaf while supporting more than 1.2 million dependent families. It is fair to say that there has been a significant shift from maize to tobacco and other cash crops (under contract farming) due to price competitiveness and sustainability issues.

This year, the maize farmgate price was set at ZW$12,330 (approximately US$110/tonne using the parallel market rate from March to May 2020), but the world market price was US$150/tonne before shipping and freight charges. After factoring in inflation and variable production costs, most farmers have suffered losses on the maize they delivered to GMB and they will likely reduce per hectare in this 2020/21 season.

A fixed producer price discourages primary production, creates market shortages and arbitrage opportunities for importers or parallel market buyers who scam desperate farmers.

The government does not save money by paying farmers low farm gate prices or by forcing farmers to sell directly to GMB. From January to June 2020, Zimbabwe imported maize worth US$229 million (at US$250/tonne or more) from South Africa, Mexico and Ukraine. In a nutshell, the government is happy to import maize at prices 120% higher than what it pays local farmers.

Similarly, allowing imports of cheap maize (duty-free) to avoid starvation crowds out local farmers who would normally benefit from price increases and increased demand provided the law allows them to freely sell their products.

Therefore, to revitalize maize production, the rural economy and increase food security, the government must establish a commodity market where buyers (including the Grain Marketing Board) purchase maize at determined by the market, not at fixed producer prices. GMB should compete with other buyers on contract farming and deduct all agricultural inputs made available to communal farmers by the government. Viability will gradually increase the corn production of communal farmers.

Irrigated agriculture

Zimbabwe’s rainfall patterns have changed negatively due to climate change and over 60% of the country receives rainfall levels that are not adequate for growing crops. The government should redirect funding from ordinary agricultural inputs to small-scale irrigation pumps and pipes for communal farming areas close to water bodies.

Irrigated agriculture not only ensures food security for rural farmers, but enables year-round production by small-scale farmers who currently depend on rainfall and are affected by climate change.

Infrastructure rehabilitation

Communal farmers need direct and easy access to markets for their products. The rehabilitation of key infrastructure such as roads, bridges, dumping ponds, dams, irrigation farms and boreholes is the core mandate of the District Development Fund (DDF). Therefore, to ensure the maintenance of rural infrastructure and facilitate the revival of the rural economy, there is a need to adequately re-equip and strengthen the DDF to cover all rural districts in the country. The agency also offers civil engineering, tillage, plant and equipment rental services to communal farmers, which is helpful in boosting agricultural production.

Public Service Remuneration

Civil servants are important to the rural economy in terms of redistributing income from urban areas to rural communities by spending their salaries in communal enterprises.

Rural teachers, nurses, municipal workers and other government employees are essential in supporting small farmers and buying livestock. Therefore, paying competitive civil service salaries improves spending on goods and services while ensuring support to rural households through urban-rural remittances.

Currently, there is no incentive for civil servants to take up posts in rural areas and most prefer towns which offer better living conditions. The Public Service Commission (PSC) should examine strategies to incentivize public servants to fill positions in rural areas.

Rural electrification

To reduce poverty in rural communities and facilitate an equitable distribution of energy, there is a need to electrify all rural communities in the country under the Rural Electrification Agency (REA). REA derives its funding from Treasury allocations and the 6% tax levied on prepaid electricity tokens.

However, priority should be given to growth points/business centres, schools, health centres, government offices and mines. Electrification projects need more funding from the Treasury and the redirection of funds from the reforestation tax imposed on tobacco growers. Rural electrification is key to reducing deforestation and achieving the country’s SDG of providing affordable and clean energy.

Zimbabwe’s rural areas lag behind in economic output compared to urban areas. However, they are home to over 80% of the country’s population, which is rapidly sinking into extreme poverty due to years of economic instability, climate change, high inflation and lack of access to basic necessities. basic amenities. The government needs to change its funding model for poor communal farmers (under the presidential budgeted input program) and put more emphasis on irrigated agriculture.

Achieving the SDGs also requires revitalizing the rural economy through the establishment of a commodity market to facilitate the payment of viable prices to communal farmers under a parity price model. import determined by the market. Sustainable agriculture will play a central role in import substitution for maize and other strategic crops that are part of the $700 million grain import bill that Zimbabwe pays each year.

Bhoroma is an economic analyst and holds an MBA from the University of Zimbabwe. — [email protected] or Twitter: @VictorBhoroma1.

About Keneth T. Graves

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